Maryland Homebuyers Blog

Sales Of Exisiting Homes Fall Sharpley In June

Wall Street abruptly ended an earnings-driven rally and closed sharply lower Thursday after a steeper-than-expected decline in existing home sales and worries about the financial sector chilled the market's recent optimism. The major indexes fell about 2 percent, including the Dow Jones industrial average, which lost more than 280 points.

The National Association of Realtors said sales resumed their decline in June after a slight rebound in May. Existing home sales declined by 2.6 percent in June, well beyond the 1 percent drop economists had forecast. Investors punished shares of homebuilders and financial companies Thursday because both sectors have struggled with the declining housing market. Alan Lancz, director at investment research group LanczGlobal, said investors are concluding that while financials had been oversold in recent weeks and were due for a rebound, problems remain with tight credit and souring mortgage debt.

Financial stocks declined again Thursday after rising sharply in the past week from their recent lows. Washington Mutual Inc. fell 62 cents, or 13 percent, to $4.03 after dropping 20 percent Wednesday as concerns persisted about the company's mortgage portfolio. The nation's largest thrift this week posted a $3 billion loss due to increases in its loss reserves to cover souring loans in its mortgage holdings. Other financials lost ground. Citigroup Inc. fell $2.06, or 9.8 percent, to $19.06, while Merrill Lynch & Co. fell $4.77, or 14 percent, to $29.04. Wachovia Corp. declined $1.96, or 11 percent, to $15.69.

Fannie Mae and Freddie Mac fell sharply after rallying earlier in the week on legislation speeding through Congress that would grant the Treasury Department power to extend the government-sponsored mortgage companies an unlimited line of credit and to buy an unspecified amount of their stock, if necessary. The companies together back or own $5 trillion in mortgages—nearly half the nation's total. Fannie Mae fell $2.98, or 20 percent, to $12.02, while Freddie Mac fell $1.99, or 18 percent, to $8.81.

Sales Of Existing Homes Up In May

Sales of existing homes edged up slightly in May although median home prices continued to fall. The National Association of Realtors reported that sales of existing single-family homes and condominiums rose by 2 percent to 4.99 million units last month. It was only the second sales increase in the past 10 months, but it was not viewed as a sustained rebound. Many economists believe that prices will have to decline more before the housing industry can mount a sustained recovery.

The median price of an existing home sold in May dropped to $208,600, a fall of 6.3 percent from a year go. That was the fifth biggest year-over-year price decline on records that go back to 1999. The strength in sales reflected gains in all parts of the country except the South, where sales dropped by 0.5 percent. Sales were up 5.5 percent in the Midwest, 4.6 percent in the Northeast and 2 percent in the West.

Paul Bishop, senior economist for the Realtors, said that for the past few months sales have been rebounding in parts of the country that had been hardest-hit by the housing bust, while sales have weakened in some areas that formerly had been immune from the overall downturn.

Distressed areas that now are seeing sales gains included Sacramentothe San Fernando Valley and Monterey California, SarasotaFla and Battle Creek, Mich.The inventory of unsold homes dropped by 1.4 percent to 4.49 million units, which represents a 10.8-month supply at the May sales pace, down from a 11.2-month supply in April. That's still about double the inventory level that existed during the five-year housing boom.

"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," said Lawrence Yun, the Realtors' chief economist. However, rising mortgage foreclosures are dumping even more homes onto the already glutted housing market. Many economists predict sales will keep falling through the summer and prices will not start to rebound until the spring of next year.

Maryland Ranks 12th in US Forclosures

The increase in forclosures has come to our shores. The stagnating housing market coupled with soaring energy & food prices have have even effected normally resiliant Maryland. Forclosures are up 112% national since Q1 2007. The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said. Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year. RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states. The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

"What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again," said Rick Sharga, RealtyTrac's vice president of marketing. However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said. "It's a cycle that's going to be difficult to break, and we're certainly not at the breaking point just yet," Sharga added. The surge in foreclosure filings also suggests that much-touted campaigns by lawmakers and the mortgage lending industry aimed at helping at-risk homeowners aren't paying off.

Hope Now, a Bush administration-organized mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to receive a foreclosurerelated filing plunged 24.4 percent from a year earlier. Sharga credited the decline to the state's foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac. The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate. California had the most properties facing foreclosure at 169,831, an increase of 213 percent from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice. California metro areas accounted for six of the 10 U.S. metropolitan areas with the highest foreclosure rates in the first quarter. Many of the areas -- including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield -- are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

"California still hasn't hit bottom," Sharga said. "We have a lot of California homes that are in early stages of default that may not be salvageable because either there's no market or financing available, or both."

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245 percent from a year ago and up 45 percent from the last quarter of 2007.

Coming in fourth, Florida had a foreclosure rate of one in every 97 households. The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

Source: YAHOO

Putting Your Federal Tax Rebate To Work

What can home sellers do with their pending federal tax rebate check? Eventhough it is not that much, it could come in handy for sellers who use it wisely. The Economic Stimulus Act of 2008 includes, among other provisions, tax rebates, bureaucratically dubbed "economic stimulus payments".

Starting in May, the U.S. Treasury Department will begin sending rebates to taxpayers, who had $3,000 of income, filed a 2007 tax return and have a valid Social Security number. Eligible taxpayers will receive up to $600 ($1,200 for married couples). Parents will receive an additional $300 for each eligible child younger than 17.

If you are a retiree, disabled veteran or low-wage worker who is otherwise exempt from filing a tax return, you must file a tax return this year in order to receive a rebate.

The rebate –– both the basic component and the additional funds for qualifying children –– begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds.

You can estimate what your tax rebate take might be with the Economic Stimulus Payment Calculator online.

And here are a few things you ought to consider doing with that unexpected windfall, if you are selling your home.

Give it to the buyer. Cash is a great concession to help coax a buyer into escrow. Buyers can find a lot to do with a few hundred dollars to $1,000 or more, especially first-time buyers who likely will be strapped when the deal closes. A cash gift could be a deal maker.

Buy a home inspection. Use a home inspection to determine what you need to do to put the home in the best competitive shape for the market, or to price it fairly to sell as-is. The inspection could also turn up building code violations the law mandates you correct before selling. The buyer may also opt to use the inspection as a guide to the condition of the home.

Put some extra zeal in your curb appeal. Curb appeal, the first impression your home conveys to prospective buyers, should create an emotional desire to own the home and enjoy the lifestyle and status it represents. Putting the best face on your home also should give a lasting impression that motivates buyers to cross the threshold and take that first step toward closing the deal. More like a home improvement or exterior staging job than a cosmetic makeover, curb appeal that sings is particularly crucial when buyers are calling the shots. Hire a landscaper, consider painting the exterior of your home, tidy up the grounds.

Clean house. Hire a round of service workers to get all the dirt and grime out of every nook and cranny and make the home look neat and tidy. Include house cleaners, carpet and rug cleaners, fence repairers, handy men and women, window washers, organizers (for the garage too), the works. To get the best help to make your home Spic and Span ready for fussy buyers, consider a $34 two year subscription to Consumer Checkbook, a service that rates service workers, like its affiliate Consumer Reports rates goods.

Set the stage. Hire a staging expert. Staging is to the interior of a home what curb appeal is to the exterior -- nipping and tucking, furnishing and accessorizing, buffing and polishing until the place looks like a model home, without appearing too clinical. The new look will pay for itself in terms of sales speed or a higher sales price.

Set the stage online. Hire a creative virtual staging professional to create an online listing with all the digital whistles and bells he or she can muster. Extra marketing is key in a tough market and a competitive boost in any market. Consider a Web site or blog dedicated to your home to give it that 24-hour, open house feel. Add a virtual tour as well as videos (of the home, neighborhood), photos, maps, informative editorial content and links to neighborhood, school, crime and employment information. Gift the website or blog to the new owner.

Finally Some Growth In Real Estate

You might not hear much about them on TV or in the papers, but there are some economic signs popping up right now that are -- at the VERY least -- encouraging for housing and real estate.

Take the gold standard of all forward indicators for the U.S. economy -- the Conference Board's "Index of Leading Indicators," which is based on a broad survey of industry data and predicts economic activity three to six months down the road.

The latest Conference Board index registered its first increase in six months. Now I know that all we hear about these days is recession: it's either already here or it's about to happen.

But the index suggests that there should be positive growth underway in the second half of the year, if not sooner.

Buttressing that forecast is a new report from the National Bureau of Economic Research which found that industrial production in the U.S. showed an unexpected uptick in March.

Here are some other noteworthy developments this past week:

• Applications for mortgages to buy houses were up again, it was the second straight week, according to the Mortgage Bankers Association of America's national survey. Applications for FHA loans to buy houses jumped by three and a half percent -- and conventional purchase applications rose 2.1 percent.
• The federal government reported that house prices nationwide stopped their slide between January and February -- and actually increased by six tenths of one percent.
• Interest rates remain well under 6 percent, according to the Mortgage Bankers, with 30-year fixed rate loans last week averaging 5.74 percent and 15-year loans at 5.27 percent. The Federal Reserve is likely to knock another quarter percent off short term rates next week.
• Freddie Mac announced plans to pump up to 15 billion dollars into the "jumbo conforming" loan market -- those are for high cost areas that really need some stimulus right now, like California.

Now, we're the first to admit that these positive-sounding economic developments are not ballgame-changers for real estate.

We've still got lots of housing inventory to sell before calling an end to the down cycle -- and total sales dipped 2 percent in March, according to the National Association of Realtors.

We're still dealing with a lack of confidence on the part of some consumers who are afraid that maybe prices still have a ways to fall.

But here's the point: It's undeniable that there are some glimmers out there that the underlying economy and financing marketplace, which after all are what support real estate activity, finally may be headed in a positive direction. From Yahoo.

Energy Saver Initiative Comes To MD

Sponsored by the Maryland Energy Administration, the Home Performance with ENERGY STAR program is coming to Maryland. The Maryland Home Performance program is the best way for you to significantly reduce your energy bills. This initiative and its goal of encouraging homeowners to get energy audits by program-trained, certified auditors challenges Marylanders to improve the comfort they experience inside their homes and decrease their home’s contribution to climate change.

In the Maryland Home Performance with ENERGY STAR® program, a certified Home Performance Contractor will perform an energy audit on your home, make recommendations for energy improvements and provide a cost estimate to do the improvements. They can even do the work!

Do you have any of the following issues in your house? • Hot rooms in Summer • Cold Floors in Winter • Drafty Rooms • Dry Indoor Air in Winter • Dust Collection • High Energy Bills due to Heating and Cooling your home • Hot or Cold Rooms • Ice Dams • Mold, Mildew or Musty Odors • Moisture on Windows • Peeling Paint

If you are a Maryland homeowner and answered “yes” to one or more above, then you need to contact a certified Maryland Home Performance contractor and have an energy audit performed today. A Maryland Home Performance Contractor is trained to diagnose your home for issues such as drafty rooms, hot or cold rooms, mold and moisture problems, and other hidden causes for high energy bills.

What are the benefits of doing the upgrades recommended by the energy audit? 1. Significantly reduce your energy bills 2. Improve your home’s indoor air quality – make your home more healthy for you & your family 3. Improve comfort in your home 4. Make a difference in improving the environment by reducing carbon emissions 5. Be assured of the high quality of contractors’ work Sponsored by the Maryland Energy Administration, the Maryland Home Performance program trains and certifies contractors and has a rigorous quality assurance protocol to ensure high levels of professionalism.

Corp Investors Targeting Real Estate

Everybody loves a bargain. And as every bargain hunter knows, one man's discards can be another man's gold - the trick is being able to turn trash into gold. And these days, just about everybody thinks they might be able to get one.

Opportunity funds have come to be called somewhat crudely vulture funds for the picture they conjure up of investors perched and poised to swoop in on troubled deals, mismanaged and/or underperforming assets. "We have been positioning a lot of the broken deals for investors to take on, whether they are directly from the seller or workouts through banks," said Richard C. MacDonough, Jr., vice president director of operations for Fraser Forbes Land Sales.

Sellers aren't necessarily ready to sell at this juncture though, others said. Sellers that are sitting on property purchased at 5% cap rates with 10-year interest-only mortgages will never get the price they want from today's buyers who have more traditional funding at 6.5% interest rates on a 30-year schedule.

Steve Forde, a vice president at Signature Bank said he is not seeing much movement yet either. "Buyers still expect price discounts and are looking but not signing because they are worried about more devaluation in the market. They would really be taking on more risk at this juncture due to market softness," Forde said. "In addition, many of the funding sources are up to their eyeballs working out current projects, so there will be no loosening of credit until inventory levels are more reasonable."

"As the sub-prime mortgage crisis depresses the commercial credit market, which until recently had fueled soaring real estate investment returns, emphasis now is shifting to improving operating results to drive property values," said Regina T. Mullins, CPM and president of the Institute of Real Estate Management (IREM). "Operations is replacing speculation as the stimulus for growing real estate values - and the lead players in this essentially back-to-basics scenario are the top-notch, professional managers of real estate assets who are hired by investors to do just that, to optimize ROI from operations."

"Now that flipping properties no longer is as prevalent or feasible as it once was, owners and investors are looking to sustained long-term ROI growth as the key to increasing the value of their investments," Mullins added.

Radon Gets Some Unwanted Attention

Radon is the second leading cause of lung cancer behind smoking, and about 20,000 people in the United States will die this year due to breathing too much radon without even knowing it, the EPA said. Radon, an invisible radioactive gas that seeps into homes through foundation cracks, causes 100 times more deaths than carbon monoxide poisoning, says the U.S. Environmental Protection Agency.

To heighten awareness of that potential danger, the agency has designated January as National Radon Action Month. "It's remarkably easy to protect our loved ones by testing for radon and building new homes with radon-resistant features that allow everyone to breathe freely and safely," EPA Deputy Administrator Marcus Peacock said in a prepared statement.

As part of the National Radon Action Month, the EPA has released public service announcements about how people can protect themselves against radon, which is emitted by underground sources of uranium and can reach harmful levels if trapped indoors. About one in 15 homes in the United States have a high radon level, the EPA said. The first step in protection is to check your house with an easy-to-use radon test kit. If high levels of radon are detected, a venting system can be installed by a contractor. During construction of new homes, it's easy to include radon-resistant features and home buyers should ask for these, said the EPA, which also recommended that new home buyers ask their builder to test for radon gas before they move in.

Over the past 20 years, radon preventive actions have saved about 6,000 lives, according to the EPA, which wants to double that number over the next five years.

Will Housing Rebound In 2008?

Sales of existing homes fell in December, closing out a year for housing in which sales of
single-family homes plunged by the largest amount in 25 years. The median home price
dropped for the entire year, the first time that has occurred in four decades. The National
Association of Realtors reported that sales of single- family homes and condominiums
dropped by 2.2 percent in December to a seasonally adjusted annual rate of 4.89 million
units.

For the year, sales of single-family homes were down by 13 percent, the biggest drop
since a 17.7 percent plunge in 1982. The median price for a single-family home dropped
1.8 percent to $217,000. That was the first annual price decline on records going back to
1968. Lawrence Yun, the Realtors' chief economist, said it was likely that the country has
not experienced a decline in housing prices for an entire year since the Great Depression
of the 1930s.

For December, sales were down in all regions of the country. Sales fell by 4.6 percent in
the Northeast, 1.7 percent in the Midwest, 1 percent in the South and 2.1 percent in the
West. The inventory of unsold homes dropped by 7.4 percent, raising hopes that backlogs
that had hit record levels were starting to be reduced, a key factor necessary to prompt a
rebound in the market. While Yun said he expected sales to start to rebound this spring,
other analysts said housing is likely to remain in the doldrums throughout most of 2008.

Fed Unveils New Mortgage Plan

The Federal Reserve endorsed new rules Tuesday that would give people taking out home mortgages new protections against shady lending practices.

The proposed rules, approved in a 5-0 vote by the board, are geared to providing safeguards to the riskiest "subprime" borrowers, already painfully stung by the housing and credit debacles. The proposal is expected to apply to new loans made by all types of lenders, including banks and brokers. The plan could be finalized next year.

The Fed, which has regulatory powers over the nation's banking system, is proposing:

_restricting lenders from penalizing certain subprime borrowers — those with tarnished credit or low incomes — who pay off their loans early. The restriction would apply to loans that meet certain conditions, including that the penalty expire at least 60 days before any possible payment increase.

_forcing lenders to make sure that subprime borrowers set aside money to pay for taxes and insurance.

_barring lenders from making loans when they don't have proof of a borrower's income.

_prohibiting lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.

"Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole," said Fed Chairman Ben Bernanke in prepared remarks. "They have no place in our mortgage system," he added.

Fed policymakers also are considering requiring financial disclosures to borrowers early enough to use while shopping for a mortgage. Lenders could not charge fees — except for a fee to obtain a credit report — until after the consumer receives the disclosures. The Fed also will consider prohibiting certain types of misleading or deceptive advertising for certain loans. It also would require that all applicable rates or payments be disclosed in ads with equal prominence as advertised introductory "teaser" rates.

In addition, the Fed is expected to propose barring lenders from paying mortgage brokers a fee that exceeds the amount the would-be borrower had agreed to in advance that the broker would receive.

And, the Fed would ban certain practices, such as failing to credit a mortgage payment to a borrower's account when the company servicing the mortgage receives it. The Fed also would prohibit a broker or other company from coercing or encouraging an appraiser to misrepresent the value of a home.

Before taking effect, the rules must be voted on again following a period of public comment and possible revisions.

The Fed's response has taken on heightened importance given the meltdown in the housing and credit markets that has led to record numbers of home foreclosures. The crisis has raised the odds that the economy might fall into a recession, roiled Wall Street and given Democrats and Republicans much fodder to blame each other.

The plan, if ultimately adopted, offers Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed's regulatory powers. Some critics have complained that Bernanke's predecessor — Alan Greenspan, who ran the Fed for 18 1/2 years — failed to act as a forceful regulator especially during the 2001-2005 housing boom, when easy credit spurred lots of subprime home loans and many exotic types of mortgages.

When the housing market went bust, subprime loans were most heavily affected.

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association from July through September, a record 4.72 percent entered the foreclosure process during those months. At the same time, a record 18.81 percent of the subprime adjustable-rate loans were past due.

When home values weakened, borrowers were left with loan balances that eclipsed the value of their homes. They also were clobbered when their loans reset with much higher interest rates.