home values

Columbia SC Real Estate News - July 2013

In this Issue for July 2013:

Real Estate Values Set Record Nationally

Rising Mortgage Rates Raising Concerns

Bad At Math? You're More Likely To Lose Your Home

 

Real Estate Values Set Record Nationally

Real Estate Values Set Record NationallyU.S. home prices jumped 12.1 percent in April from a year ago, the most since March 2006. More buyers and a limited supply of available homes have lifted prices in most cities across the country, a sign of a broad-based housing recovery.

The Standard & Poor’s/Case-Shiller 20-city home price index released recently also rose 2.5 percent in April from March, the biggest month-over-month gain on records dating back to 2000. Prices rose from a year earlier in all 20 cities for the fourth straight month. Twelve cities posted double-digit gains.

The housing recovery is looking more sustainable and should continue to boost economic growth this year, offsetting some of the drag from higher taxes and federal spending cuts. Steady job gains and low mortgage rates have encouraged more people to buy homes.

David Blitzer, chairman of the index committee, said the housing recovery should continue even with mortgage rates rising. Borrowing rates have jumped after Federal Reserve Chairman Ben Bernanke said recently that the Fed could slow its bond-purchase program, which is intended to keep long-term interest rates low.

Prices are rising because demand is up and fewer homes are available for sale. That's made builders more optimistic about their prospects, leading to more construction and jobs.

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The April figures are the latest available.

 

.

Rising Mortgage Rates Raising Concerns

Rising Mortgage Rates Raising ConcernsAlthough still low by historic standards, the recent increase in mortgage rates have put a damper on a home refinancing boom and will make buying a home noticeably more expensive for borrowers. What's more, some experts say, the rapid run-up could pose a threat to consumer confidence, delivering a blow to the recovering housing markets and even beyond.

Mortgage rates have jumped a full percentage point above their recent record lows, raising costs for borrowers and questions about the housing recovery.

A standard 30-year fixed-rate home loan hit an average of 4.63% recently before backing off just slightly. That's up from 3.49% on May 3rd and an all-time average low of 3.44% during a week in December.

Regardless of whether the jump in rates reflects a new reality or just volatility in a skittish market, refinance volume is likely to fall further. Home purchases have been on the upswing, but not enough to make up for the decline in refinancing.

Higher rates have an instant effect on family budgets. At 3.5%, a borrower who bought a home for May's median price of $368,000 would have a principal-and-interest payment of $1,322, assuming a 20% down payment. At 4.5%, that payment rises to $1,492.

At 6%, still a decent rate by historical standards, the payment goes up to $1,765.

Despite the run-up in rates, homes remain affordable in most markets across the nation with prices still about 25% off their peak during the housing bubble.

Higher mortgage rates tend to have the immediate effect of pricing certain stretched borrowers out of the market. But it will likely take rates rising to 6% over the next 12 months to depress home purchases and prices.

.

 

Bad At Math? You're More Likely To Lose Your Home

Bad At Math? You're More Likely To Lose Your HomeAccording to a study released last week, math-challenged borrowers were five times more likely to default on their loans.

The study examined several hundred borrowers who held mortgages issued in 2006 and 2007 — right before the mortgage meltdown. Of the study subjects, 25% of the borrowers who scored in the lowest bracket for math skills had defaulted on mortgage payments within five years of getting the loans. Meanwhile, only 5% of those in the top tier for math skills defaulted.

The survey sample included homebuyers from a variety of backgrounds, from blue collar workers to corporate professionals. Their math ability covered the gamut — from those with very limited abilities to a mathematician with a six-figure salary.

The researchers controlled for differences in overall intelligence by measuring for verbal and general IQs, as well as math skills, and controlled for socioeconomic factors, such as age, sex, income, ethnicity and local labor market conditions.

Surprisingly, it did not seem to matter what kind of mortgage the borrowers had, the researchers found.

The researchers asked the survey participants a series of five basic questions. The simplest question asked them how much a $300 sofa would cost at a half-price sale. The most difficult asked how much a savings account of $200 would grow to after earning 10% interest for two years.

Determining why those with poor math skills default on mortgages more often than others will take more research, but previous studies suggest that people who struggle with simple math also struggle with handling their finances. This group tends to budget less carefully, misuse credit cards and mishandle financial emergencies, such as temporary income losses. When they hit a rough financial patch, they may not understand the math well enough to negotiate the most favorable settlements with lenders.

The report suggested that benefits could come from improved financial education. The more homeowners understand money matters, the less likely they are to mishandle them.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Owners Think Homes Worth More Now Than When They Bought ThemSlightly over half of all homeowners say their homes are worth more today than they were when they bought them, according to a new national survey conducted just before Christmas.

Most homeowners are confident they know what their home is worth, and a greater number than ever, some 29 percent, believe that they have lost value since they bought it.

An earlier Rasmussen national telephone survey conducted in early November found that just 12 percent of U.S. homeowners now expect the value of their home to go up in 2012.

The latest Rasmussen Reports national telephone survey also found that homeowners are growing increasingly pessimistic about their home equity position. The survey found that just 44 percent of homeowners believe their home is worth more than the amount they still owe on their mortgage, a decrease from 50 percent of owners in April who believed their home is worth more than the mortgage.

The survey of 690 U.S. Homeowners was conducted December 19th & 20th, 2011 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence.

Are you a homeowner? If so, do you think your home is worth more than when you bought it? We’d love to hear how you feel about your home’s value. Leave us a comment by clicking the comment link below. Your email address will never be shared on this site.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Home Values Continued Slide in 2011Five consecutive years of declining home values have taken its toll on the country, with homeowners shouldering the brunt of these losses. In 2010, home values fell a collective $1.1 trillion according to Zillow, but in 2011 those losses have eased with Zillow estimating that home values fell by approximately $681 billion or 5.1 percent.

Zillow states that the bulk of the losses for the year were realized in the first six months of the year, falling by $454 billion. Since then, losses have slowed and have fallen at a pace that is half that of the first six months of 2011 at $227 billion.

One hundred and twenty-eight metropolitan statistic areas are tracked by Zillow, with nine showing gains for 2011.

Offering comment on behalf of Zillow was the company’s chief economist, Stan Humphries, who stated, “While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom. Compared to last year when we saw sharp declines following the expiration of the homebuyer tax credits, this year we saw some organic improvement in home values, in terms of a slowed depreciation rate which resulted in a smaller total value loss for the year.”

Humphries added that the losses are not over yet noting that the “…unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market…” and may push off the recovery until late 2012 or early 2013. A delayed economy will likely have a huge impact on next year’s general election with Barack Obama seeking a second term and a Republican hopeful working to send him home.

For homeowners who have seen their home values slide substantially since 2007, the recovery cannot come soon enough. Positive local conditions in some areas demonstrate that prices can stabilize and even rise. But prices can vary dramatically from neighborhood to neighborhood, something buyers, sellers and refinancers should consider and obtain local comps for accurate localized information.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Home Values StabilizeHome values in the U.S. declined slightly in October as the depreciation rate stabilized, but the market bottom likely will not hit until sometime next year after a drop of another 2 percent to 4 percent, according to the real estate research site Zillow.

According to Zillow’s latest market report, home values fell 0.3 percent in October compared to the previous month.

On a year-over-year basis, the Zillow Home Value Index declined 5.1 percent to $147,900. Home values have fallen 23.7 percent since their peak in May 2007.

Throughout the nation, 95 of the 156 metropolitan areas covered by Zillow saw monthly home value depreciation and 39 areas showed monthly home value increases. Twenty-two areas remained flat.

There are some somewhat positive signs in hardest hit areas. In Miami, home values were flat on a monthly basis, while Phoenix and Detroit both saw monthly gains of 0.2 percent and 1.0 percent, respectively.

Only ten metro areas saw home value appreciation on a yearly basis, with seven of those cities also having monthly appreciation.

The foreclosure liquidation rate continued to decline in October, with 8.1 out of every 10,000 homes in the country liquidated. This is down significantly from the record high of 10.7 out of every 10,000 in October 2010 – just preceding the “robo-signing” controversy and investigation into shoddy foreclosure paperwork by the biggest lenders.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.

Real Estate Short SalesThe term “short sales” is used to describe a situation in which a homeowner is at risk of defaulting on their loan, and the lender agrees to sell the property below the original appraisal price in order to avoid foreclosure. Most lenders do not readily agree to short sales, although exceptional circumstances such as a homeowner losing his/her job or the death of a wage-earning spouse may make some of them more open to doing so.

If a property is sold as a short sale, the lender recoups at least a portion of the original loan amount, the homeowner avoids the stress and stigma of foreclosure, and the new homebuyer gets a property below its original appraised price. If a short sale doesn’t work, then the property usually goes into foreclosure.

Short sales may be an emerging trend as the rate of foreclosure is rising dramatically across the nation.

The credit of homeowners may be impacted after a short sale, but it all depends on how the lender reports the outcome. Some lenders report a partial loan repayment as full payment of the debt due, which does not adversely impact the credit of the borrowers. Other lenders report the sale as “settled,” which adversely and significantly impacts the borrower’s credit. The other problem is that the portion of the loan amount forgiven by the lender may actually count as taxable income by the IRS.

In summary, a successful short sale has some potential positive benefits (e.g., homeowners avoid foreclosure, lenders recoup at least a portion of the loan amount, new homebuyers gets a property at below the original appraisal price, etc), but there are also many negative consequences.

Some of these potential negative consequences include: the negative impact on borrower’s credit, negative impact on the value of other similar homes in the neighborhood, and that the amount forgiven by the lender may be taxable event.

Homeowners having difficulty making their monthly mortgage payment may benefit from talking to a real estate agent who is experienced in short sales.

Home and Commercial Inspections in the Columbia SC area is our specialty! Every year we help hundreds of clients save tens of thousands of dollars, by responsibly finding and exposing conditions that threaten property, value and safety. To learn how we may be able to serve you, please click and read, or call 803-261-5810.