Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas.
Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase. The other 19 markets averaged a 1.23 percent decline between January and February.
However, that’s not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.
Unfortunately for active home buyers and sellers, year-over-year data isn’t all that helpful when making a real estate decisions. It’s the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.
The rosier, annualized data published this past week just doesn’t capture the reality of what was the February 2010 market. And even then, the data is somewhat useless because it’s from February and May will be upon us next week.
Case-Shiller is on a 2-month lag — hardly reflective of the “right now” of real estate in Cincinnati.
When you’re looking for real estate data that actionable, consider using sources that are more “real-time”. A real estate agent may be the right place to start. Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.
The Federal Reserve adjourns from a scheduled, 2-day meeting today. It’s one of 8 scheduled Fed meetings for 2010.
Upon adjournment, Fed Chairman Ben Bernanke & Co. will release a formal statement to the market. In it, the Fed is expected to announce “no change” in the Fed Funds Rate.
The Fed Funds Rate is currently in a target range of 0.000-0.250 percent.
The Fed Funds Rate is an inter-bank lending rate. It’s also the basis for Prime Rate, a consumer interest rate on which credit card payments are based, among other consumer loans. Prime Rate is equal to the Fed Funds Rate + 3 percent. Credit card rates, therefore, will likely stay flat today, too.
Mortgage rates, however, should change. Possibly by a lot. The 30-year fixed mortgage does not correlate with the Fed Funds Rate (as shown in the chart at right).
The reason mortgage rates will change today is because, in its statement, the Federal Reserve will highlight vrious parts of the economy, identifying strengths, weaknesses and probable threats to growth.
These observations influence investors with a stake in bond markets and future returns and, with Wall Street on edge right now — unsure of whether recent economic growth is a longer-term trend or a short-lived blip – mortgage rates could shoot higher or they could drop, depending on how traders interpret the Fed.
It’s a difficult time to be shopping mortgages in Ohio.
Further complicating matters is Greece’s recent debt downgrade to junk status. A small contagion fear is budding worldwide and, as a result, the flight-to-quality has picked up steam. Mortgage rates are down because of it but could reverse higher at any moment.
Therefore, if you’re actively shopping for a mortgage today, it may be prudent to lock your rate ahead of the Fed’s announcement and any major market reversal. Mortgage rates may fall today, but there’s very little room for them to fall. This is, however, a lot of room for them to rise.
The Fed adjourns at 2:15 PM ET. Call your loan officer to lock your rate.
Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.
In its press release, the FOMC noted that, since March, the U.S. economy “has continued to strengthen” and that the jobs markets “is beginning to improve”. This is a step up from the last meeting after which the Fed said jobs were “stabilizing”.
It also reiterated that business spending “has risen significantly”.
Today’s statement marks the 7th straight press release in which the Fed shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year’s financial crisis.
Threats remain to growth, however. The Fed fingered a few:
Employers are reluctant to hire new workers
High unemployment threatens consumer spending
Consumer credit (still) remains tight
Also in its statement, the Fed re-acknowledged its plan to hold the Fed Funds Rate near zero percent “for an extended period”. This was expected.
Overall, the statement’s tone was positive and the Fed noted that inflation is within tolerance.
Mortgage market reaction has been muted thus far. Mortgage rates in Cincinnati are unchanged post-FOMC.
The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010. The 55-day span between meetings will be the FOMC’s longest of 2010.
The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.
Take a look at the headlines from last Friday:
Sales of new homes rocketed up 27 percent in March (WaPo)
New-home sales rise fastest in 47 years (CNNMoney)
Sales of New Homes Climb by Most Since 1963 (Business Week)
None of these statements is false, per se, but each is somewhat misleading. The biggest reason why March’s New Home Sales was even able to rise 27 percent is because data from the month before it — February — was the worst in New Home Sales history.
In February, new homes sold posted its lowest level in recorded history.
A better comparison would be against March a year earlier; or October 2009, the month before the home buyer tax credit’s initial expiration date.
Against both of those time periods, March 2010 fared well.
Home buyers – first-timers and repeats alike — went under contract last month, taking advantage of the soon-to-expire federal home buyer tax credit program. The credit gives up to $8,000 for first-time buyers and up to $6,500 for repeat ones.
Buyers must be in mutual contract on or before April 30, 2010 to be eligible for the credit, and must closed on or before June 30, 2010.
The New Home Sales data included other strong housing data, too. The current supply of new homes nationwide is at a multi-year low. Along with stronger home demand, this should push Cincinnati home prices higher throughout the coming months.
Existing Home Sales rose in March, as expected. U.S. home buyers closed on 7 percent more homes as compared to February.
Furthermore, versus March 2009 — a month many people equate to the low point of the U.S. economy — sales volume was up 16 percent.
“Existing home sale” is the technical term for a home resale; a home previously inhabited by a person. It’s the opposite of a “new home sale” which is a sale of a newly-constructed home.
Existing Homes Data is tracked by the National Association of Realtors® and a closer look at the March data reveals some other interesting notes:
Year-over-year sales are higher for the 9th straight month
Real estate investors represented 19 percent of all homes purchased
First-time home buyers account for 44 percent of all buyers
Also worth noting is that the supply of available homes is down on a broader basis. At the current rate of sales, the existing home inventory will be exhausted in 8 months.
Despite banks releasing foreclosures and REO into the Cincinnati market, that’s still one half-month less from February.
When supplies drops, home prices tend to rise. It suggests an underlying strength in housing that should support home prices through the next few months — especially as the home buyer tax credit finishes working its way through the system.
That said, real estate markets are local. You shouldn’t assume that what’s happening on the national level is also happening here at home. Be sure to check with your real estate agent about local market conditions before making a decision to buy or sell.
More than 60 percent of U.S. homes are “over-assessed”, says an industry trade group. Homeowners in Cincinnati pay more in property taxes than they otherwise should have to. You might be one of them.
Have you considered fighting your real estate tax bill?
When to file your tax bill dispute for the best chances of winning
How to pull your “property card” and check for tax bill-raising errors
What to do if the taxing authority turns down your request
Most importantly, you’ll learn that don’t need to hire an attorney to fight your tax bill. You just need to be prepared. Do your research and make your case. It’s estimated that nearly half of all contesting homeowners are successful.
Mortgage rates and home affordability have improved lately, thanks to an unlikely ally — Mother Nature.
In the 7 days since Iceland’s Eyjafjallajökull erupted, ash clouds have grounded planes, disrupted businesses, and stranded exports in warehouses worldwide.
It’s a drag on commerce that’s spilled over onto Wall Street. As experts debate the potential for future seismic activity, traders are taking some of their investment risk off the table.
In trading circles, it’s called “safe haven buying”. When the market gets cloudy, investors often move their cash into relatively safe assets. This includes government-backed securities — mortgage-bonds among them.
Demand for bonds rise, pushing up prices and driving down rates.
Conforming and FHA mortgage rates in Ohio touched a 3-week low earlier this week.
Volcanic eruptions and like natural disasters remind us: mortgage rates change for all sorts of reasons. Some we can predict, most we cannot. There’s literally thousands of influences on the U.S. mortgage market.
If you’ve been shopping for a home or floating a mortgage rate, luck’s been on your side. Mortgage rates have fallen post-Eyjafjallajökull. However, as ash clouds dissipate and business resumes worldwide, investors will regain their collective appetite for risk and safe haven buying will reach its natural end.
When that happens, mortgage rates will rise.
Therefore, use the seismic uncertainty to your advantage. Consider locking your mortgage rate sooner rather than later — while rates are still low.
After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.
It’s yet another signal that the housing market in Cincinnati and nationwide is stabilized.
A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month.
This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago. Revisions to prior data have all been higher, too.
Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008.
Housing permits are an important data point in housing because permits are precursors to actual housing starts. According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance.
Therefore, because March’s housing permits increased, we should expect Housing Starts to continue to rise into the early months of summer.
This, too, reflects well on housing because the federal home buyer tax credit won’t be in existence this summer. The simple fact the homes are being built now shows that housing is likely to expand even after the tax credit expires.
Non-military members must be under contract by April 30, 2010 and closed by June 30, 2010 in order to claim up to $8,000 in federal tax credits.
Fold-up speakers for your MP3 players? You better believe it. OrigAudio’s eco-friendly Fold-N-Play speakers let you take your favorite playlists on the road to your office, hotel rooms and the beach.
Made from recycled materials, the Fold-N-Play speakers and arrives in a similarly-recycled box. It’s two, flat pieces of cardboard with embedded speakers and an attached cable. There’s no batteries.
All you need is a headphone jack.
Follow the enclosed instructions to convert the speakers into 3-inch cubes of sound. Then, when you’re done, fold them back up and slip them into your laptop sleeve. The 1-watt sound won’t rival a home stereo system, but will outperform most internal laptop speaker sets.
The OrigAudio Fold-N-Play made Time Magazine’s list of 50 Best Inventions of 2009. It sells for $20 per set, or $80 for all 6 available styles.
Each week, government-led Freddie Mac publishes a weekly mortgage rate survey based on data from 125 banks across the country. According to this week’s results, the relative rate of a 5-year ARM in Ohio is extremely low versus its 30-year fixed-rate cousin.
Consider this comparison:
In April 2009, the two products ran neck-and-neck with respect to rates
In April 2010, the two products are split by 0.99 percent
On a $200,000 home loan, that’s a difference of $117 per month to a mortgage payment.
Adjustable-rate mortgages aren’t suitable for everyone, but they can be a terrific fit given your individual circumstance. For example, any one of the following scenarios could warrant a 5-year ARM:
Buying a home with an intent to sell within 5 years
Currently financed with a 30-year fixed mortgage with plans to sell within 5 years
Interested in low payments and comfortable with longer-term interest rate and payment uncertainty
Additionally, homeowners with existing ARMs may want to refinance into a brand-new ARM, if only to extend the initial change date on the current note.
Before opting an ARM or a fixed, speak with your loan officer about how adjustable-rate mortgages work, and what longer-term risks may exist. The savings may be tempting, but there’s more to consider than just the payment.
Foreclosure filings rose close to 20 percent nationwide last month versus February, according to foreclosure-tracking firm RealtyTrac.com, and for the 13th straight month, total filings topped 300,000.
In addition, bank repossessions reached an all-time, quarterly record. Through the first three months of 2010, banks reclaimed more than 257,000 homes.
Nonetheless, 4 states dominated foreclosure activity nationwide.
California, Florida, Arizona and Georgia accounted for more than half of all bank repossessions. It’s a disproportionate distribution of foreclosures. Together, the 4 states represent just 23 percent of the overall U.S. population.
The RealtyTrac report revealed some other interesting statistics, too.
Foreclosure activity was up in 40 out of 50 states last month
Bank repossessions rose 9 percent versus the same quarter last year
For the 13th straight quarter, Nevada topped the state foreclosure rate
Regardless of where you’re buying, foreclosures and REO are making a profound impact on pricing and product. Distressed homes are 35 percent of the overall resale market.
There’s excellent value in foreclosures out there if you know where to look, but keep these points in mind:
Buying bank-owned homes can take 120 days to close or more. Be flexible.
Foreclosures aren’t always listed for sale publicly. Some inventory is privately-held.
Bank-owned homes are often sold “as is”. There may be defects that render the homes mortgage-ineligible.
The REO market can be different from the traditional “existing home” market. Therefore, if you have an interest in buying REO, be sure to talk with an experienced real estate agent first.
The federal home buyer tax credit expires April 30 and the deadline is sparking a home sale surge. It figures to burden real estate, mortgage and title offices nationwide over the next 60 days so plan your closing date accordingly.
Especially because the last Friday in May is the Friday before Memorial Day.
Now, if the connection between the tax credit and Memorial Day is not immediately clear, think of your own office on a 3-day weekend’s Friday. Some of your colleagues take a half-day at work, others take the entire day off.
Office-wide, productivity drops.
The same is true in the real estate space. Offices are short-handed ahead of a holiday so, if you’re under contract for a home and plan to close in May, consider a closing date other than Friday May 28, 2010.
And meanwhile, with 6 weeks until Memorial Day, here’s some steps you can take today prepare for other people’s time off later.
Notify your lender of your planned vacation time between now and your scheduled closing
Purchase a homeowners insurance policy and prepay the first year. Send proof of payment to your lender.
Have Power of Attorney forms lender-approved and signed by all parties in advance, if applicable
Deposit gift monies and/or retirement fund withdrawals into an acceptable bank account, if applicable
Schedule your final walk-through as far in advance as is realistic so there’s time to make “fixes”, if needed
Have your closing funds ready at least 1 day in advance
The tax credit’s expiration is around the corner and as it gets closer, real estate-related businesses are taking on more work. Basic title and mortgage tasks are taking longer to complete and that should persist for a while.
Get ahead of the curve and beat your contract dates handily. Use the checklist above and be responsive to your lender’s requests.
And, if at all possible, avoid closing on the Friday before Memorial Day and even the Tuesday after — it’s when office staffs are at their smallest.
Not all home improvements are created equal. Especially if you’re looking for “resale value” back from your work.
An article from the Wall Street Journal lays it out cleanly. Function beats flash these days so be wary of where you spend.
Environmental upgrades such as home insulation and energy-efficient steel entry doors are recovering a much greater percentage of their cost these days than major remodels including kitchens or bathrooms. This is especially true for homes that are already “over-improved” relative to the neighborhood.
Upgrading the biggest and best homes on the block can be a losing proposition.
The article’s findings include data from groups such as the National Association of Home Builders, Remodeling Magazine, and Consumer Reports. It lists the following home improvements among its top “paybacks”:
Steel entry door replacement : 129% cost recovery
Wood deck addition : 81% cost recovery
Vinyl-replacement window : 77% cost recovery
Energy-efficiency projects also recoup costs monthly in the form of lower heating and cooling bills.
Remodeling Magazine says a larger number of homeowners will remodel their homes in 2010 with less emphasis on upgrading kitchens and bathrooms, and more emphasis on adding new rooms. From an appraisal perspective, this is a terrific way to increase your home’s value — especially if your home’s bed/bath count lags your neighbors.
Before starting a home improvement project, regardless of whether your goal is increase resale value, talk with a real estate agent about other homes in the area and how they’re built. At worst, you’ll gather some ideas you can work into your plan. At best, you’ll keep yourself from over-improving.
If you own kitchen knives, you better keep them honed. That’s because a dull knife blade not only slows you down in the kitchen, but it can be more dangerous than its ready-to-cut counterpart, too.
In this brief, 2-minute video, you’ll learn how to use a knife steel to keep your kitchen cutlery in top form.
Among the tips:
Hold your knife at a 20-degree angle to the steel for maximum effect
10 swipes per side is sufficient to keep the blade straight
Mid-range knife steels are the best choice for most kitchens
Most knife steels don’t actually sharpen knives. Instead, they straighten the microscopic teeth that make the knives work. And that’s okay. Just remember use the steel every time you use your knife.
The Federal Reserve adjourns from a scheduled, 2-day meeting today. It’s one of 
Today, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.
The sales of newly-built homes 
Existing Home Sales rose in March, as expected. U.S. home buyers closed on 7 percent more homes as compared to February.
Mortgage rates and home affordability have improved lately, thanks to an unlikely ally — Mother Nature.
After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better.
Fold-up speakers for your MP3 players? You better believe it. OrigAudio’s eco-friendly Fold-N-Play speakers let you take your favorite playlists on the road to your office, hotel rooms and the beach.
Foreclosure filings rose close to 20 percent nationwide last month versus February, according to foreclosure-tracking firm RealtyTrac.com, and for the 13th straight month, total filings topped 300,000.
The federal home buyer tax credit expires April 30 and the deadline is sparking a home sale surge. It figures to burden real estate, mortgage and title offices nationwide over the next 60 days so plan your closing date accordingly.
Not all home improvements are created equal. Especially if you’re looking for “resale value” back from your work.
