Home Resales Boom Into The End Of The Tax Credit; Home Values Seen Rising.

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:

1. Year-over-year sales are higher for the 9th straight month
2. Real estate investors represented 19 percent of all homes purchased
3. 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 Palmyra 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.

How To Properly Screen A Prospective Tenant

According to the the National Association of Realtors®, "distressed homes" represented nearly 2 of every fifth home sold in January 2010. Clearly, real estate investors in Mount Holly and around the country are taking advantage of good deals on cheap property. But there's risk involved.

This NBC Today Show interview first ran in March 2009, featuring real estate expert Barbara Corcoran. Despite its age, the message remains relevant. Today may be a terrific time to buy a bank-owned home -- just make sure you do your research first. There's plenty of ways for investors to get burned.

Some of the tips in the video include:

• Buy in your own backyard
• Start small, then build to a bigger portfolio
• Watch receipts -- rent rolls don't matter if tenants aren't paying rent

Corcoran also gives pointers on how to evaluate a prospective tenant.

Foreclosures should represent a large number of 2010's total home sales and will offer interesting opportunities to bona fide real estate investors. Before you jump in, make sure to watch the video. The rents you save may be your own.

Remember, the stats and the data are from 12 months ago, but the advice stays meaningful. Real Estate investing, when you apply sound principles is still a great way to build income and acquire wealth. You just have to take time and investigate it completely.

Foreclosures Per Capita | February 2010

According to foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 12th straight month last month as 1 in every 418 U.S. homes received a foreclosure filing.

It's a small improvement from January and a just 6 percent increase over February 2009.

On a per-capita basis, foreclosure density varied by state:

• Nevada : 1 foreclosure filing per 102 homes
• Florida : 1 foreclosure filing per 163 homes
• Arizona : 1 foreclosure filing per 163 homes
• California : 1 foreclosure filing per 195 homes

Also, as in January 2010, foreclosures across the country were concentrated. 10 states beat the national Foreclosure Per Capita average; 40 states fell below. Like everything else is real estate, it seems, foreclosures are local.

For today's Palmyra home buyers, foreclosures represent an interesting opportunity.

Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes. It's one reason why distressed home sales account for 38 percent of all resales. However, less expensive doesn't always mean less costly. A foreclosed home may be in various stages of disrepair and they're often sold as-is, as policy.

Buying new or used in Philadelphia or surrounding counties can be cheaper than buying broken-down. Buying foreclosures is attractive, and I've been selling bank owned properties since 1988, but you can create a problem for yourself if you chase the "deal" instead of looking for the house that suits your needs.

Therefore, if you're in the market for a bank-owned home, make sure you know what you're buying before you sign a contract. Have qualified professionals review and inspect the property, as needed. Damage to pipes or the property's structure, for example, may not be so obvious on a walk-though and you'll want to know about it before you buy. If you want to look at foreclosure properties, just visit our website.

Also, foreclosed homes are federal tax credit-eligible. Buyers must be under contract by April 30, 2010 and closed by June 30, 2010.

The True Picture: Half of all Foreclosure Issues in Only Four States

Foreclosures stories dominate the national housing news. It seems at least one foreclosure-related story makes its way to the front page or the nightly news every week.

But for as much as the foreclosure filing statistics can be astounding -- over 300,000 homes were served last month alone -- the prevalence of foreclosures depends on where you live.

As reported by RealtyTrac, just 4 states accounted for more than half of the country's foreclosure-related activity last month.

• California : 22.7 percent of all activity


• Florida : 14.9 percent of all activity


• Arizona : 6.7 percent of all activity


• Illinois : 5.7 percent of all activity

The other 46 states (and Washington D.C.) claimed the remaining 49.9%.

However, just because foreclosures are concentrated geographically, that doesn't make them less important to homebuyers in Philadelphia, Palmyra and around the country. There's been more than 1.4 million foreclosure filings in the last 12 months and that's a figure that can't be ignored.

Distressed properties now play a role in one-third of all home resales.

Therefore, if you're in the market for a foreclosed home, here's a few things to keep in mind.

1. Properties are usually sold "as-is" and may not be up to living standards. Be sure to physically inspect the home before buying it.


2. Buying a home from a bank is rarely as streamlined as buying from an individual homeowner. Be prepared for delays and long closings.


3. Foreclosures aren't always listed for sale publicly. Ask your real estate agent how to access the complete foreclosure inventory.

In order to use the federal homebuyer tax credit, you must be under contract for a home by April 30, 2010 and closed by June 30, 2010. That doesn't leave much time to find a bank-owned home and make it to closing. In Philadelphia we also face specific issues regarding the time needed for settlement because the deed obtained from the foreclosure sale often takes a longer time to record than in other counties. So if you're serious about buying foreclosures, it's probably best to start your search soon.

RealtyTrac's 2009 Foreclosure Report Gives Reason For Optimism

Like real estate, it appears that foreclosure activity is a local phenomenon, too.

As reported by RealtyTrac.com, more than half of all foreclosure-related activity in 2009 came from just 4 states:

1. California
2. Florida
3. Arizona
4. Illinois

More than 1.4 million filings made in 2009 are attributed to the above states. Furthermore, each ranks in the Top 10 for 2009 Foreclosures Per Capita.

The other states are Nevada, Utah, Georgia, Idaho, Michigan and Colorado.

Versus 2008, foreclosures are up 21 percent nationwide and that's a big number, but a deeper look at RealtyTrac's annual reports reveals a more positive undertone on the housing market.

1. 40 states fell below the national Foreclosures Per Capita average in 2009
2. Foreclosure activity fell on an annual basis in 10 states as compared to 2008

Foreclosures are still prevalent, though, and buying homes in foreclosure in Philadelphia continues to be big business. Having been active in selling foreclosures for over 22 years, our firm sees this activity on a day to day basis in the inquiries from the Lender's web sites sending buyers to us. First-time buyers, move-up buyers, and real estate investors each are bidding aggressively.

Distressed homes account for one-third of home resale activity, according to an industry trade group.

That said, buying foreclosures can be tricky.

First, properties are often sold "as-is" and the cost of repairs may unwind the home's status as a "value buy". Furthermore, a lender may require specific fixes to be made prior to closing and that, too, costs money.

Second, buying a foreclosed home in Pennsylvania isn't as streamlined as buying a "normal" home. Closing on a foreclosure can be a longer process if the sherriff deed is not yet recorded, though many foreclosures can settle much faster. But you need to know the time frame since a 4-month time-frame may not fit your schedule.

And, third, finding foreclosures can be difficult. Despite the growth in foreclosure search engines, it still takes a good real estate agent to uncover the best homes at the best prices. Luckily, being such a vendor, we can make it a little easier. You should still concentrate on finding the best house for you, even if its not a foreclosure.

Read the complete foreclosure report and take a peek at RealtyTrac's foreclosure heat maps. If you like what you see, talk to your real estate agent about what to do next.

There's still good deals in the foreclosure market -- you just have to know where to find them

Can You Still Catch the Buyer's Market?

The 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.

Everybody Thinks the Real Estate Market has Recovered

Image 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 Watch.com. 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!

Related articles by Zemanta

• Push on to expand $8,000 tax credit (money.cnn.com)
• Recovery more rapid than expected, UCI prof says (lansner.freedomblogging.com)

Three States Hold 50% of U.S. Foreclosures

Foreclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month.

However, 3 states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined.

• California : 30.0 percent


• Florida : 15.7 percent


• Arizona : 5.4 percent

On a per-household basis, the states ranked 2, 3 and 4. Only Nevada's foreclosure rate was higher.

Now, we point out these statistics for two reasons.

The first is to remind you that foreclosures can be highly local. For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others. In Pennsylvania for example, there are only 1 foreclosure for every 1030 housing units as opposed to New Jersey where there is one foreclosure for every 541 housing units, or the national average of one foreclosure for every 355 household units.

And, second -- foreclosures can represent a terrific buying opportunity. Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too. By buying a home after the foreclosure sale, all liens and encumbrances are removed, and the buyer will have title as clear and pristine as in any other type of sale. Title Insurance is still needed for the buyer's protection, but is normally provided at settlement.

Furthermore, as banks get better at disposing of foreclosed homes, the process of buying one isn't as challenging as it was, say, 12 months ago.

As part of its research, RealtyTrac.com catalogs a lot of foreclosed homes and lists them online. However, you may find it better to start your search with a local real estate agent that knows the foreclosure market.

So long as buying foreclosures is a high-touch process -- and it is a high-touch process -- you may want to have a human face and agent to guide you through it. To search for foreclosure properties , just check the Century 21 Advantage Gold Web site.

The complete RealtyTrac report is available online.

Philadelphia Foreclosures and the Pareto Principal

The Pareto Principle is a statistical concept most commonly known as the 80/20 Rule, and is commonly applied in a variety of situations. for example "20% of the salesmen make 80% of the sales" or put another way "20% of your efforts generate 0% of your results"

Iin other words 80 percent of the effects come from 20 of the causes according to this principal.

Apparently, the 80/20 Rule applies to foreclosures, too -- at least according to data compiled by foreclosure-tracking firm RealtyTrac.

Based on data from May, 11 states accounted for 80% of the country's foreclosure activity. The remaining 20% was spread across the 39 others.

That's 80/20 almost to the tee.

The disparity goes deeper that that, though. The top three states in RealtyTrac's list -- California, Florida, Nevada -- were home to half of May's foreclosure-related actions.

Clearly, foreclosures are concentrated in certain geographies, generally where the spike in the real estate market was the greatest. Put another way, the places with the greatest increases, saw the greatest decreases in price, and were subject to the greatest abuses in mortgage lending. As a result these states are seeing the largest amount of foreclosures

But, even in Pennsylvania,where we are not suffering from as difficult a market as other places in the country, foreclosures still impact us. This is because mortgage lenders are often national companies, lending in all 50 states.

When home loans go bad -- in any state -- lenders respond by increasing downpayment requirements and by adding new borrowing hurdles. If you've applied for a mortgage in the last 18 months, you've experienced this phenomenon personally.

On the other side, if you're a home buyer in a foreclosure-heavy state, you're finding terrific value versus several years ago. It's one reason why Existing Home Sales in the West Region are up by 19 percent from last year, for example.

50% of the Foreclosures in the US are in 3 States!

Since 2007, foreclosures have dominated real estate news. You can't turn on the news or open a paper without some foreclosure-related story.

But for all of the discussion, foreclosures continue to be geographically concentrated.

Adding up the latest stats from RealtyTrac.com, more than half of the country's foreclosure actions from March occurred in just 3 states -- California, Florida and Nevada.

Those 3 states represent just 19 percent of the nation's population.

Despite the local concentration of foreclosures, however, they remain a national problem. This is because mortgage lenders lend in all 50 states -- not just 3 of them -- so the impact of mortgage defaults in one region can quickly spread to others.

In part because of foreclosures are higher, the following has happened:

• Mortgage guidelines have tightened
• Downpayment requirements have increased
• Private mortgage insurance has become more expensive

That's an important set of changes for a would-be borrower. In some cases, it can keep a person from qualifying.

Search the March 2009 foreclosure report for yourself on RealtyTrac.com's website.

First Time Investor Video

"Most of the biggest real estate fortunes were not made in good times, but in bad times like this" Barbara Corcoran reminds us in this talk with NBC.

It's important perspective for Americans wondering how to invest in foreclosed properties without losing their cash or their credit rating.

In the 4-minute interview, Corcoran quips on the basics and the essentials of foreclosure investing,

• "Everyone who loses their shirt loses it somewhere else."
• "Every big shark started small."
• "The house on the corner sets the tone for the block."

She also lends some personal perspective to rent rolls, the cost of losing a tenant, and finding a good business partner.

Banks are anxious to sell their foreclosed homes and that makes this an ideal time for shrewd real estate investors. If you're new to the game, watch the video and take good notes.

Good News For Investors!

Image by thinkpanama via Flickr

Last Friday, Fannie Mae rolled-back one of its least popular mortgage guidelines updates of the last 12 months.

Effective March 1, 2009, real estate investors can once again own and finance up to 10 individual properties. The restriction reversal does come with new minimum requirements, however.

Homeowners buying a 5th, 6th, 7th, 8th, 9th or 10th home must meet the following standards, as set forth by Fannie Mae:

1. 720 credit score
2. 25% downpayment for a 1-unit (30% for a 2-4 unit)
3. No mortgage delinquencies in the last 12 months
4. 6 months of reserves for each investment property

In other words, Fannie Mae is re-opening the lending spigot for real estate investors with good credit, a sizeable downpayment and ample reserves.

According to Fannie Mae, the change rationale is that experienced investors can "play a key role in the housing recovery". Until now, foreclosure auctions have gone at less than full speed because investors unable to pay cash have been halted by the existing 4-property Fannie Mae limit.

Going forward, expect a more expedient foreclosure liquidation nationwide which should, in turn, provide further support for the housing market.

And lastly, not to be forgotten, homeowners with more than 4 properties can finally participate in the ongoing conforming mortgage Refi Boom. Until now, they've been stymied by the 4-property restriction, too.