Saturday, October 31, 2009

Can You Still Catch the Buyer's Market?

Existing Home Supply September 2009The national housing supply fell to a 2-year low last month, according to the National Association of Realtors®.

At the current sales pace, existing home inventories would sell out in 7.8 months -- 30 percent faster versus November 2008.

For a 10-month window, that's a major housing supply reduction and it helps to explain why multiple-offer situations have been so common lately.

Moreover, the same report from NAR showed sales activity reaching its highest point since July 2007, too.

If you're looking for evidence that the long-standing Buyers Market is ending, this month's Existing Home Sales report might be it.

Even median sales prices -- typically dragged lower by distressed and foreclosed properties -- declined at its slowest pace in a year. The market may have turned a corner.

Home prices are rooted in the basic economics of supply and demand.

  • When supply outweighs demand, home prices fall
  • When supply lags demand, home price rise

Since March 2009, the market has been moving in the right direction. Low mortgage rates, ample housing supply and a first-time home buyer tax credit fueled buy-side demand so that home prices are now rising in many U.S. markets.

If home supplies stay on this path into 2010, expect home prices to rise even more.

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Thursday, October 29, 2009

Happy Day! Phillies Win & The Senate Moves Towards a Tax Credit Extension

Robin Roberts A WhiZ Kid!Image by reeltor99 via Flickr

Its hard to decide what to write about this morning. Last night the Phillies faced the Yankees in the World Series for the first time since 1950 (when the Whiz Kids took on the New York Team) and they won - even though the game was in New York. That's really exciting for a city where sports are such an important part of our history and our culture, not to mention that it was an auspicious start for a historic series, the first World Series repeat in the team's history.

If that weren't enough, there was news yesterday that the Senate had reached agreement on extending the $8,000 first time homebuyer's credit until June of 2010 - with a potential $6500 tax credit for people that had bought and owned homes for 5 years or more. In our city, where prices are moderate, first time home buyers are a major part of the real estate market, and those amounts are significant to home buyers that news is incredibly good.

We have already seen the real estate market improve every quarter of this year to date, stimulated by the tax credit, great mortgage rates, and moderate prices. Though the lack of mortgage liquidity negatively impacted the attempts of some buyers to gain entry to home ownership, on the whole , the true worry was whether the gains in the market would be sustainable - with the extension of the tax credit through the spring, that question would be answered.

Now the next question for buyers is whether they will be smart enough to act early and avoid the inevitable upward pressure on price that such activity should create, and whether the mortgage market will increase credit liquidity amid the signs of economic recovery.

Of course for this week in Philadelphia,more people may be worrying about whether the Phillies can sustain their early lead this evening in New York, and then Saturday and Sunday night when they return to Philadelphia ;-)

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Monday, October 26, 2009

Housing Starts Post 8th Gain in 9 Months

Housing Starts September 2009Housing Starts on single-family homes gained last month, marking the 8th time that's happened this year.

A "Housing Start" is a home for which the foundation has been excavated and, considered alongside other key market metrics, September data suggests that the housing market stabilization is complete.

Momentum in housing is overwhelmingly positive:

Despite the positive news, the press is calling September's Housing Starts data a "bummer". Citing a drop in monthly building permits, the media purports that housing will slow in the months ahead.

The conclusion may be right, but the rationale may be wrong.

The probable cause for fewer permits isn't that the housing market is overdone. It's that home builders are choosing to exercise caution given the pending expiration of the First-Time Home Buyer Tax Credit and a still-growing number of foreclosed homes.

It's unclear what housing demand will be beginning in December and the last present a builder wants for the holidays is an excess of inventory.

It makes sense that building permits are down, in other words. In our marketplace, where new homes are not the most significant part of the housing inventory, unlike primarily new home communities like areas of Nevada, a Florida, the increase or decrease of housing starts may be less significant in any case.

Looking back at February of this year, there's a host of signs that housing is on the path to recovery. Now, that path won't be a straight line and there's bound to be setbacks, but September's Housing Starts is not one of them.

Housing Starts are up 40 percent on the year. WHich does indicate that ate the very least we have passed the bottom of this contraction.

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Saturday, October 24, 2009

Everybody Thinks the Real Estate Market has Recovered

Philadelphia Skyline SouthImage by reeltor99 via Flickr

Well maybe not everybody, and maybe not quite recovered yet, However a consensus of several major real estate groups says that 2010 is the time for the expansion of the real estate market. According to several studies, the market of 2009 will mark the end of the real estate "contraction" and next year will mark an expected increase of almost 10% with a projected total of 5.403 million units closed in 2010 compared to an estimated 4.929 million units registered in 2009.

The compilation of housing forecasts released was released earlier this week on Real Estate Economy The Web site , operated by former NAR economist David Lereah presented the September housing forecasts of the National Association of Realtors, the National Association of Homebuilders, the Mortgage Bankers Association, Fannie Mae and Freddie Mac and then calculated the consensus (mean) prediction for each major housing measure for the group as a whole.

Of course the impact of foreclosures on the market, and the renewed activity of investors and home buyers looking to take advantage of the well priced inventory, combined with the $8,000 tax credit have positively impacted the market this year. Local tracking indicates that each quarter this year so far has seen increases in sales activity. However the tax credit is currently due to end in November, and if it is not extended, the impact on the marketplace will have to be seen to be judged.

The article goes on to say "At present, the housing sector is experiencing a recovery in home sales and housing starts. Both measures are meaningfully above their January cyclical lows. Home price movements are also improving. Home price declines on a year over year basis have decelerated in monthly reporting, while home prices have increased in recent months on a monthly basis." In our local market area, where prices were not reduced as drastically as some parts of the country, this impact is good news for homeowners and a caution for home buyers that want to take advantage of the current combination of low rates and attractive prices.

In the meantime, as things seem to get brighter, we can't forget that miracles do sometimes happen. After all the Phillies are in the World Series for the 2nd year in a row!

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Friday, October 23, 2009

The Phillies Make History!

I'm not a real baseball fan.

I lost my taste for baseball in 1964 during the Phillies famous meltdown and never really recovered. But last year the Phillies captured my imagination and when they won the world series in game 5 I was there (for both parts of the game on both nights)

It was an interesting experience. I had been at an NBA final in 2001 when the Sixers played the Lakers, and at the Superbowl in Jacksonville when the Eagles played the Patriots, so last year wasn't the first time I saw a Philadelphia team try for a championship. It was however the first time I actually saw them win one. It was exactly like the other two times, except that last year, in the world series there wasn't a sense of sickening loss at the end of the game. It just felt good!

Now, for the first time I can remember, the Phillies have won the National League championship for a second year in a row. In fact, according to Wikipedia, its the first time in the team's history that they ever won two pennants in a row!

I've been a fan in Philadelphia too long to be too excited, but their success does lead me to be an optimist. I guess we'll wait and see what happens, but at least I know I'l be watching and hoping that they break another record

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Tighten Up Your Loose Towel Racks

Over time, towel racks tend to come loose from sheetrock walls. And, sometimes, they separate completely. The good news is that making repairs is easy -- it's something you can do yourself with a little instruction.

In this 2-minute video from, a professional contractor shows that with just a drill and some butterfly anchors, re-securing a towel rack can be a basic handyman job.

So, before you call a professional to rehang your towel rack, watch the video and consider making the repair yourself.

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Thursday, October 22, 2009

SImple Real Estate Definitions: Escrow Account

Escrow reserve accounts collect 1/12 of the annual bill each monthAn escrow account is a designated savings account into which funds get deposited for a specific purpose.

With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments.

Escrow accounts are managed and disbursed by lenders.

When a homeowner "escrows" his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home's annual real estate tax bill plus 1/12 of the annual homeowners insurance bill.

By sending a pro rata portion of the tax and insurance bill each month, the homeowner's escrow account will always, in theory, have enough funds to make payments in full as tax bills and insurance premiums come due.

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Monday, October 19, 2009

Philadelphia's Magic Garden Dazzles South Street

I had the pleasure of attending the kickoff of a new local charity called

IMG_1021Image by reeltor99 via Flickr

Making a Progressive Philadelphia (MAPP) - the name is quite a mouthful, but its acronym is also the last name of the founder Brett Mapp. The organization wants to raise money so that they may give micro-grants to worthy organizations in the city that have financial needs too small to be addressed by most grant giving organizations. I don;t know Brett well, and was there because I was invited by my social media buddy Gloria Bell who is very active with non-profits in Philadelphia. Though I am intrgued by the organization's stated goal, and they seem like really nice people, I really don't know much about them, so you can check out the organization later if you wish to get involved with them.

What I will say though is that Brett and company really know how to choose a venue! Their event was held at Philadelphia's Magic Garden on South Street, a building and a lot that has been converted to an amazing work of art. The artist is Isaiah Zagar a 7- year old artist who has this to say about his work;
It is an impossible place, but strangely you can visit it and smile at that which you knew existed somewhere. Now you know that place is in Philadelphia, and you knew it all along, didn't you?

I have to admit , I didn't know that such a place existed, but I certainly hoped it did...and I'm really pleased that it does exist here so that we can all experience his vision,

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Monday, October 12, 2009

Is It Better to Take a 15 Year Mortgage?

Comparing 15-year mortgage rates to 30-year mortgage rates

For today's home buyers and homeowners that can manage the higher monthly payments, 15-year fixed rate mortgage rates look attractive as compared to comparable 30-year products.

The 15-year/30-year interest rate spread is near its 5-year high. That means that the cost of money during the term of your loan is much much lower if you choose a 15 year term.

Despite lower rates, however, homeowners opting for a 15-year fixed mortgage should be prepared for its higher monthly payments. This is because the principal balance of a 15-year fixed is repaid in half the years as with a standard, 30-year amortizing product.

As compared to 30-year terms, 15-year products repay 3 times as much principal each month, which accounts for the greatest part of the payment difference.

Versus a 30-year, 15-year fixed mortgages have a few downsides worth noting. The first is that, because 15-year mortgages are heavy on principal and light on interest, homeowners who itemize tax returns may have to claim a smaller mortgage interest tax deduction at tax time.

Another negative is that the sheer size of the payment. If you run into fiscal trouble down the road, the only way to reduce the monthly obligation is to refinance into a 30-year product and that costs money to do.

In other words, be sure you can manage the payments over the long-term before you opt for a 15-year term. If you can manage it, though, the rewards are tangible. Building equity in your property faster can have a number of benefits, including making a move up easier later on.

At today's rates, a 15-year fixed and 30-year fixed costs $230 extra per $100,000 borrowed.

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