Friday, June 29, 2012

FHFA : Home Values Up 3% Since Last Year

HPI from April 2007 peak
The Federal Home Finance Agency's Home Price Index shows home values up 0.8% in April on a monthly, seasonally-adjusted basis.

April marks the third consecutive month during which home values increased and the index is now up 3 percent from last year at this time.

As a home buyer in Metro Atlanta, it's easy to look at the Home Price Index and believe that its recent, sustained climb is proof of a broader housing market recovery. Ultimately, that may prove true. However, we cannot base our buy-or-sell decisions on the HPI because, like the private-sector Case-Shiller Index, the Home Price Index is flawed.

There are three main flaws in the FHFA's Home Price Index. They cannot be ignored.

First, the FHFA Home Price Index's sample set is limited to homes with mortgages backed by Fannie Mae or Freddie Mac. By definition, therefore, the index excludes homes with mortgages insured by the FHA.

5 years ago, this wasn't such an issue because the FHA insured just 4 percent of mortgage. Today, however, the FHA's market share is estimated to exceed 30 percent.  This means the HPI excludes more than 30% of U.S. homes from its calculations right from the start.

The index also excludes homes backed by the VA; jumbo mortgages not securitized through the government; and, portfolio loans held by individual banks.

Second, the FHFA Home Price Index is based on the change in price of a home on consecutive home sales. Therefore, it's sample set cannot include sales of new home sales, nor can it account for purchases made with cash because cash purchases require no mortgage.

Cash purchases were 29% of the home resale market in April.

Third, the Home Price Index is on a 60-day delay.

The report that home values are up 0.8% accounts for homes that closed two months ago, and with contracts from 30-75 days prior to that. In other words, the Home Price Index is measuring housing market activity from as far back as January. 

Reports such as the Home Price Index are helpful in spotting long-term trends in housing but data from January is of little help to today's Georgia home buyers and sellers. It's real-time data that matters most and the best place to get real-time housing market data isn't from a national home valuation report -- it's from a local real estate agent.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Thursday, June 28, 2012

Simple Real Estate Definitions : Right To Cancel

Right To Cancel notice
As part of the federal Truth-in-Lending Act, refinancing homeowners are granted a 3-day "cooling off" period post-closing during which they retain the right to rescind, or "cancel", their recent refinance without penalty or cost.


The Right To Cancel is protection against surprises at closing and/or a change of heart. It's also a safety valve for homeowners signing paperwork under duress. With 3 days to revisit and rethink the terms of a loan, a homeowner can maintain tighter control of his/her financial situation. 

If you ever have the wish (or need) to execute your right to rescind, be aware that the process is a formal one. The required steps must be completed on-time, and in order, or else your request will be invalid.

The process starts with a document labeled "Right To Cancel". It's included in your closing package and lists the terms of a rescission in straight-forward language. Among the key points :
  1. You have 3 business days during which to cancel your loan
  2. When you cancel the refinance, the entire transaction is cancelled
  3. You must submit your Right To Cancel in writing
"Business day" is defined by the government to be every day, save for Sundays and federal holidays. A loan that closes on a Monday, therefore, must be rescinded prior to Friday at 12:00 AM.

Typically, rescission requests are faxed to the settlement agent, notary, or title company assigned with the refinance. It's good practice to ask for an acknowledgement of receipt as proof of delivery, too.

There are some refinances for which the Right to Cancel does not apply, however. This includes refinances linked to an investment property, and loans not collateralized by residential real estate. There are other conditions, too, that may supersede your right to rescind so be sure to ask your lender.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Wednesday, June 27, 2012

New Home Sales Rise To 2-Year High

New Home Supply
The new construction market continues to improve.

As reported by the Census Bureau, 369,000 new homes were sold last month on a seasonally-adjusted, annualized basis. A "new home" is a home that is considered new construction.

May's data marks the highest number of new homes sold since April 2010, the last month of that year's federal home buyer tax credit.

It's also a 14% increase over the rolling 12-month average.

The news was somewhat expected based on the most recent Homebuilder Confidence survey, which rose to a 5-year high. Home builders have been reporting higher sales volume and rising buyer foot traffic since October of last year. 

The May New Home Sales report confirms what builders already told us.

Furthermore, new homes are selling more quickly than builders have built them, lowering the national "home supply" to levels not seen since October 2005. There are currently 145,000 new homes for sale.

A supply of 6.0 months is believed to represent a market in balance. Anything less connotes a "sellers' market". At the current pace of sales, the entire new home housing stock would be exhausted in 4.7 months.

The South Region continues to account for the majority of new construction sales, posting a 55% market share in May. South Region sales were up 13 percent as compared to April. The other 3 regions turned in mixed results :
  • Northeast Region : +36.7% from April 2012
  • Midwest Region : -10.6% from April 2012
  • West Region : -3.5% from April 2012
For all its strength, though, the Census Bureau's New Home Sales data may also be "off".

Although New Home Sales were said to rise by roughly 8 percent nationally from April to May, the government's monthly report was also footnoted with a ±12.2% margin of error. This means that the actual New Home Sales reading may have been as high as +20% last month, or as low as -4%. The values could be positive or negative -- we can't know for certain.

However, that's not to say that the New Home Sales should be ignored.

Longer-term, new home trends have been positive and builder confidence survey suggests the same.  If you're in the market for new construction in Metro Atlanta, you may want to go into contract soon. Home prices and mortgage rates remain low -- a terrific combination for today's home buyers.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Tuesday, June 26, 2012

Existing Home Sales Slip 2% In May

Existing Home Sales
Home resales slipped last month; a slight setback for the nation's housing market's recovery.

According to the National Association of REALTORS®, Existing Home Sales fell to 4.55 million units in May 2012 on a seasonally-adjusted annualized basis, representing a 2 percent drop from April.

An "existing home" is a home that's been previously owned or occupied, and cannot be categorized as new construction.

Despite May's retreat, however, as compared to last year at this time, Existing Home Sales by units are higher by 10 percent. In other words, like everything else in housing, the long-term statistical trend has been a positive one.

The housing market has seen its bottom and is finding balance.
Other data from the Existing Home Sales report includes :
  • First-time buyers accounted for 34% of all purchasers, down from 35% in April
  • Real estate investors accounted for 17% of all purchasers, down from 20% in April
  • Cash buyers accounted for 28% of all purchasers, down from 29% in April
In addition, distressed sales accounted for 25% of all sales in May, down from 28% in April.

"Distressed sales" include the sale of homes in various stages of foreclosure, and of short sales. This is the smallest percentage of homes sold in a "distressed" status since the real estate trade group began tracking the data in 2008. 

And, lastly, home supplies rose by 0.1 months to 6.6 months nationwide in May. This means that, at the current pace of sales, the complete U.S. home resale inventory would be sold out before the end of 2012.  A 6-month supply is widely believed to represent a market in balance between buyers and sellers.

There are now 2.49 million homes for sale -- a 20% reduction from May 2011.

Home resales may have slipped last months but volume remains brisk nationwide. All-time low mortgage rates and high home affordability are keeping buyers in the market. Home prices are rising in many U.S. cities as the housing market continues its slow, steady recovery. 


For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Monday, June 25, 2012

How To Choose The Proper Paint Color(s) For A Room


Whether you're moving into a new home and want to make it "yours", or just want to change the feel of your current place, a painting project is an easy way forward. Painting is relatively inexpensive yet it can transform a home's look-and-feel.

But how do you make sure you're choosing the best colors and the proper type of paint?

This 8-minute video from Lowe's tells it all. In it, you'll learn how professional designers identify a potential paint palette for a room, then how they choose between shade, finish and type.

Among the tips and advice in the video :
  • How to use 2x2 "test blocks" to ensure a color works in both natural and artificial light
  • How to choose the right colors for a small room, and for a large room
  • Why painting the ceiling can change a room's perceived size
  • How to build complementary, split-complementary and analogous color schemes for a room
  • How to choose between latex and oil-based paint products
In addition, the video shares notes on how light bulb types can affect the "warmness" of a particular paint color, and how to consider existing room elements such as furniture in your final color choices.

Paint projects require little advance planning and, if done properly, they can change the feel of a room, and a home. Most projects can be completed within a weekend.


For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Friday, June 22, 2012

Mortgage Rates Make New Lows At 3.66%

Freddie Mac mortgage rates for June 21 2012
Mortgage rates have resumed their downward trend.

According to Freddie Mac's weekly Primary Mortgage Market Survey, the national average 30-year fixed rate mortgage rate fell 5 basis points to 3.66% this week. The rate is available to "prime" borrowers who are willing to pay, on average, 0.7 discount points plus a full set of closing costs.

30-year fixed rate mortgage rates are down in seven of the last eight weeks but, depending where you live, the mortgage rates made available to you will vary. The Freddie Mac survey notes that mortgage rates vary by region.

For example, mortgage applicants in the West Region received the lowest rates from lenders, on average, but also paid the highest number of discount points. Discount points are a specific type of closing cost where 1 discount point is a fee equal to one percent of your loan size.

Average mortgage rates in the five U.S. regions, as tracked by Freddie Mac :
  • Northeast Region : 3.70% with 0.7 discount points 
  • West Region : 3.62% with 0.8 discount points
  • Southeast Region : 3.68% with 0.7 discount points
  • North Central Region : 3.65% with 0.7 discount points
  • Southwest Region : 3.68% with 0.7 discount points
Nationally, one year ago, the average 30-year fixed rate mortgage rate was 4.50%. Today, it's 3.66%. This 84 basis points difference yields a monthly savings of $49 per $100,000 borrowed at today's rates, or $588 per year.

A $400,000 mortgage would save $2,352 annually at today's mortgage rates as compared to June 2011.

The 15-year fixed rate mortgage rate is also low, averaging 2.95% nationwide with 0.6 discount points. This is the second-lowest reading in recorded history. However, when the 15-year fixed averaged 2.94%, banks required an average of 0.7 discount points to get it. One could argue that this week's average rate-and-points combination is actually a better "deal" because closing costs are lower.

Mortgage rates continue to break new lows so, if you're eligible to refinance, the timing may be right to explore your mortgage options. Similarly, if you're in the market to buy a home, today's low rates will help to keep your home affordability high.

Talk to your loan officer about capitalizing on the lowest rates of all-time. Rates in Metro Atlanta may not rise starting next week, but when they do rise, they're expected to rise quickly.


For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Wednesday, June 20, 2012

A Simple Explanation Of The Federal Reserve Statement (June 20, 2012)

Putting the FOMC statement in plain English
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent Wednesday.

For the fifth consecutive meeting, the Fed Funds Rate vote was nearly unanimous. Just one FOMC member, Richmond Federal Reserve President Jeffrey Lacker, dissented in the 9-1 vote.

The Fed Funds Rate has been near zero percent since December 2008. 

In its press release, the Federal Reserve noted that the U.S. economy has been "expanding moderately" this year. Beyond the next few quarters, the Fed expects growth to "pick up very gradually". 

In addition, the Fed re-acknowledged that "strains in global financial markets" continue to pose "significant downside risks" to the U.S. economic outlook. This statement is a repeat from the FOMC's April press release and is in reference to the sovereign debt concerns of Greece, Spain and Italy, plus the potential for a broader European economic slowdown.

The Fed's statement also included the following economic observations :
  1. The housing sector remains "depressed"
  2. Labor conditions have "slowed in recent months"
  3. Household spending is "rising at a somewhat slower pace" than earlier this year
With respect to inflation, the Fed said that pressures have declined, led by falling oil and gasoline prices. Longer-term inflation expectations remain stable.

The biggest news of the FOMC meeting is that the Federal Reserve will be extending its "Operation Twist" program. The program sells shorter-term securities on the Federal Reserve's balance sheet and uses the proceeds to purchase longer-term securities. This move puts "downward pressure on longer-term interest rates" and makes "broader financial conditions more accommodative."

The Fed also pledged to keep the Fed Funds Rate at "exceptionally low" levels at least through late-2014.

Mortgage markets are muted post-FOMC. There has been no real change in rates, although that may change later in the day, or week. Mortgage rates in Metro Atlanta remain at all-time lows.

The FOMC's next scheduled meeting is a two-day event slated for July 31-August 1, 2012.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Housing Starts Up 26% In Last 12 Months

Housing Starts
Sometimes, the housing data headlines tell just half the tale. The stories on May's Housing Starts figures are proving to be a terrific illustration.


Tuesday, the Census Bureau released its monthly Housing Starts report. A "housing start" is a home on which construction has started.

The report is separated by property type with a separate count for single family homes such as detached residences and town homes; for multiple-unit homes such as 2-unit, 3-unit and 4-unit structures; and, for buildings of 5-units of more such as new condominiums.

In May, Housing Starts fell 4.8 percent nationwide. This runs contrary to recent housing market statistics and home builder confidence data which both have suggested a recovery. The press picked up the story and ran the following headlines :
  • Housing Starts In U.S. Fall 4.8% In May (BusinessWeek)
  • Housing Starts Plunge, But Permits Surge In Mixed Market (CNBC)
  • Housing Starts Slump In May (US News)
Although factually correct, these headlines are somewhat misleading. 

Housing Starts did slip 4.8 percent last month but that figure accounts for all Housing Starts. It fails isolate the single-family starts that matter to today's buyers and sellers throughout Georgia. Homeowners rarely buy multi-unit homes or entire apartment buildings.

If we remove the report's tally of 2-4 unit homes and apartment buildings, we find that, in May, single-family housing starts rose for the 4th straight month, registering 516,000 homes started on a seasonally-adjusted, annualized basis. This is the highest tally since April 2010, the last month of that year's frderal home buyer tax credit. 

Single-family housing starts are up 26% as compared to last year. 

The housing starts report, therefore -- headlines aside -- is the latest in a series of housing market data that points to a sustained recovery nationwide. If you're planning to buy a home in 2012, consider buying in between now and September because after that point, home prices and mortgage rates are likely to be higher.



For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Tuesday, June 19, 2012

Building Confidence Rises To 5-Year High

Homebuilder confidence since 2000

Home builders anticipate growth in the market for newly-built, single-family homes.


For June 2012, the National Association of Homebuilders reports its monthly Housing Market Index at 29 -- an increase of more than 100% from one year ago and the highest HMI value since May 2007.

When the Housing Market Index reads 50 or better, it's meant to indicate favorable conditions for builders in the single-family, new-construction market. Readings below 50 suggest unfavorable conditions for builders.

The index has not been above 50 since April 2006. 

The NAHB Housing Market Index is not a "single survey" -- it's a composite. Three separate surveys are sent by the trade association to its members and roughly 400 builders respond. The NAHB's survey questions query builders on their current single-family home sales volume; their projected single-family home sales volume for the next 6 months; and, their current levels of buyer "foot traffic".

The results are then compiled into the NAHB Housing Market Index.

In June, home builders provided mixed replies :
  • Current Single-Family Sales : 32 (+2 from May)
  • Projected Single-Family Sales : 34 (Unchanged from May)
  • Buyer Foot Traffic : 23 (Unchanged from May)
Of particular interest to today's new construction buyers is that builders are reporting higher levels of single-family sales, and expect their sales volume to increase over the next six months. This expectation is rooted in housing market momentum and low mortgage rates.

Never in recorded history have homes been as affordable as they are today and home buyers are taking notice. Foot traffic through builder models remains strong and is at its highest pace in more than 5 years. 

When demand for homes outweighs the supply of homes, home prices rise. If builder expectations are met, therefore, buyers in Metro Atlanta should expect new home prices to rise in 2012's second half.

Planning to buy new construction this year or next? Consider moving up your time frame.


For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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Monday, June 18, 2012

10 Cities Projecting Home Value Increases Through 2013

10 cities poised for growth through 2013
Nationwide, the U.S. housing market is showing signs of recovery. Home prices are rising as demand for homes outweighs existing home supply in many metropolitan regions.

As is customary in real estate, though, the degrees to which home values change vary by area.

In some U.S. markets, the housing recovery is outpacing the national average. In other markets, it lags. In an effort to measure the changes, CNNMoney has named the 10 U.S. housing markets in which home prices may rise the fastest.

The list is stuffed with small- to mid-size cities, most of which have experienced huge price drops since the housing market's peak in 2007. The cities are gems, however, for the right type of home buyer. This may include real estate investors, first-time buyers, move-up buyers, and even parents with children in need of "college housing".

As listed by CNNMoney, the 10 cities in which home values are rising fastest are :
  1. Madera, CA (Down 53.1% from peak; Forecast 21.5% gain through 2013)
  2. Medford, OR (Down 37.1% from peak; Forecast 20.1% gain through 2013)
  3. Yuma, AZ (Down 37.4% from peak; Forecast 16.7% gain through 2013)
  4. Corvallis, OR (Down 11.4% from peak; Forecast 13.2% gain through 2013)
  5. Eugene, OR (Down 21.2% from peak; Forecast 12.4% gain through 2013)
  6. Olympia, WA (Down 26.3% from peak; Forecast 11.3% gain through 2013)
  7. Boise, ID (Down 36.9% from peak; Forecast 11.0% gain through 2013)
  8. Billings, MT (Down 3.0% from peak; Forecast 10.1% gain through 2013)
  9. Lewiston, ID (Down 7.5% from peak; Forecast 10.0% gain through 2013)
  10. Sante Fe, NM (Down 17.1% from peak; Forecast 10.0% gain through 2013)
These 10 cities are more diverse in their make-up than their geography. All ten can be found in the western half of the United States. However, whereas some cities are expected to excel as a result of proximity of universities -- Eugene and Corvallis, for example -- others are expected to excel for economic reasons.

This includes cities such as Yuma, which is in a Foreign Trade Zone.

Real estate remains a local market, though, and even within these ten cities, there will exist neighborhoods in which growth exceed national averages, and areas in which growth falls behind.

For accurate, real-time real estate data in Metro Atlanta, please contact me.


For more information about the Atlanta area real estate market, please email me at ed@edshort.com or call me at 404.918.2500.


~ Ed Short, Atlanta REALTOR®














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