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NEW YORK (Reuters) – Consumer sentiment rose to its highest level in more than four years in May as Americans stayed optimistic about the job market, while higher income households expected to see bigger wage increases, a survey released on Friday showed.
The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment rose to 79.3 from 76.4 in April, topping forecasts for 77.8 and an initial May reading of the same.
It was the highest level since October 2007.
“Unfortunately, consumer confidence is still extremely vulnerable to a reversal, as occurred in the past two years,” survey director Richard Curtin said in a statement.
“While their most optimistic expectation for job growth could go unfulfilled without much harm, if the recent slowdown in job growth persists in the months ahead, it could form the basis for a third retreat in confidence.”
Half of all consumers said the economy had improved during the past year, while buying plans for vehicles and household durables also improved. The gauge of buying plans rose to 132 from 126.
Higher income households anticipated a 2 percent income increase in the year ahead, while lower income households expected just a 0.3 percent gain.
The survey’s barometer of current economic conditions jumped to 87.2 from 82.9, while its gauge of consumer expectations improved to 74.3 from 72.3.
The indexes were at their highest levels since January 2008, and July 2007, respectively.
The survey’s one-year inflation expectation eased to 3.0 percent from 3.2 percent, while the survey’s five-to-10-year inflation outlook dipped to 2.7 percent from 2.9 percent.
http://news.yahoo.com/may-consumer-sentiment-highest-more-4-years-142300756–business.html
Monday, May 21, 2012— Washington and the housing market are never far apart. Experts ranging from real estate professionals to the members of the Federal Reserve have reported that the state of the nation’s economic recovery relies heavily on a housing recovery.
According to the latest Legislative and Political Forum held at the Realtors 2012 Midyear Legislative Meetings and Trade Expo, housing will play a large part in deciding the outcome of the 2012 presidential election.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “We believe efforts that help creditworthy homebuyers obtain mortgage financing and allow more people to stay in their homes or avoid foreclosure through streamlined short sales are important for a housing and economic recovery.”
For the majority of Americans, their home is their largest asset and the foundation of their familial stability. Taking steps to ensure homeowners keep their homes helps those not only those owners but also home values across the nation.
Federal Reserve Governor Elizabeth Duke also commented on the need for a healthy real estate recovery. She noted that the health of housing is the strength of the overall recovery.
When would-be buyers are worried about job security they aren’t thinking of buying. When potential buyers can’t access credit they can’t buy homes.
“Unfortunately, some buyers who would like to purchase a home are unable to do so because they cannot obtain a mortgage,” said Duke. She said the tightening of credit standards is apparent in the credit scores of borrowers, noting that the median credit score of borrowers rose from 700 in 2006 to 760 in 2009, where it remains today.
Duke added that tight credit standards have made obtaining a mortgage particularly difficult for first-time home buyers, since they tend to be younger than other homebuyers, and have lower credit scores and fewer financial assets.
http://realtytimes.com/rtpages/20120521_realestateoutlook.htm
Size up the market before you list
With home prices back where they were ten years ago and sales still sluggish, it seems as if sellers can’t catch a break. But if you want to sell your home this year, there are glimmers of hope. In January, the National Association of Realtors reported that sales of existing homes nationally rose slightly from the year before and were also higher than in three of the preceding four months. Plus, the inventory of existing homes for sale fell 21% from the year before.
But even if you have less competition and better prospects, today’s buyers are still a tough sell. They’re nervous and risk-averse. They want a home in move-in condition, with all the upgrades completed, because they know they can’t count on a quick increase in the home’s value to help them recoup money they spend on improvements. They try to negotiate a steal from list price. “You must find a way to improve the condition or lower the price until a buyer pulls the trigger,” says Leigh Brown, an agent with Re/Max in Charlotte, N.C.
How long will it take to sell your home? You can get a rough idea by looking at the average “days on the market,” preferably for your neighborhood and price tier. You’ll find that and other market statistics on the Web site of the local Realtors association or from an agent. You may have some advantage if your home is in a desirable location because, say, it’s in a good school district or close to jobs.
As a seller, you may have your own issues to grapple with — not the least of which is thinking your home is worth more than it is. Gayle Henderson, an agent with Re/Max in Phoenix, recommends that sellers play “buyer for a day” to check out the competition in their neighborhood. It will help you be more realistic about the price you set for your home.
Above all, find a good agent. Don’t interview just one candidate — that’s a mistake that two-thirds of sellers make, according to the National Association of Realtors. In addition to a history of successful sales in or around your neighborhood, you want total honesty — even if it’s painful to hear that you must spend money in order to sell.
In 2010, sellers nationwide paid an average commission of 5.4%, reports Real Trends, a real estate consulting firm. If an agent or the agent’s firm wants to be able to represent you and a buyer in the same transaction in order to collect the full commission, try to negotiate the rate down by one or two percentage points.
Get your home in shape to sell
To hook buyers and reap the highest possible price, you must clean, declutter and stage your home, inside and out. Cotty Lowry, an agent with Keller Williams, in Minneapolis, tells his sellers that they should expect to spend two to four weeks preparing their home for sale, and be ready to spend as much as 2% to 3% of its list price on improvements. Lowry tells balky sellers that spiffing up the place could cost them less than having to make an initial price reduction.
As a first step, Lowry says, you should hire a home inspector for a “pre-inspection” to identify all the issues that would otherwise turn up in a buyer’s inspection. Get a termite inspection, too. (The report would count toward any closing requirement.) Each will cost you $300 to $400. The inspections give you the opportunity to make repairs so buyers won’t reject your home out of hand or use problems to negotiate against you.
Charlotte, N.C., agent Leigh Brown says that you may also need to invest in improvements that buyers now expect as standard features. In many markets that means granite countertops and hardwood floors, even in starter homes. All other things being equal, those two features will put you head and shoulders above your competition. Ask your agent to check the features of recently closed and pending sales. You’ll know what amenities you need to match, or what you can do to sell faster, even if you can’t raise your price.
Expect to get advice about spiffing up your home from agents and their stagers. But you can begin preparing your home using the checklists in the “Home Sale Maximizer Guide” by HomeGain, a home-marketing Web site. Stagers declutter if you haven’t, rearrange furniture to improve traffic flow and create a sense of spaciousness, and make sure your décor doesn’t shout your personal tastes. Home sellers spend an average of $1,800 staging a home, but the cost can be $5,000 or more. Agents may provide the service as part of their fee.
Staging proved critical to the sale of Tim and Kristel Barber’s home, in Minneapolis. They thought that their four-bedroom, four-bath home had everything a buyer could want, including high-end finishes and a hot location in the city’s Linden Hills neighborhood, where million-dollar homes were replacing tear-downs. But the sticking point for buyers was a long, narrow living room.
The Barbers first put their home on the market in March 2011, but by October, after several price cuts and an attempt at staging, it hadn’t sold. So the couple got serious: They moved their four children and belongings to their new home, and a stager brought in new furnishings throughout and redesigned the living room to create a welcoming entryway and a seating area with smaller-scale furniture. A month later they got an offer. Altogether, the Barbers spent $6,200 on two stagings.
Price it right and negotiate
No agent can guarantee that your house is worth x and will sell for z. Instead, you and your agent should scrutinize all the comparables (current listings of homes for sale, recently closed sales and pending sales in your neighborhood) for the past six months that are similar to your property. Agents must visit comparables in person to accurately assess differences that will influence desirability, price and whether they really are your competition, says Francie House, an agent with Seattle broker Windermere.
If you want to start with a price at the high end, be prepared to lower it within a certain length of time or number of showings, based on your agent’s experience. While sellers may think that a price reduction suggests weakness, Lowry says it shows buyers and their agents that sellers are flexible. Plus, it will generate automatic e-mails to buyers and inclusion on agents’ “hot sheets,” which prompts renewed interest and showings.
Negotiate the price. To head off a price reduction, try offering perks that add value for the buyer without costing you too much. But wait to include the incentives until you make a counteroffer, or else your tactic could backfire. For instance, buyers may want you to cover
part of their closing costs. But if they know too early that you’re willing to ante up the money, they’ll expect you to reduce your price by that much – and still ask for closing costs later.
If the buyer gets a mortgage backed by or sold to Fannie Mae or Freddie Mac, the agencies’ rules will limit how much of the buyer’s closing costs you can pay. If the down payment is 10% or less on a principal residence or vacation home, you can cover up to 3% of the closing costs; from 10% to 25%, 6%; and 25% or more, 9%. With VA financing, you can pay all closing costs, plus up to 4% of the sales price for other buyer costs or to pay down debt so that the buyer will qualify for a mortgage.
Perks in lieu of price cuts. When you make a counteroffer, instead of a price reduction you can try to offer something that adds value for the buyer without costing you too much. Your agent can ask the buyer’s agent, “What’s important to your buyer? What do they need?” says Leigh Brown, an agent in Charlotte. The possibilities include a flexible closing date, a home warranty (about $400), paying homeowners-association dues for some period of time or offering appliances or furniture that you don’t want or don’t want to move.
Qualify the buyer. The best offer isn’t always the one with the highest price. It’s the one that will close, and that means buyers must assure you they will qualify for the financing they need. A preapproval letter (the buyers have qualified for a loan based on an application and some documentation) from a known, creditable lender beats a prequalification letter (a ballpark estimate of what the buyer can afford). If you receive an offer with only a prequalification, your agent can call the buyer’s lender to scope it out. Or better yet, ask the buyer for permission to get financial details from the lender.
You could ask buyers to sign a financing addendum to the purchase contract. The buyer must agree to be fully approved for financing and ready to close in a set amount of time — typically two weeks to a month — before the scheduled closing. If the buyers and their lender don’t meet the deadline, the seller can cancel the contract.
http://www.kiplinger.com/magazine/archives/how-to-sell-your-home-fast.html?topic_id=35
More Affordable To Buy in 98% of Major Metros
by The KCM Crew on March 27, 2012
Last week, Trulia released their Winter 2012 Rent vs. Buy Index. In the index, they report that:
“After years of home price declines and tightening rental markets, home ownership is now more affordable than renting in all but two of the 100 largest metros – even in expensive real estate markets such as New York, Los Angeles and Boston.”
The two metros where renting was more affordable were Honolulu and San Francisco. However, Trulia explains that, even in these markets, buying a home:
“…might make sense for people who plan to stay in their next home for at least five years and can benefit from the mortgage-interest tax deduction.”
This rent/buy ratio favors buying more so then at almost any time in history. In a recent article, Forbes Magazine quotes Jed Kolko, Trulia’s chief economist:
“Certainly prices have continued to fall nationally, but rents have been rising so this would be the lowest price-to-rent ratio that we’ve seen.”
Bottom Line
It might be time to talk to a local real estate professional about the possibility that buying a home makes sense for you and family.
http://www.kcmblog.com/2012/03/27/more-affordable-to-buy-in-98-of-major-metros/
WASHINGTON (Reuters) – The battered housing market looks to be on the mend as buyers make a tentative return and house prices stabilize.
Sales of new homes in February fell from January but jumped more than 11 percent compared with the same month last year and prices rose, according to data released on Friday that was in line with other recent signs of a slow recovery.
Big challenges lie ahead, most notably in the form of a glut of unsold properties – many of them foreclosures – and tight lending by banks. But even if the recovery is slow and bumpy, the worst of the six-year slump seems to be over.
“The housing market is slowly coming back. It’s still a depressed market, but it’s getting better. We have a long way to go,” said Patrick Newport, an economist at Global Insight in Lexington, Massachusetts.
New home sales slipped 1.6 percent to a seasonally adjusted 313,000-unit annual rate in February, the lowest since October, but were up 11.4 percent in year-on-year terms, the Commerce Department said.
The median new home price jumped 8.3 percent to an eight-month high of $233,700. Compared with February last year, the rise was 6.2 percent.
The report rounded off a week of mixed U.S. housing data and followed a similar pattern seen in the bigger market for existing homes – sales also fell in February, but stayed close to their highest level in nearly two years and prices rose for the first time on a yearly basis since November 2010.
Realtors say they are seeing higher traffic volume and are moving more houses off the market than a few years ago.
“My listings are selling much more quickly compared to the past few years, even approaching 2007 pre-crash levels,” said Lindsey Sanders, a Realtor with Muffley & Associates in Atlanta.
“I began seeing a meaningful uptick in open house traffic last summer and it has continued to improve. I think this is a combination of sellers finally becoming more willing to ask market prices for their homes instead of bubble-level prices.”
Builders tell a similar story. An index measuring confidence among homebuilders held at a near four-year high this month and they anticipated an increase in sales over the next six months.
While the pace of home construction fell last month, permits for future projects approached a 3-1/2-year high. Much of the activity is concentrated in the multi-family segment, as demand for rentals soars.
SPOTTY RECOVERY
The recovery remains spotty. According to CoreLogic, for every two homes sold, there is one that could be foreclosed. It estimated the so-called shadow inventory of homes at 1.6 million in January, down from 1.8 million a year ago.
KB Home, the fifth-largest U.S. homebuilder, on Friday said net orders for new homes declined 8 percent in its first quarter as cancellations rose.
“Don’t expect this to be a broad-based, rocket-ship recovery,” said KB Homes Chief Executive Officer Jeff Mezger on an earnings call. “The overall housing market is better, but this is definitely a localized recovery … and in some cases, it’s a zip-code-by-zip-code recovery.”
KB’s order decline was in sharp contrast to the strong order growth reported by other U.S. homebuilders, including D.R. Horton, Pulte and Lennar, who have forecast an improving housing market.
While the pace of new home sales held above 300,000 units for a sixth straight month, they are just over a fifth of their 1.389 million unit peak reached in July 2005.
“Mindful that more healing needs to be done, we expect new home sales in 2012 to post their first annual increase in seven years, rising 12 percent,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
Last month, the inventory of new homes on the market was unchanged at a record low 150,000 units. At February’s sales pace it would take 5.8 months to clear the houses from the market, up from 5.7 months in January.
New home sales last month surged in the Northeast and West but slumped in the South and Midwest.
New home sales account for about 7 percent of the overall housing market and face stiff competition from the used home segment despite low levels of stock.
“Buyers have been able to take their time as they have little fear that prices or rates will get away from them. Mortgage rates, though, are beginning to rise slowly and that could continue through the rest of the year,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.
“Add price increases to that and there is a little more urgency to the decision. So while investors may be disappointed by this report, I think better times are just about here so be a little more patient.”
http://news.yahoo.com/home-sales-slip-prices-8-month-high-143754718.html
Economy Warming with the Weather
Though the risk of a spike in energy prices looms, there’s mounting evidence that this time, economic recovery is for real.
By John Maggs, Senior Economics Editor, The Kiplinger Letter
March 14, 2012
The economy has been heating up as much as the weather lately, but is it only another false spring?
We don’t think so. Unlike 2010 and 2011, when early economic gains withered on the vine, this year’s green shoots will bear fruit.
We’ll forgive you if you harbor some doubts. In 2010, after the worst and longest recession since the 1930s, the economy grew at nearly a 4% rate through June, and it looked as if a self-sustaining recovery had begun. But growth slowed sharply in the second half of the year, and businesses shelved expansion plans. Similarly, in the spring of 2011, strong job numbers made it seem as if the economy was back on track. In February, March and April, employers added more than 200,000 jobs in each month, the first time that had happened since 2006. Then employment gains plunged, and the economic growth hit the brakes. U.S. gross domestic product ended up an anemic 1.7% for the year.
This year, there’s more evidence of sustained recovery.
Consumers are starting to spend more. Cars and trucks are flying off dealer lots, at the fastest pace since before the recession. February’s sales, at an annualized rate of 15 million autos, will ease off in the coming months, but sales this year may be close to 14 million, up from less than 11 million in 2009 and 13 million last year.
Retail sales are also strong. After a solid holiday season, retailers report that sales are still growing, up 1.1% in February, normally a time when consumers are hanging around the house waiting for the thaw. Warm weather helped get them out to stores, and they did more than window shop. Overall retail sales in February were 6.3% higher than a year earlier. Sales were up even more at chain stores — 6.7%.
Unseasonable weather may not continue, but surging consumer confidence indicates that the acceleration in spending will. The Conference Board’s confidence index is up 30 points since October, to a reading of 70.1. That’s the largest increase over a four-month span in more than 30 years. Consumers are also signaling their confidence by borrowing more. Revolving debt — student and auto loans, credit cards, etc. — is rising.
Meanwhile, the benefits to employers of cost cutting are fading. Productivity — the output per worker — surged in the Great Recession and its immediate aftermath, as employers slashed payrolls to stay competitive. In 2010, productivity increased by 4%, above the long-run average of about 2% a year. But growth stopped cold in 2011, actually falling for part of the year and ending the year up a mere 0.4%.
Normally, low productivity growth is bad news because it holds down wages. But in an economy with 8 million people actively looking for work, it’s good news. We expect productivity gains to continue to languish in 2012, forcing businesses that want to expand to hire workers. That, in turn, should spur economic growth.
It’s also encouraging that job growth is becoming more consistent. Based on the lower level of new claims for unemployment insurance this month, it is likely that March will be another month of job gains north of 200,000. One of the most discouraging things about the recovery since the Great Recession has been the stop-and-start nature of economic growth and job creation. Though GDP gains in the first half of 2012 won’t be spectacular — an annual rate of only about 2% — more-consistent net job creation will reinforce consumer confidence.
There are even signs of improvement in housing, still the biggest drag on the economy. The inventory of unsold homes is dropping — at last count, to the equivalent of about six months of sales at the current pace of closings. The combination of mild weather, low mortgage interest rates and the prospect of those rates turning around once the economy picks up some steam is luring more traffic into open houses. At the same time, real estate brokers say sellers have gotten more realistic about sales prices, finally accepting that the bubble prices of a few years back are gone. Unfortunately, with millions of foreclosures still in the pipeline, the modest improvement we expect in housing prices by the end of the year won’t do much to nurture growth.
Finally, some clouds on the horizon look less threatening. Europe’s debt crisis will calm down, now that holders of Greek bonds have agreed to write off most of their investments. A repeat of last year’s fiscal brinkmanship in Washington isn’t likely. The posturing angered voters, and members of Congress won’t want to play chicken again before facing voters in November.
One major thundercloud remains: The prospect of a sharp spike in oil prices if Israel attacks Iran to thwart its pursuit of nuclear weapons. An attack would drive gasoline over $5 a gallon and raise the average cost of filling up for each U.S. household by $1,000 a year. Such a shock would lower the growth in U.S. GDP next year from around 2% to 1%, leaving the economy one adverse event away from a recession. Although the chances for an attack in the coming weeks are lower since Israel agreed to another round of diplomacy, the risk can’t be ignored.
http://www.kiplinger.com/columns/practical-economics/archives/economy-improving-2012.html
Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
From Basking Ridge Patch: Morris, Somerset to Feel Real Estate Surge
Otteau said in a statement the housing demand in New Jersey “exploded off the chart in January” and that, with home prices at 2003 levels and low interest rates, 2012 is the “opportunity of a lifetime” to buy a home.
Drivers of the increase in purchase contracts include more consistent job creation and improved consumer sentiment, he said.
“The recovery in real estate has now begun,” he said.
This certainly feels true, and Jeff Otteau is one of the best analysts we have in the area. The argument against this includes the national unemployment and inflation numbers, just not the one’s most often reported in the major media. The CBO states real unemployment is 15% and analyst reports put the inflation rate for non-capital (e.g. most expensive) purchases at 8.1% That’s quite a lot for buyers and sellers to overcome and take home prices on an upward path. But, New Jersey is doing better that most of the rest of the country and our local area of Morris and Somerset counties are certainly one of the most desirable anywhere.
I say this feels true because since the turn of the new year, we have seen a larger pool of buyers that is, at least for now, significantly greater the the number of active sellers with listings. Of course, more listings will be coming on the market over the next 90 days, and no one can predict the future (except Mr. Otteau) but it does seem as if there may be upward pressure on pricing if the laws of supply and demand apply.
Residential mortgage interest rates are currently low, at around 3.75%, the lowest I’ve ever seen. That helps, too.
Bring on the spring!
And if you’re thinking about selling, let us help show you how to position your home for the greatest return. Drop us a line or give us a call anytime. After all, that’s what we’re here for. 
