Despite the downturn of the past few years, Americans still believe in housing as a great investment. Image from Wikimedia Commons.

A recent survey indicated that most Americans think real estate is a good investment. The value of the average house has dropped by nearly a third since the housing recession began in late 2007, and nearly a third of all homes are worth less than the amount that is owed on them. Housing prices will eventually begin to appreciate, but the process will take a while.

More than 80 percent of Americans have confidence in real estate

A recent survey revealed that despite the economic downturn, most Americans still have confidence in real estate as an investment. The Pew Research Center, according to Reuters, found that 81 percent of Americans felt real estate was still the best long term investment. More than 2,000 adults were surveyed by phone by the Social and Demographic Trends project, part of the Pew Research Center, and 37 percent “strongly agreed” that a house is the best long term investment, and 44 percent “somewhat agreed.” Most people believe that housing values will recovered within three years, but 23 percent said that they wouldn’t have bought their house if given the choice again.

April showers and May flowers

Realtors, according to MSNBC, are hoping that sales pick up during the spring and summer of 2011 and the current trend of slowing sales is reversed. Realtors and real estate industry analysts are concerned that the number of underwater homes and lower demand will keep home sales and home values down for some time. However, the National Association of Realtors is expecting an increase in home sales of 7.4 percent this year. One of the biggest complaints from the real estate industry has been that lenders are being too stingy, and standing in the way of the recovery that would benefit them by being too conservative with loan capital.

Downturn fuels skeptics

Skeptics and critics of the real estate industry have intensified their stance against home ownership, a cornerstone of the American Dream. An article on the USA Today website quoted Robert Shiller, co-founder of the real estate tracking Case-Shiller Index, as saying that people buy houses for security or lifestyle reasons. Another economist in the same piece found that a house only yields a 6 percent return on average. With depressed prices, along with agent fees and other closing costs, it may be far lower than that for many people.

Sources

Reuters

MSNBC

USA Today

Statistics of the national vacancy rate may cause people to think that ghost towns are popping up, but that is not the case. Photo Credit: Vivaverdi/Wikimedia Commons/CC-BY

It has been reported that the national rate of vacancy, or the number of houses sitting empty, has reached a 13 percent, but don’t panic. That figure does not mean it is time to begin constructing a bomb shelter and making hats from tinfoil. The housing market is depressed, but signs of life are still there.

Wealthy buying fewer homes in vacation hot spots

The media report a number of economic indicators, and statistics regarding real estate can cause a sense of doom on the horizon regarding the housing market. For instance, CNN recently published an article that said up to 13 percent of homes sit empty in America. That is a misleading statistic; CNN points out that many of the vacancies are in areas like Maine, Arizona and Florida — popular places for vacation homes. Furthermore, vacancies have gone up less than 1 percent, from 12.1 percent to 13 percent, in four years.

Pending sales increasing

Pending sales, homes that are being officially in the process of being sold, increased by 2.1 percent over February, according to Bloomberg. The dip in home sales over the past few months was attributed partially to frigid winter conditions, as no one wants to go house hunting in the middle of a blizzard. However, pending sales for February 2011 were also 8.2 percent lower than for February 2010, as the housing market is still sputtering. Lawrence Yun, chief economist for the National Realtors’ Assocition, anticipates existing home sales will pick up over the rest of 2011, according to Reuters, as older homes are selling at a faster pace than newly built homes. Newly built homes are usually more expensive than older homes.

Reality of realty

Most news about the housing market makes it seem as though a second crash is imminent, and it may be. The reality is that sales are slow, houses are not worth as much as they used to be, and banks may be less willing to lend. Prices are likely to stay low as long as fewer people are willing or able to buy houses, and lenders are skittish about lending in the current economic climate surrounding real estate. The good news is that anyone with the means to buy right now will get a great deal, and people who already own are likely to see the value of their property rise in the next few years.

Sources

CNN

Bloomberg

Reuters

The actual value of homeownership is being questioned by a growing number of skeptics. Image from Wikimedia Commons.

One of the longest standing hallmarks of the “American Dream” is becoming a homeowner. However, a growing number of skeptics are beginning to question whether it is actually a good idea for people to buy a home at all. There is some evidence that could support home-ownership skeptics’ argument.

Housing prices may not perform that well as investments

There are a number of experts within the finance industry that are coming to seriously question the long-held assertion that owning a home is a good investment, according to USA Today. In 2000, highly influential Yale economist Robert Shiller, for whom the Case-Shiller Index is named, released a book in which he looked at home values from 1890 and 1990. After adjusting for inflation, Shiller found that home values had barely moved at all in terms of real value. Former Federal Reserve economist Jack Francis found that stocks on the Standard & Poor’s index yielded an average return of 11 percent, but real estate yielded only 6 percent. Given the fluctuations in real estate values during the past several years, it would seem plausible that not as many people are realizing that much of a profit.

Prices and equity plunging

Overall home prices have been plunging since 2008, and the decline has not slowed drastically as yet. Home sales and home prices both declined in February 2011, according to Reuters. Existing home sales declined four percent during February 2011, and home prices declined 5.2 percent between February 2010 and February 2011. A more disturbing, but less prominently disclosed statistic in the press is the amount of equity the average homeowner holds. In the most recent “Flow of Funds Accounts of the United States” release by the Federal Reserve, the average household was estimated to hold 39.5 percent equity in the family home as of September 2010.

Old model breaking down

A home paying off as an investment depends on a lot of assumptions that cannot necessarily be taken for granted. If a person buys a home with a 15 or 30 year fixed rate mortgage and pays the mortgage off, the homeowner has property free of encumbrances that is not costly to live in and can be sold to raise a retirement nest egg. However, few families occupy the same home long enough to accomplish that task. Also, if a person sells a home for a greater price than it was purchased for, that profit may actually be nullified. Costs such as home repairs, property taxes, real estate agent fees and closing costs can add up to thousands of dollars, and very quickly. Furthermore, a home can be repossessed or foreclosed on by the mortgage loan lender if the home owner defaults on the mortgage. In comparison, stocks, bonds and mutual funds only have to be kept until they appreciate in value.

Sources

USA Today

Reuters

Federal Reserve on household holdings (PDF – Requires Adobe Reader)

Federal Reserve Flow of Funds Accounts report

More than half of Americans have insufficient amounts saved for retirement. Photo Credit: Miki Yoshihito/Flickr.com/CC-BY

The number of people who feel financially confident about entering retirement are an increasingly small portion of the population. Falling real estate values and a volatile stock market have made soon-to-be retirees fairly nervous. To make matters worse, energy prices could be due for a large increase, and politicians may be gunning for Social Security.

Survey indicates most don’t save enough for retirement

The Employee Benefit Research Institute recently released a survey that found about 50 percent of the people who were surveyed did not feel confident about their finances after retirement, according to USA Today. In the survey, 33 percent said they were “not too confident” and 27 percent they were not confident at all. The survey also found that 56 percent of subjects had less than $25,000 saved or invested for their retirement, not including their homes. And 29 percent had less than $1,000 set aside for retirement. The survey also found that 74 percent of workers planned to find other work post retirement, and 22 percent said they have major debts.

Traditional bedrocks of retirement not so solid

One of the traditional foundations of a solid retirement plan is real estate. Some people finish paying off their homes before retirement and thus don’t have to worry about paying for housing. Homeowners also have the option of pocketing the cash from selling their homes. However, home values have fallen 31 percent since the pre-recession peak, according to CNN. Since it is also being predicted that real estate values will fall again, or “double dip,” people staring down the barrel of impending retirement are not likely to realize nearly as much of a profit from the sale of their homes as they planned. Since very few people ever pay off a mortgage in full, the profit realized from the sale of a home is likely to be very modest in the current market.

Social Security could be in Congressional sights

The climate in Washington D.C. is currently favors cutting spending. The largest single budget item, Social Security, ran a deficit last year for the first time in more than two decades, according to MSNBC and will need an overhaul before it depletes all the surplus cash in the Social Security trust fund in 2037. There is a lot of speculation that the Social Security Administration is going to experience major cuts, especially in benefits, in the near future as the Baby Boomers will put further strain on the national pension plan. Few workers enjoy a traditional pension, or defined benefits pension plan that lasts for life upon retirement. Only 33 percent of private sector workers had that luxury in 2005, according to Forbes. As Social Security becomes less dependable and investments like real estate become less valuable, retirement may soon become a luxury reserved only for the wealthy.

Sources

USA Today

CNN

MSNBC

Forbes

Consumer lending, especially for housing, has been slow to recover from the recession. Image from Wikimedia Commons.

Consumer lending — loans lent to individuals — has been slow to recover from a two-year lull. Loans such as mortgages, auto loans, home equity lines of credit and personal loans aren’t impossible to get but are harder to get approved for. Banks are loathe to repeat mistakes that made them run for government cover.

Federal Reserve data indicates borrowing has slowed

Data compiled by the Federal Reserve indicates that debt levels from consumer loans have been falling since the summer of 2008, before the recessionary period began, according to Bloomberg. Total consumer debt, which includes most loans that lenders make to consumers such as personal loans, installment loans and auto loans, but excludes mortgages, stands at $2.4 trillion. That is 6.6 percent below July 2008, the peak period before the recession. Debt from housing loans has declined by more than $530 billion since 2008 with $10 trillion in housing debt still owed by homeowners in the United States. Fed Chairman Ben Bernanke was recently quoted as saying that conditions for credit markets were tight and that he didn’t expect a significant turnaround for some time in the housing market.

Housing market still lagging

The recession began in the housing market, and the return to healthy levels of activity in the housing market has been pursued for some time. Though improvements have been made, there have also been setbacks. From December 2010 to January 2011, home sales increased by a modest 2.7 percent, according to MSNBC, but the share of first time home buyers was only 29 percent of all purchases. Foreclosure properties made up 37 percent of the homes that were sold, and 32 percent of all purchases were made with cash. Given that a high number of foreclosure properties are being sold, a lot of purchases are being made with cash. The Case Shiller Index noted that high-end home sales are rising again, according to CNN, and there is every indication that this is a fantastic market for investors, not for prospective middle-income homeowners.

New models emerging

An increasing amount of regulations, such as the CARD Act and the proposed cap on interchange fees, makes it harder for large financial institutions to be able to turn the kind of profits they are used to. Some consumer credit may not be as easy to come by in coming years. For instance, since the CARD Act was enacted, free checking accounts have been disappearing from major banks, and JPMorgan Chase has been hinting at capping debit card purchases at $50 to $100 if the interchange fee cap is passed.

Sources

Bloomberg

MSNBC

CNN

A person could buy real estate for dirt cheap through GovSales. Image from Wikimedia Commons.

Buying a home is a huge decision, but that doesn’t mean that one must always pay what agents would like them to. There’s a way to buy real estate ridiculously cheap, no matter where you live. Try looking at real estate being offered by the United States Government.

Uncle Sam will be agent and loan lender in one

The government of the United States is indeed one of the largest, if not the largest, real estate agent in the nation. It is also one of the biggest loan lenders, too. Federal Housing Administration, Veterans Administration and other installment loans for purchasing homes or other property are lent all the time by the government. For the past few years, Uncle Sam started selling houses, too. During the administration of President George W. Bush, the Office of Management and Budget asked all federal agencies to catalog all assets like property, equipment and so forth that they held, according to CNN. Holdings of equipment or property that weren’t being used or wouldn’t be used are now sold through the General Services Administration.

GovSales offers homes to lighthouses

The General Services Administration, or GSA, maintains an auction site at Govsales.gov – and there are some seriously cheap prices on real estate. Former industrial properties and government buildings from office space to lighthouses are available to the highest bidder. There are also some incredibly low-priced residential listings as well, especially former Housing and Urban Development properties. For example, one listing is for an HUD property in Birmingham, Alabama, where a 4 bedroom, 2 bathroom home is listed for sale at a mere $35,000. Granted, some repairs may need to be done, but a buyer could get a loan through the FHA.

Plenty of other stuff, too

GovSales also has cars, trucks, computer equipment, boats and just about everything else the government has in surplus. It is an auction site, so interested buyers will need the cash on hand to make the purchase. That said, a person can save some serious green by buying from Uncle Sam.

Sources

CNN

GovSales

Imagine your Kansas free land. (Photo Credit: CC BY/Adam Sparks/Flickr)

According to the Department of Agriculture, there are 386 U.S. counties where residents consistently reside in poverty. Of those, 340 are of the rural variety. In order to stimulate rural economic growth, some of these counties offer free land programs. Web sites including Kansas Free Land offer prospective homesteaders a means to take advantage of available free building lots, with the hope that the infusion of tax dollars and purchasing power will give communities a lift during the recession.

Support rural America with Kansas Free Land

Aside from being suitable for agriculture, ranching and other endeavors, Kansas Free Land gives potential homesteaders the opportunity for a fresh start, far from the hustle and bustle of city life. From Atwood to Osborne and Plainville to Chetopa, numerous Kansas cities are offering Free Kansas Land plots, many of which are located within range of major interstate highways. Links to individual real estate company websites are provided at KansasFreeLand.com. Residential and commercial options are available.

eHow advises that those serious about taking Kansas Free Land do the following:

• Decide how much to spend on a house before you move
• Get pre-qualified for a mortgage once you’re certain
• Be prepared for paperwork and credit checks

Taking advantage of Kansas Free Land

eHow advises those who are serious about the opportunities available to begin by researching the various communities where Kansas Free Land is available. Talk to locals, visit the towns and get the lowdown from law enforcement on safety. Each small town has unique local color and history, so research and interviews can prove useful in sorting things out. Wilson, for instance, is known as the Czech Capital of Kansas, while Marquette is only a few minutes away from Lindsborg, aka Little Sweden. For those with more of an interest in non-human creatures, Ellsworth, Kansas, was reportedly a wild cow town during the 19^th century.

Other benefits offered with Kansas Free Land

Depending upon the city you choose, Kansas Free Land may come with other bonuses. Some examples are property tax abatements, down payment assistance or waived loan fees on homes, and even the option to move a modular home onto your Kansas Free Land.

Sources

eHow: “How to Get Free Land in Kansas”

Kansas Free Land

USDA Economic Research Service

Profile of a Kansas ranching family

The real estate market hasn't completely burned to the ground. It's showing some signs of life. Image from Wikimedia Commons.

There doesn’t seem to be a lot of good news when it comes to real estate in the U.S. However, there is a scant glimmer of hope amid the doom and gloom. It turns out that U.S. home prices have been rising, if only slightly, for the last few consecutive months. The Case Shiller Price Index has been showing slight upward trending of home prices, and a gain was recorded across 20 cities for homes sold between May and June 2010. Some good news is appreciated, as real estate is one of the most depressed markets in the U.S. currently.

Slight gain in home prices

Standard & Poor’s Case Shiller price index, which tracks real estate activity in 20 cities, has showed a gain in home prices in the second quarter of 2010. According to the New York Times, the second quarter posted a 4.4 percent gain in home prices. The first quarter of this fiscal year saw a fall in home prices of 2.8 percent. Also, home prices for second quarter of 2010 are 3.6 percent higher than for second quarter of 2009. For July, home prices rose 1 percent over June.

There is a catch

Along with the rise in home prices, sales are trending downward. The homebuyer tax credit helped to spur home sales, but once the credit expired sales began to drop off. It’s likely that home prices will fall again. Economist Karl Case (for whom the index is named) said that while some of the data was positive, a stabilization of financial markets had not occurred yet, according to Bloomberg. Case thinks it will be another year or so before a more stable market emerges, and begins to grow again.

At least it was good news

The bottom line is that the homebuyer tax credit gave a temporary, which is to say artificial, boost to home sales, and also home prices. A truer state of the market can’t really emerge until governmental encumbrance has been removed. However, on the plus side, things are better than they were a year ago.

Sources

New York Times

Bloomberg

The U.S. housing data indicates demand is drying up and no one feels safe enough to buy. Image from Wikimedia Commons.

Since the recession that began in 2008, housing and employment  numbers have been watched the closest. A new round of U.S. housing data has just been released by the Commerce Department. Fears that figures such as existing home sales and new home sales had been spurred by the homebuyer tax credit were more or less confirmed. The news caused a drop in stocks on the market. All signs indicate that the economy is nowhere near to recovered.

U.S. housing data indicates slow growth

The U.S. Department of Commerce keeps track of U.S. housing data. The report for the month of July has just been released. According to CNN Money, there was one modest glimmer of hope. New home starts, or beginning construction of new homes, increased by 1.7 percent from June to 546,000 for July. However, new home starts are down 7 percent since July of 2009.  Housing construction permits fell by 3.1 percent from June to July 2010 and have fallen 3.7 percent since July 2009. Construction of new single family housing fell 1.2 percent from June to July.

Slower to sell

Sales data for the real estate industry indicate that the tax credit was all that was holding up previous existing home sales and other home sales figures. According to Bloomberg, existing home sales fell by 27 percent between June and July 2010. Since July 2009, they have fallen 26 percent. Predictions were for a drop, but not nearly that large a drop. The current supply of available houses on the market is the highest since 1983. Of the homes that did sell, 22 percent had been foreclosed. The Obama administration has pledged a few billion dollars more in stimulus funding to try to keep foreclosures down.

The market slides on housing data

The doom and gloom of the U.S. housing data and existing home sales triggered a slide in stock markets. According to the Wall Street Journal, the Dow Jones fell 1.2 percent, the Nasdaq fell 1.5 percent and Standard & Poor’s fell 1.3 percent in the wake of the dismal reading. It appears the stimulus programs have done little other than put taxpayers on the hook for billions in debt while providing a temporary boost to a few.

Further reading

Wall Street Journal

Bloomberg

CNN Money

Click Above To Check Out The Free Property Look Up Calculator Now!

The housing bubble has burst, and things are difficult for scores of homeowners nationwide. According to MSNBC.com, a direct result of the real estate market crash is that up to 60 percent of America’s taxable property may be over-assessed. Owners of such over-valued properties are paying thousands of dollars more on their property taxes than they should, based on these inflated assessments. It is an outrage that many consumers begrudgingly accept – yet it doesn’t have to be that way. With the easy, inexpensive assistance of LowerMyAssessment.com, homeowners can prepare a professional-quality property tax assessment appeal that can save big money on property taxes.

If your property is over-assessed, go to LowerMyAssessment.com

The real estate crash and subsequent recession have made the need for accurate tax-assessed valuations more important than ever for financially conscious consumers, and LowerMyAssessment.com can help. Jacqueline Byers, director of research for the National Association of Counties in Washington, D.C., told the Wall Street Journal that “If you have a three-year period between assessments and the last one was in 2007, your assessment is still at the top of the market.” That may no longer be accurate and mistakes are often made, reports Bankrate.com. With LowerMyAssessment.com, homeowners can challenge their outdated or inaccurate assessment.

Why make it more difficult and more expensive than necessary?

A property tax assessment appeal involves a detailed filing process with very specific time windows (as small as two weeks in some areas). It can be a dauntingly complicated task to undertake alone. Hiring your own property tax attorney or real estate appraiser costs several hundred dollars, if not more. With LowerMyAssessment.com, the process is not only simpler, it is much less expensive. Start with the free online calculator and you’ll know immediately whether you qualify for an appeal. No personal information is needed until you agree to use the LowerMyAssessment.com program.

Three ways to lower your property taxes

Upon qualification, LowerMyAssessment.com offers you the following three levels of service:

• Basic $39.95 – LMA provides the necessary valuation data in the form of a Fair Value Report. The included appraisal is adjusted to the correct “as of” date, depending upon codes for the county in which the property is located. All you have to do is complete the appeal form
• Deluxe $79.95 – The appropriate official property tax assessment appeal forms for your county are completed by LMA and delivered to you with the above Fair Value Report. Envelope and label are ready; all you have to do is mail it to your local property tax authority
• Premier $299.95 – If you own a higher-value residence or rental property, LMA makes arrangements for a local professional appraiser to prepare a custom report for your property. All reports and forms from the above plans are included

Buying your way into a property tax appeal win is unnecessary

Why spend thousands of dollars on a property tax attorney? LowerMyAssessment.com can do the job for as little as $39.95, saving you both time and money. With the Deluxe and Premier packages, all you have to do is sign, affix a stamp to the envelope and mail the appeal form. It’s that simple. If you have any additional questions, contact LowerMyAssessment.com via email or their contact form. Via phone, fax and postal mail, contact the company as follows:

Toll-free: 877-908-7191
Fax: 877-938-1942
Mail: P.O. Box 36567, Lynnwood, Wash. 98036

Sources:

Bankrate.com
LowerMyAssessment.com
MSNBC.com Real Estate
Wall Street Journal

Mortgage rates may be low, but that's meaningless unless people want to buy homes. Image from Wikimedia Commons.

As the real estate market has been closely watched, there are numerous indicators to keep an eye on, one of which is overall mortgage rates — the average interest rate charged on a mortgage loan.  Despite a slight spike in existing home sales, overall mortgage rates are staying down. This may sound like a prelude to greater numbers of home purchases. However, coupled with higher unemployment, it may mean a recipe for a longer road to recovery.

Mortgage rates down to historic lows

Industry mortgage rates are down to near historic lows.  According to the Wall Street Journal, it was anticipated that rates would rise after the Federal Reserve stopped purchasing mortgage securities, but that did not happen. Instead of rising to the predicted 6 percent, the rate dropped through the month of May to 4.86 percent.  In fact, by the middle of May, the number of applications for loans for purchasing new homes was at its lowest level in 13 years.  If rates continue to stay this low, people might be able to avoid needing mortgage loan modification.

Unemployment comes into play

The rates may be down at this point, and they are likely to stay that way if demand stays low because of high unemployment rates. According to CNN, it is believed that the spike in existing home sales had everything to do with the first time homebuyer tax credit, and once that expires, there will be less demand.  According to the WSJ piece, even if there are fewer people looking to borrow, those with existing mortgages would do well to refinance now, while rates are low.

The future for housing

For now, it is apparent that demand was temporarily boosted by the tax credit being offered for homebuyers.  The market currently has lower levels of demand, and as demand lowers, so does scarcity and therefore price. However, this lower demand is coupled with more difficult access and less willingness to commit to a mortgage because of the job market. This means that the housing market may stabilize at a lower point, and we may not see a real estate market at previous levels for years to come.

Hey, if you like Dutch Colonials, the Amityville Horror house might be just what you're looking for. Image from Wikimedia Commons.

Looking for real estate?  How about a three story, six bedroom Dutch Colonial with a gambrel roof? It also has a swimming pool and a boat house right on the water. The house is located in a small sleepy Long Island suburb. It’s right on the Atlantic Ocean so the beach is never far away.  It’s going for $1.15 million.  Oh, and it’s the house where  “The Amityville Horror” took place.

‘The Amityville Horror’

“Amityville Horror” the book focuses on the experiences of George Lutz and his wife Kathy Lutz. They bought this Dutch Colonial house for rock bottom prices in 1976, after the house had been vacant for more than a year. The couple learned that the house was where Robert DeFeo Jr., shot and killed his parents and siblings. It cost the Lutzes just $80,000. For a house of this type, that’s the kind of price that guarantees most people won’t need payday loans to keep up with the payments. But the Lutzes left the home with their children in less than a month in terror, claiming strange occurrences tantamount to either a haunting or demonic possession in the home.

Off to the movies

After the incidents involving the Lutzes took place (allegedly), a book was written about the events. The book in question, “The Amityville Horror” has come to be viewed as not-quite-accurate. Regardless of the book’s truthfulness, a film was made in 1979 and sequels followed. In 2005, a remake starring Ryan Reynolds was released.  The interesting thing is that the Lutzes left in 1976, and a new owner, James Cromarty, moved in the next year and lived there for a decade. According to him, “Nothing weird ever happened, except for people coming by because of the book and the movie.”

Homes at killer prices

This is something the National Association of Realtors probably won’t tell you, but when a murder takes place at a residence, the bank or loan company holding the mortgage will list it for sale at rock bottom prices.  The idea is to sell it quickly and quietly.  Don’t believe me? Check this article out at HousingWatch.com.  The only thing you have to ask yourself is if you’re alright with knowing someone met a grisly end in your living room.

Fannie Mae Headquarters. Image from Wikimedia Commons.

Mortgage giant Fannie Mae just announced record losses, and the company is asking for another $8.4 billion from the government to stay afloat. Fannie Mae has been in conservatorship — or possessed by the federal government — for some time.  Its losses have grown almost exponentially, and have posted the 12th consecutive quarterly loss.  Clearly, any fast cash from the taxpayers to prop up the mortgage house has not been put to good use, and this ship is sinking fast.

Fannie Mae posts 12th consecutive loss

For the 12th consecutive quarter, Fannie Mae has posted a loss. Not only that, but the mortgage financing giant has seen about $148 billion go down the drain over that time. That’s almost the entire GDP of Chile. Though it may seem the effects of the housing recession and bailouts are already forgotten by Wall Street, Fannie Mae and Freddie Mac are still troubled. The losses posted by Fannie Mae for this quarter, according to the Wall Street Journal, are only $11.5 billion, contrasted to first quarter 2009 losses of $23.5 billion.

Fannie Mae under conservatorship

In 2008, as the housing recession threatened to collapse the entire U.S. financial system, Fannie Mae and Freddie Mac were both placed in conservatorship. Essentially, they were seized by the Federal government because they couldn’t stop losing money.  Because Fannie Mae had assumed the risk for so many mortgages, as the numbers of defaults rose, so did the company’s losses. A recent article on CNN Money reports that the rate of foreclosure has slowed in some areas, but still managed to rise by 16  percent.

The impact

Fannie Mae and main rival Freddie Mac are huge mortgage lenders in the U.S., and they hold trillions in mortgage assets.  Portions of those assets have become toxic.  Mortgage loan modification will only do so much good, and if a mortgage becomes underwater, the homeowner and the bank lose money. If the trend of real estate losing value and massive foreclosures doesn’t reverse course, getting a mortgage loan will be difficult for anyone.

The silver lining

According to the same piece in the Journal, Fannie reported that 5.47 percent of its loans were 90 days past due in March. In February, it had been 5.59 percent. This means some modest improvements are beginning to happen. However, the question becomes how long before small improvements add up to a positive direction for the real estate market overall.

The S&P Case Shiller home price indexes have shown some gains, though still depressed. Photo from Wikimedia Commons

The S&P Case Shiller home prices indexes have reported gains, of sorts, in home prices.  The price indexes in February showed a rise in home prices compared with the previous February, showing a modest spike, but the prices were still technically modestly declining.  Though the housing market is not fully recovered, it is believe to be showing signs of improvement.  With home prices still somewhat declining, some people are looking into mortgage loan modification to get out from underwater mortgages.

Case Shiller reports first gain since 2006

According to MarketWatch, the current spike in February home prices in major metropolitan areas was the first month of climbing home prices since December 2006.  Home prices gained 0.6 percent in February compared to February of a year ago.  The bump in home prices is credited for that, as many improvements in real estate these days are, to the homebuyer tax credit. The prices aren’t low enough to buy a home with a small loan, but they are low enough to stimulate some into buying.

But there is also bad news

The bad news is that home prices are actually still declining.  The same study indicated that despite the increase in home prices between February present and past, home prices actually are still declining.  February home prices were actually down 0.9 percent from January. According to CNN Money, the Case Shiller home prices indexes for 18 of the 20 cities tracked experienced monthly declines in home prices, and six were at new lows.

Economic recovery can has no cheeseburger yet

David Blitzer, the chairman for the index committee at S&P said that the data would “point to a risk that home prices could decline further before experiencing any sustained gains.” He also indicated that true recovery of the housing market hadn’t truly begun, though it has shown some modest improvements.  There were recent spikes in home sales, but home sales at depressed prices only mean people are buying lower.  (Granted, as more people buy low, that will start trending prices upward eventually.)

So where are we now?

The S&P Case Shiller index of home prices is about where it was in fall of 2003.  The high point was June of 2006, and since June of 2006, home prices have fallen 32.6 percent.  It may be some time before a full recovery is realized.

Existing home sales rose sharply in March. Image from Wikimedia Commons.

Since the Great Recession had origins in real estate (at least partially), existing home sales have been of great interest. The existing home sales rose by 6.8 percent in March.  It’s believed the first time homebuyer tax credit had a hand in the spike.  Because so many people had been hard up to get the financing, and others went running for mortgage loan modification, any modest gains in real estate are welcome signs of relief.

Existing home sales reflect inventory

Existing home sales are defined as sales of single family homes that are not new construction — any single family residence not brand spanking new, in other words. The National Association of Realtors recently released its monthly report concerning existing home sales, and things are starting to look up.  More homes are available, which means lower prices.  Not that you’ll ever be able to buy a home for a couple of payday loans worth, but the sun is shining, and people are making hay, so to speak.

Inventory is up as well

According to CNN, home inventories rose by 1.5 percent, with an inventory of 3.58 million homes available.  The median home price rose 0.4 percent to $170,000.  The supply of homes (how long it would take to sell inventory at current pace) dropped from an 8.5 month supply in February, to an 8 month supply for March. Single family home sales rose 7.3 percent, to a rate (homes sold per year) of 4.68 million, up from 4.36 million in February.  According to the NAR report, 44 percent of sales were to first time homebuyers, up from 42 percent in February.

Why the sudden boom?

Late winter home sales are often affected by late winter storms, and January and February had some doozies.  Also, the first time homebuyer credit is believed to have affected sales.  An $8,000 credit off the tax bill may have encouraged some homebuyers who were on the fence.  NAR Chief Economist Lawrence Yun said the tax credit “has been a resounding success.”

Distressed homes or foreclosures

Foreclosed or distressed homes accounted for 35 percent of total sales.  Lower prices make them more attractive to first time buyers with hesitancy over the market.  Regarding foreclosures, Yun said, “In fact, foreclosures are selling quickly, especially in the lower price range that are attractive to first time homebuyers.”

So is the housing recession over?

The way markets work is that conditions constantly cause adjustments – supply and demand, Econ 101 kind of stuff.  However, depressed market conditions are guaranteed to eventually reverse – as demand lowers, supply increases, and prices lower. Lower prices mean people who want to buy will because they’re getting their desired commodity for a discount. Eventually, supply decreases and demand, and thus price rise again. The market is recovering naturally, as it always was going to.

February home sales are up, but remember it could just be a reflection of a new housing bubble. (Photo: ThinkStock)

Plenty of Real Estate experts have gone on record that a new housing bubble is forming, but others view increased February home sales numbers for the U.S. as a positive sign that the market is surging again. According to the National Association of Realtors, home sales in February 2010 rose 8.2 percent. Analysts had expected sales to continue to flat line, as credit for too many today is limited to the payday loan. This was in spite of the tax credit for home buyers. The tax credit was among the driving forces for sales increases in fall 2009, but the New York Times says that it has been a lesser force this spring.

Do February home sales equal a second surge?

National Association of Realtors Chief Economist Lawrence Yun says it is possible. A second Real Estate market surge would go a long way toward stabilizing home prices, placing that market very much on the same track as U.S. employment, where the service sector has been shown to be experiencing resurgence, even if it still has some distance to go before it reaches the break even point. The Institute for Supply Management also indicates that non-manufacturing jobs and exports are on the rise. Yet this does not take into account the perpetually “underemployed,” who have difficulty making ends meet and rely upon occasional payday loans.

February home sales: Good news for dark times

Let’s be clear about this: the increase in February home sales is all relative, for the U.S. Real Estate market is still in a deep rut. Foreclosures are still on the rise. Yet the February home sales report is a glimmer of hope. Areas of the country that experienced bad weather even showed an uptick; according to the Times, the Northeast and South – areas hard-hit by snow this winter – showed a nine percent increase in sales.

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Buying Your First Home

Buying a home is an exciting time, but it can be a bit nerve-wracking – especially if you’re a first-time homebuyer. The following guide will give you a rough idea of what to expect throughout the process:

Your First Steps

• Determine how much mortgage you can afford.
  Buying a home isn’t just substituting your rent payment with a mortgage. Spend some time looking at your budget to see how much you can afford to spend on housing each month – just don’t forget to include things like taxes, homeowner’s insurance and a separate savings fund for major home repairs you may need down the road.

• Get pre-qualified for a mortgage.
  Before you even start looking at homes, you’ll want to sit down with your banker or a representative from a mortgage lending company to get pre-qualified for a loan. Basically, the lender will review your finances and determine how much of a loan they’re willing to give you. Knowing this number will help you narrow down the houses that will fit within your budget.

Moving Forward with the Home Buying Process

• Choose an agent.
  As a first-time home buyer, going at it alone can prove overwhelming. Look for an agent who’s familiar with real estate trends in the area and who has the necessary connections to get you into the home of your dreams. This is a major decision, so don’t make it lightly!

• Begin Searching for Homes.
  Yes, this is the fun part – the one you’ve been waiting for since you started thinking about buying your first home. Your agent will help you narrow down the pool of available homes, but you’ll still need to visit each home for a tour. Throughout this process, take careful notes and plenty of pictures to use when coming to a final decision.

The Final Stages

• Make an Offer.
  Once you’ve chosen your ideal home, your agent will help you prepare your offer. He or she will determine a good starting point for your price negotiations and will present your offer to the seller’s agent. If the offer is rejected, your real estate agent will help you to figure out your next steps, whether it’s submitting a new offer or moving on to another home.

• Wrap up the Process.
  Even after your offer has been accepted, you still got work to do. Throughout this period, you’ll need to complete a home inspection and follow up on your closing paperwork. In these final steps, your real estate agent will be an invaluable resource in keeping track of all the paperwork that’s necessary to complete the purchase of your first home.

Finding the Right Home

Of course, the home buying process rarely proceeds according to these six, straightforward steps. As you move forward, you may run into complications, such as a rejected bid or a failed inspection. However, with the assistance of a qualified real estate agent, it is possible to navigate these challenges until you reach your end result – a home you can call your own.

A decade ago consumers were borrowing money without thinking. They stretched their finances for no real reason other than because they could. Lenders played along and gave out huge dollars without fully researching how the money would be repaid. It sent the lending world into a tailspin, and consumers struggled to repay loans. According to the National Association of Realtors, in 2007, 12% of all residential sales were for vacation homes and 21% were for investment properties. Many people took on too much debt and now buyers are under financial strains trying to manage it.

Managing too much real estate debt

For anyone who is strapped, there are options. Government-sponsored foreclosure programs are aimed at saving primary homes. Bankruptcy protection is on the rise. Here are some additional ways to manage.

• Refinance loans. Mortgage rates are historically low and all homeowners in trouble should at least consider a refinance. At minimum, a good refinance can cut down a mortgage payment by a few hundred dollars. Of course, some homeowners, whose home’s value has declined considerably, may not have a refinance option. According to Milo Benningfield, financial advisor in San Francisco, “Typically, lending companies won’t offer a refinance loan for more than 80% of a home’s value. That leaves owners who owe, say $200,000 on a condo now worth $170,000 without the ability to refinance.”

• The short-sale. There is also the short-sale option. When a home’s sale price is less than the mortgage total, owners can ask the lender to accept sale proceeds, even when they are less than the total owed. Normally, it’s easier to short-sell a primary home. Chicago attorney Joseph Nery said, “They are being more flexible when they think the only other option will be the customer forecloses on the property.” He also added, “A lender may also try to recoup their shortfall by looking to borrowers’ other assets like equity in additional properties, savings, and even retirement accounts.”

• Modification. The loan modification has grown in popularity in the last few years with President Obama’s push for aid to homeowners in trouble. Making a modification work relies heavily on the person borrowing money having the ability to prove their income is sufficient. The investor has the decision-making power to accept or reject the modification. Nery added, “More modifications are happening, but they involve a reduction of principal or interest rate charges, or other changes like lengthening the term of the loan to make payments more affordable.”

• Bankruptcy. Some consumers are seeking bankruptcy protection to save their homes. Areas like Las Vegas are seeing soaring numbers when it comes to bankruptcies. The market in Nevada is struggling, and according to a recent survey by RealtyTrack, over 60% of homes in the state are in default. Nery said, “Bankruptcy should be a last resort, but if someone reaches that point, they are no longer worried about their credit. They are in survival mode.”

Struggling with overwhelming debt

Borrowing money used to be a simple process. Lenders were quick to qualify consumers without thorough examinations of their finances. In today’s world, however, many people are struggling with that huge debt and looking for ways to manage. Though it is a difficult situation, there are ways to manage an overwhelming debt, but each one comes with its own problems to overcome.

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Buying a home can be a challenging journey – especially if it’s your first time on the market. For this reason, many people choose to enlist the services of a qualified real estate agent to help navigate these waters. Because you’ll come to rely on this person to help you through many complicated issues, it’s important to spend some time finding the agent that best meets your needs. Don’t just choose the first person whose advertisement you see or, worse, the person whose picture is on the “For Sale” sign of the house you’ve fallen in love with.

Enlist Your Own Agent

If this is your first time buying a home, you might be wondering, “Why shouldn’t I just call up the agent that’s pictured on the For Sale sign? Wouldn’t that be easier for everyone involved?” What most people don’t realize is that there are typically two agents involved in a real estate transaction – one representing the buyer and one representing the seller. The agent listed on the For Sale sign is representing the seller, and he or she is contractually obligated to look out for the seller’s best interests.

What this means is that if you approach this person to represent you as well and you tell the agent how much you can afford to spend on your new home, the agent is required to report that back to the seller. Obviously, you want someone who’s going to look out for you in that way. You need a buyer’s agent – but how do you go about choosing one?

Look for Someone with Experience

Now, this isn’t to say that there aren’t plenty of young, up-and-coming agents out there, but if you’re a first-time homebuyer, you really need to find someone with experience – not just as a real estate agent, but also with the market where you’ll be buying. An experienced agent will know more about the different homebuyer incentive programs available today, as well as how the neighborhoods in your target city have changed over time. Experienced agents have also been through more transactions than their newer colleagues, so they’ll be better prepared to help you through any unusual situations you may experience.

Ask for Referrals

The easiest way to find a good, experienced agent is to ask friends and coworkers which agents they’ve worked with in the past and whether or not they would recommend them to you. Any agent can put together a great looking website or make bold claims in their advertising materials, so you need to go off of more than just paper. If possible, get recommendations for several different agents and then set up consultations with each agent individually. Take the time to prepare some questions ahead of time and give the agent as much information about your housing needs as possible to see what he or she can come up with. You’ll likely find that one is a better fit for your personality and your needs throughout the home buying process.

Now that Americans are getting back to buying and selling real estate, many are willing to use instant cash loans to fund various unexpected costs. One of the biggest concerns for any home seller is their appraisal. Although the price of a home can be based on the market assessment value, the appraisal can make, or break, a home price. Here is a common scenario in the world of selling real estate: A home is listed for $450,000 and the buyer offers $400,000. They eventually settle on a price of $425,000. Then just prior to closing, an appraisal is done where the maximum the mortgage company is willing to lend is $410,000. The buyer and seller are now left with a shortfall of $15,000. Walter Molony, senior public affairs specialist with the National Association of Realtors, said, “This has proven to be a fairly significant problem in today’s economy.”

What sellers can do

The question in this case is: What can sellers do to avoid the shortfall? A new problem more and more sellers are facing is the short appraisal. The recession created a decline in overall house values throughout the country. With the huge number of foreclosures in most neighborhoods, it’s difficult for appraisers to come up with comparable values that are accurate. Add to the mix the relative inexperience a lot of appraisers have with the new unstable market, and disastrous appraisals are imminent. Molony added, “Appraisers can be uneducated to begin with, but add to that the post-recession market and it’s a formula for problems.”

Buyers need to take proactive steps to protect themselves from the short appraisal. When talking with lenders, buyers can specifically request appraisers who come from their county. This can be helpful because the appraiser may have more experience in the area and have inside information on what the true neighborhood is like. Buyers can also request that the appraiser is certified. Various organizations like the Appraisal Institute’s Senior Residential Advisor or Appraisal Institute certifications can both signify a more intense education on how to appraise properties. Finally, buyers should also meet with their appraiser as they are doing the inspection so they can share information on the area. Leslie Sellers, president of the Appraisal Institute of Chicago, said, “Many appraisers are just pulling data out of MLS, or Multiple Listing Service, or off the deed at the courthouse and not checking it out. Most good appraisers will appreciate the information.”

The instant cash loan and appraisals

More homeowners are using instant cash loans to fund small house improvements. To make the process of an appraisal as simple as possible, homeowners are cautioned to do their own walk-thru of their home. Sellers added, “It can be helpful to have a few candid family friends walk through the house as if they were going to buy… let them be impartial and listen to their criticisms. Then fix the issues as quickly as possible prior to the assessment.” The key to pre-appraisal home improvements is to have the work completely finished before the assessment and to keep on budget. Small things like cleaning clutter, buying organizational tools, putting items in offsite storage and keeping things in order can make a huge difference when an appraiser comes in. Coupling affordable updates with first-hand information on the location of the property can greatly aid the appraiser in formulating their final documentation on the home.

Help the appraiser all you can

In the end, selling a house can be difficult in today’s market. If you are looking to sell, remember that there are some wise things you can do to help your appraiser target an accurate sales figure. The number he or she comes up with will dictate how much of a loan will be needed to get the property sold. For this reason, it is always best to try to offer as much information on the home as you can. If you can get as fair a price as possible, it may mean the difference between having to eat a large loss and needing small instant cash loans to handle the shortfall.