Rolando Trentini's Blog

Existing-home sales continued on an uptrend in December, rising for three consecutive months and remaining above where they were a year ago, according to the National Association of REALTORS®.

The latest monthly data shows total existing-home sales rose 5.0 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.

Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. “The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.

Affordability Conditions
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96 percent in December from 3.99 percent in November; the rate was 4.71 percent in December 2010; recordkeeping began in 1971.

NAR President Moe Veissisaid more buyers are expected to take advantage of market conditions this year. “The American dream of homeownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”

Total housing inventory at the end of December dropped 9.2 percent to 2.38 million existing homes available for sale, which represents a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November.

Available inventory has trended down since setting a record of 4.04 million in July 2007, and is at the lowest level since March 2005 when there were 2.30 million homes on the market.

“The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future,” Yun said.

Who’s Buying What
Foreclosures sold for an average discount of 22 percent in December, up from 20 percent a year ago, while short sales closed 13 percent below market value compared with a 16 percent discount in December 2010.

The national median existing-home price for all housing types was $164,500 in December, which is 2.5 percent below December 2010. Distressed homes — foreclosures and short sales — accounted for 32 percent of sales in December (19 percent were foreclosures and 13 percent were short sales), up from 29 percent in November; they were 36 percent in December 2010.

All-cash sales accounted for 31 percent of purchases in December, up from 28 percent in November and 29 percent in December 2010. Investors account for the bulk of cash transactions.

Investors purchased 21 percent of homes in December, up from 19 percent in November and 20 percent in December 2010. First-time buyers fell to 31 percent of transactions in December from 35 percent in November; they were 33 percent in December 2010.

Contract failures were reported by 33 percent of NAR members in December, unchanged from November; they were 9 percent in December 2010. Although closed sales are holding up better than this finding would suggest, contract cancellations are caused largely by declined mortgage applications and failures in loan underwriting from appraised values coming in below the negotiated price.

Single-family home sales increased 4.6 percent to a seasonally adjusted annual rate of 4.11 million in December from 3.93 million in November, and are 4.3 percent higher than the 3.94 million-unit pace a year ago. The median existing single-family home price was $165,100 in December, which is 2.5 percent below December 2010.

Existing condominium and co-op sales rose 8.7 percent to a seasonally adjusted annual rate of 500,000 in December from 460,000 in November but are 2.0 percent below the 510,000-unit level in December 2010. The median existing condo price was $160,000 inDecember, down 3.0 percent from a year ago.

Around the Country
Regionally, existing-home sales in the Northeast jumped 10.7 percent to an annual pace of 620,000 in December and are 3.3 percent above a year ago. The median price in the Northeast was $231,300, which is 2.7 percent below December 2010.

Existing-home sales in the Midwest rose 8.3 percent in December to a level of 1.04 million and are 9.5 percent above December 2010. The median price in the Midwest was $129,100, down 7.9 percent from a year ago.

In the South, existing-home sales increased 2.9 percent to an annual level of 1.76 million in Decemberand are 3.5 percent above a year ago. The median price in the South was $146,900, down 1.1 percent from December 2010.

Existing-home sales in the West rose 2.6 percent to an annual pace of 1.19 million in December but are 0.8 percent below December 2010. The median price in the West was $205,200, up 0.3 percent from a year ago.

Source: NAR http://realtormag.realtor.org/daily-news/2012/01/20/december-existing-home-sales-show-uptrend

To calculate how much remodel you can afford, follow these four steps: Ballpark the cost, establish a spending limit, make a wish list, and set your priorities.

What’s on your remodeling wish list? Maybe you’re longing for a spa-like master bathroom, a new eat-in kitchen, or a garage with space enough to fit your cars and your outdoor gear. Well, when it comes to home improvements, knowing what you want is the easy part. The tougher question is figuring out how much you can afford. Follow this four-step plan to arrive at the answer.

Ballpark the costs

The first step is to get a handle on how much your remodeling dreams will cost. Remodeling Magazine’s 2010-11 Cost vs. Value Report gives national averages for 35 common projects. Or you can use a per-square-foot estimate: In general, major upgrades, such as a bathroom remodel or a family-room addition, run $100 to $200 per square foot. Your local National Association of Home Builders (NAHB) affiliate can help with estimates. At this point, you’re not trying to nail down exact prices, but to get a rough sense of what your project might cost.

Figure out how much you have to spend

Once you have a ballpark cost estimate, the next question is whether you have the money. If you’re paying cash, that’s pretty easy to answer. But if you’re borrowing, you need to assess how much a bank will lend you and what that loan will add to your monthly expenses.

For the vast majority of homeowners, the best way to borrow for a home improvement is a home equity line of credit. A HELOC (pronounced HEE-lock) is a loan that’s secured by your home equity, which means that it qualifies for a lower rate than other loan types, and you can deduct the interest on your taxes. Because a HELOC is a line of credit rather than a lump-sum loan, it comes with a checkbook that you use to withdraw money as needed, up to the maximum amount of the loan. For help shopping for a HELOC, download our free worksheet.

The catch is that the minimum payment on a HELOC is just that month’s interest; you’re not required to pay back any principal. Like only paying the minimum due on a credit card, that’s a recipe for getting stuck in debt. Instead, establish your own repayment schedule. You can do this simply by paying 1/60th of the principal (for a five-year paydown) or 1/120th (for 10 years) in addition to the monthly interest. If you can’t afford that much, then you should reconsider your project.

Get quotes from contractors

Once you have ballpark estimates of what your job might cost and how much you can spend, you know whether it’s feasible to move forward. Assuming the numbers are within shooting range of each other, it’s time to get a nuts-and-bolts assessment of project costs.

Don’t ask contractors for bids yet, though. First, you need to determine exactly what you want, right down to the kitchen countertop material and the type of faucet. By specifying these details up front, you ensure that contractors are all pricing the same things, rather than the countertop and faucet they assume you want. If you’re using an architect or designer, bring them in now to help with these choices. If not, consult magazines, go to showrooms, and visit friends’ houses for ideas.

Next, get recommendations for at least three contractors from friends, neighbors, and other tradesmen that you trust. Give each one your project description and specific product lists and request an itemized bid. To make a final decision, assess some of their previous work, their attitudes, and their references, and then choose the contractor who impresses you most.

Prioritize and phase

Take the winning contractor’s bid and add a 15% to 20% contingency for the unforeseen problems and changes that occur on every project. Is the total still within your ability to pay? If so, you’re ready to get started. If not, it’s time to scale back your plans.

Because you have an itemized bid, you can get a good sense of what you’ll save by eliminating various aspects of the project. Enlist the contractor’s help: Explain that you’ve decided to hire him (and you’re not trying to nickel-and-dime him) but that the bid is over your budget, and ask him to recommend ways to cut costs. He may suggest phasing parts of the job—keeping your old appliances in your new kitchen, for example, because they’re easy to upgrade later—or stealing some underutilized square footage for part of your family room to reduce the size of the addition. He may even suggest waiting until the slow winter season, or letting you do some of the work yourself. Once the bottom line on the bid matches the bottom line on your budget, you’re ready to transform your home.

Read more: http://www.houselogic.com/home-advice/planning-your-remodel/how-to-budget-for-home-remodel/#ixzz1kU1Kha1p

The University of Evansville says current enrollment of nearly 2,700 students is the highest level in a decade. The school says enrollment is also up at Harlaxton College, its overseas campus near Grantham, England.

With the Spring Semester 2012 underway, the University of Evansville is proud to announce record-setting enrollment figures, including strong freshman retention on UE’s main campus and historic enrollment overseas at Harlaxton College.

Total enrollment currently stands at 2,696, the highest in a decade. Traditional undergraduate enrollment is at its highest since 2007.
These figures are bolstered by high retention rates, with 95.3 percent of fall freshmen returning this spring.

“We’re thrilled to see growth on campus, as well as a successful freshman class that has largely returned for the spring semester,” said Tom Bear, UE vice president for enrollment services. “These kinds of numbers, particularly in an economic climate that remains challenging, demonstrate the quality and value of a UE education.”

The historic enrollment trends continue across the ocean at Harlaxton College, UE’s British campus near Grantham, England. UE student enrollment at Harlaxton has increased 11 percent from last spring, with 122 UE students currently studying at Harlaxton. The total number of students at Harlaxton, including those from partner institutions, is 185 — the highest since 1989.

Source: University of Evansville http://www.insideindianabusiness.com/newsitem.asp?ID=51797

Several recent indicators for the real estate industry are pointing to a market that is on the mend and entering recovery mode.
Housing experts’ predictions for the new year tend to center around a market stabilizing before entering a gradual, albeit very slow, recovery. However, the tone is more upbeat than it has been in years for the housing market.

Here are a few of the signs that are showing the market moving in a more positive direction:

Home sales: Existing home sales are expected to increase 12 percent this year, following a 2 percent jump last year, Moody’s Analytics predicts. The signs are already showing: In November, pending home sales — a gauge for future home buying — reached its highest level in 19 months, the National Association of REALTORS® reported. (Read more.)

New-home market: Coming off of what could be considered the worst year for new-home building ever recorded, the sector is expected to bounce back this year. New-home sales and starts were already showing a rebound in the last few months of 2011. Moody’s is predicting that single-family housing starts will increase 37 percent this year, and new-home sales will soar 74 percent.

Housing stocks: Investors are starting to get optimistic about the possibility of a rebound too, and are turning to home builder stocks. These equities have recently outperformed the broader stock market and the S&P 1500 homebuilding index has increased 38 percent since mid-October, USA Today reports.

Consumer confidence: With mortgage rates at record lows and housing affordability high, about 71 percent of Americans say now is a good time to purchase a home. Also, more Americans are optimistic that home prices will rise over the next year — about 26 percent say prices will rise in 2012, an increase of 4 percent over the last survey, according to Fannie Mae’s December National Housing Survey

Source: “Housing Outlook Is More Upbeat,” USA Today (Jan. 15, 2012) and “Consumers More Confident, Survey Says,” Deseret News (Utah) (Jan. 16, 2012)

Scammers have targeted delinquent borrowers during the past few years, hoping to take advantage of their desperation and financial inexperience. Their approach typically involves posing as a representative of a nonprofit or government agency who can help with a loan modification or some other form of assistance.
Sheri Stuart, education manager at Springboard Nonprofit Consumer Counseling, says she frequently encounters consumers at courses offered by her organization who have been victimized by these scams. Stuart says she recently met a couple from Southern California at one of these events who’d paid $3,000 to a fraudulent company in an attempt to keep their home out of foreclosure.

“It’s disconcerting,” she says. “It has a ripple effect. It not only affects the home owners, it affects the communities as well.”

To keep more consumers from being taken in by these scams, Stuart offers the following four red flags to help determine whether borrowers’ knight in shining armor is actually a swindler on the make:

1. They ask for money up front. “That’s usually an indication that someone has an ulterior motive,” Stuart says.

2. “Phantom help” appears out of nowhere. If a consumer hasn’t proactively contacted anyone about missed mortgage payments, but suddenly gets calls and mail about getting help for missed mortgage payments, it’s probably a scammer.

3. They present phony credentials. Many companies that claim to offer assistance will have official-looking seals from credentialing institutions on paperwork, promotional materials, and Web sites. Research those organizations to make sure they actually exist.

4. They make promises they can’t deliver. If they make ambitious guarantees about being able to modify loans or halt foreclosures, that should set off alarm bells. “Nobody can promise you a loan mod,” Stuart says.

If your clients suspect they have been or are being targeted, point them to Loanscamalert.org to get more information and report the scammers.

By Brian Summerfield, REALTOR® Magazine http://realtormag.realtor.org/daily-news/2012/01/13/4-ways-id-borrower-assistance-scammers

If you’re one of the millions who has an eye on 2012 as the year in which you’ll buy a home (first or not), here are five things you can do now to put yourself on the right path:

1. Check your credit. Take my word for it: there is no bad surprise worse than a bad credit surprise. Okay, maybe there is one thing worse – a credit surprise you receive while you’re in the midst of trying to buy a home!

Recent studies have revealed that a record high number of real estate transactions are falling out of escrow, and that credit “issues” are a leading cause of these dead deals. Your best chance at catching and correcting score-lowering errors and other derogatory items before they destroy your personal American Dream is to start checking and correcting while you still have time on your side.

2. Do your research. The more rapidly the real estate market changes, the more it behooves smart buyers to study up before they jump in. And now’s the time – you can start doing online and in-person research into topics ranging from:

· Target states, cities and neighborhoods. Whether you’re relocating or simply trying to narrow down the local districts to focus on during your 2012 house hunt, December is a great time to start your online research into decision-driving factors like tax rates, school districts, neighborhood character and even prices in various areas. Resident ratings and reviews sites like Trulia and NabeWise can help you make the neighborhood-lifestyle match.

Once you narrow things down and start speaking to local agents, ask them to brief you on the local market dynamics, including how long homes typically stay on the market and whether they generally go for more or less than the asking price, so you can be smart about how you search. (And yes, there are areas where homes sell for more than asking, even as we speak!)

· Real estate and mortgage pros. If you don’t already have your pros picked out, now is the time to get on the horn or drop an email or Facebook message to your circle of contacts, asking them for a referral to a broker or agent they love. Follow up by: checking whether these pros are active in answering questions on Trulia Voices, searching for their name and seeing what sort of feedback on them you can cull from the web, then giving them a ring and launching a conversation about whether you and they might be a good partnership.

· Short sales and REOs. Distressed property sales are not for the unwary. If you want to target upside down or foreclosed homes, or are planning to house hunt in an area where many of the listings are described as short sales or foreclosures, get educated about what you can expect from a distressed property purchase transaction before you get your heart set on a short sale.

· What you get for the money. Online house hunting is a powerful tool – especially when it’s cold and wet! But there comes a point in your house hunt where you’ve got to just get out into the actual physical homes you’re seeing online in order to get a strong, accurate sense of what home features, aesthetics and location characteristics correlate with what price points.

· Mortgage musts. You can read a bunch of articles about mortgages and get yourself pretty far down the path toward qualifying for a home loan, but you can only get a personalized action plan for a smooth road ‘home’ by talking with a local mortgage broker and having them assess your basic financials. They might say you need to move funds around, pay a bill down or off or produce some sort of documentation from your employer. And the time to start all that is now.

3. Fluff up your cash cushion. So, you’ve saved up your 3.5 percent down payment. Perhaps you saved a little extra for closing costs. Or maybe you’re even one of those uber-aggressive 20-percent-down-ers. No matter how much you’ve saved, you’ll find that you could use more once you activate your home buying action plan. Mark my words – after closing, you’ll crave extra cash to do some repairs, upgrade a couple of things, buy appliances or even just to hold onto in order to minimize your anxiety about depleting your savings!

4. Shed some stuff. Sell it. Donate it. Give it to relatives who’ve always coveted it. Just get rid of it. You might even be able to kill three birds with one stone: (a) getting some cold hard cash to go toward your savings, (b) getting some tax receipts to help you out on your 2012 tax returns, (c) clearing the mental clutter that physical clutter creates and (d) getting a long head start on preparing for your move, affirming your commitment to your home ownership goal.

5. Sit very, very still. Sometimes, the best way to further our goals is to stop tripping ourselves up. In that vein, commit right now to refrain from making any major financial moves until you buy your home. Don’t quit your job to start that personal chef business (yet), don’t pull a bunch of cash out of your savings account (without getting clearance form your mortgage pro first), and don’t start buying cars (or anything else, for that matter) on credit.

Source: http://www.forbes.com/sites/taranelson/2012/01/10/5-things-to-do-now-if-you-want-to-buy-a-home-in-2012/

Borrowers who have a history of paying rent on time may see a boost to their credit score.
Experian, a leading credit report company, added a section to its credit reports last year that reflected on-time rent payments, which helped give a boost in the credit scores to some on-time rent payers. Now the two other major credit reporting companies are following suit.

CoreLogic and FICO recently announced they are also adding a score that reflects payment histories from landlords, The New York Times reports.

“Evidence of positive rental payments could be a plus for consumers,” Joanne Gaskin, FICO’s director of product management global scoring, told The New York Times.

Nearly half of high-risk consumers saw an increase of 100 points or more after their rental history was added to their credit report, says Brannan Johnston, the managing director of Experian’s rent bureau. Consumers with average or higher credit scores, on the other hand, did not see any major difference to their scores.

For former home owners who lost their homes to foreclosure, they may be able to rebuild their credit histories more quickly now by showing they are “very responsible renters,” Tim Grace, senior vice president of CoreLogic, told The New York Times.

Source: “A Good Rental History Can Help Borrowers,” The New York Times (Jan. 5, 2012)

As home buyers continue to rank affordability high, more home styles are getting simpler and homes are becoming lower maintenance, according to the latest Home Design Trends Survey, conducted by the American Institute of Architects.

Simpler exterior details and the use of durable building products are growing in popularity, according to the third-quarter survey of architects, which mostly focused on community and neighborhood design.

“Consumers are favoring homes with low-maintenance exterior materials such as fiber-cement, stone, tile, and natural earth plasters,” according to the report. “This significantly outpaces any other home exterior feature in terms of its increase in popularity. Over the past year, there has been a dramatic decrease in the popularity of sustainable roofing materials, as well as in ‘cool’ roofs with high solar reflective characteristics. Tubular skylights have also decreased in popularity over the past year.”

Also, could large residential subdivisions start becoming a thing of the past? According to the survey of architects, there has been a shift away from large residential subdivisions toward smaller-scale infill development projects, which tend to focus more on affordability, access to public transportation, nearby commercial opportunities, and job centers. The survey also revealed increased interest among consumers for neighborhoods that can accommodate a growing number of multigenerational households and that encourage more interaction with the community.

Source: http://stagedsold.blogs.realtor.org/2012/01/03/trend-watch-home-design-gets-simpler/

While most consumers are aware that home insurance policies cover damage to their property resulting from fire or wind, a recent poll finds many are unclear regarding tree damage.

A recent survey conducted by PEMCO Insurance asked consumers what would happen if a tree planted in a neighbor’s yard fell and caused damage to their home.

The company says 82 percent of respondents incorrectly answered that their neighbor’s insurance company would pay for the claim. In reality, the company says that the incident would likely fall under a homeowner’s own insurance coverage unless there was some kind of negligence on the part of their neighbor.

“With so few homeowners knowing the right answer, and wind storms so common in the Northwest, we have a great opportunity here to educate consumers,” said PEMCO spokesperson Jon Osterberg.

Many Los Angeles-area homeowners have likely been asking similar questions over the past several weeks, after a powerful wind storm swept through the area earlier this month. The Pasadena Sun reports public sector damages from the storm are more than $30 million.

Source: http://homeinsurance.com/news/many-homeowners-confused-on-tree-damage-rules.php

It’s a really common mistake and one that can cost a homeowner a ton of money in the event of a total loss to their home. Homeowners across the country see their property values dropping and assume that it’s a good time to lower their home insurance coverage. The problem with this is that your insurance covers the replacement cost of your home NOT the market value.

The replacement cost and the market value of your home are two very different things. The market value of your home is the price it would sell for in the current real estate market and includes the value of the land that the home sits on. On the other hand, the replacement cost of your home only includes the structure of your home (no land) and is calculated based on current construction rates in your area (amongst other things).

This misconception is even more dangerous now because while home values have dropped significantly over the past few years, construction costs have increased. This has many homeowners believing they are adequately insured while they are actually under-insured.

How to estimate your insurance coverage:

1- For a rough estimate on how much dwelling coverage your home may need you can use an estimator such as this home insurance calculator. It will use average construction costs in your area and the square footage of your home to provide an approximate coverage for your home. This tool only provides an estimate on coverage and should not be used as a true figure when purchasing a policy.

2- For a more exact idea about how much dwelling coverage you need, you should talk to a licensed homeowners insurance agent. They will ask you about the various features of your home including building style, building materials, finished square footage, etc. to give you an estimated replacement value for your property.

3- Last but not least, make sure to review the coverage listed in your policy at least once a year or anytime you make any updates or significant renovations to your home. It’s important to do this as building costs can inflate and the replacement cost of your home may increase when you perform renovations and additions.

Source: http://homeinsurance.com/blog/2012/01/06/why-you-shouldnt-lower-your-home-insurance-coverage-when-your-home-value-drops/