Increasing Home Values
October 26, 2012 at 9:41 AM | Posted in Buyers, Local Information, Real Estate News | Leave a commentTags: California, Home Values, Increasing, Orange County, Real Estate
National home values in the third quarter experienced their biggest increase in more than half a decade, according to Zillow.
Home values in the United States rose 1.3 percent from the second to the third quarter, marking the fourth straight quarter of increases, Zillow reported. The quarterly rise is the biggest increase since March 2006, when home values rose 1.5 percent.
Five Reasons Why You Should Buy a Home Now
October 18, 2012 at 2:09 PM | Posted in Buyers, Real Estate News | Leave a comment
Based on prices, mortgage rates and soaring rents, there may have never been a better time in real estate history to purchase a home than right now. Here are five major reasons purchasers should consider buying:
Supply Is Shrinking
With inventory declining in many regions, finding a home of your dreams may become more difficult going forward. There are buyers in more and more markets surprised that there is no longer a large assortment of houses to choose from. The best homes in the best locations sell first. Don’t miss the opportunity to get that ‘once-in-a-lifetime’ buy.
Price Increases Are on the Horizon
Prices will bounce along the bottom this winter. However, projections call for appreciation after that. Several studies and surveys call for price increases over the next few years starting in 2013. One such survey shows that prices will increase over 10% by 2016.
Price appreciation/depreciation expected over the next five years:
2012: -.4%
2013: +1.3%
2014: +2.6%
2015: +3.2%
2016: +3.5%
The average pre-bubble (1987-1999) annual appreciation was 3.6%
Rents Are Skyrocketing
Rents historically increase by 3.2% on an annual basis. A study issued earlier this year projects rent increases of 4% for the next two years. Trulia recently reported hat rents this year have actually shot up by 5.4%.
Interest Rates Are at Historic Lows
Federal Reserve Chairman Ben Bernanke has kept interest rates low in an effort to stimulate a lethargic economy. He understands that low rates will help housing and housing is a key to bringing back the economy. As the economy approves, the need to keep rates low will no longer exist. The 30-year-mortgage rate before the financial crisis was 6.57% (August 2007).
Buy Low, Sell High
We would all agree that, when investing, we want to buy at the lowest price possible and hope to sell at the highest price. Housing can create family wealth as long as we follow this simple principle. Today, real estate is selling ‘low’. It’s time to buy.
5 Great Reasons to Sell Your House Today
September 7, 2011 at 3:39 AM | Posted in Local Information, Real Estate News | Leave a commentWe are often asked “Is it time to sell my home?” The answer to that question is based on what your families’ goals are. If you don’t need or want to move for a few years it might make sense to wait for the housing industry to recover and prices to appreciate. However, if you wish to move within the next six to eighteen months, it is probably better to sell sooner rather than later. Here are five reasons why:
Your House Will Get More Exposure Now Than the Winter
Housing sales usually level off in the summer and then regain momentum in September and October. The spring buyers’ market has passed. Don’t miss the early fall market. It has consistently outperformed the winter season.
Distressed Properties Will Impact Prices
Distressed properties (foreclosures and short sales) on the market will increase this fall and winter. This will put tremendous downward pressure on prices for at least the next 12-18 months. Get your home sold before they become your competition.
Mortgages Will Become More Difficult to Attain
Lending standards are continuing to tighten. There is legislation currently being considered that will make it even harder for buyers to qualify. Less demand will equate to lower prices.
It is the Perfect Time to Move-Up
With prices where they are and interest rates at all time lows, there may have never been a better time to move-up into your dream home. If you move into a more desirable home now, you will be in position to gain larger equity as prices eventually appreciate.
You Get to Move On with Your Life
Probably the most important reason to sell is so you can get on with your life. You are considering selling for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you are thinking about moving. Are these reasons really important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.
Distressed Property: The Impact on House Values… Great article!
August 23, 2011 at 4:41 PM | Posted in Foreclosures, Real Estate News, Short Sales | Leave a commentTags: distressed sales appraisal appraisals values home realtor debra soudipour short sale foreclosure effects anaheim hills yorba linda orange county brea placentia
We are honored to have Chip Wagner, an icon in the appraisal industry and our good friend, as a guest blogger yesterday and today. Yesterday, Chip defined the role of the appraiser in today’s real estate market. – The KCM Crew
Today, Chip will discuss the impact distressed properties have on housing values.
Contrary to the alarming nature being used in reporting that appraisers are killing deals, I would bet that most of my peer appraisers are not seeking the lowest possible sales to use in their appraisals. They are searching the data available in the real estate market for the best comparables out there. But the reality is that good comparables are hard to find.
Just last week, I was finishing up an appraisal in a condominium in a Chicago suburb. It is a 246-unit development that has 24 listings available. In the past 12 months, there were 5 sales, of which 4 were distressed (short sales and foreclosures). The one arm’s-length transaction sold pretty low too, and when confirming with the listing agent, we found that the owner needed to sell (but not under duress) and understood the oversupply in their marketplace and didn’t want to sit on the market for a year or more competing with the overpriced competition. In this same condo development, in the previous year (13 to 24 months ago), there were 15 sales of which 6 were distressed (still 40%, but not 80% of the market). As a result, the average sales price has dropped over 15% in the past year.
First of all, with 24 competing on the market and only 5 sales in the past year, which is a 2.5 year supply of inventory. A balanced market is 4 to 6 months, so a 2.5 year supply of inventory is going to place significant downward pressure on prices.
What does this mean to overall values?
According to RealtyTrac.com, foreclosures, on average, sell for a 35% discount and short sales sell for a 10% discount. These distressed properties might not be in the same physical condition as the non-distressed properties. However, at sizable discounts, many purchasers are more than willing to absorb the risk of purchasing a property “as-is” and doing the necessary repairs as well as playing the waiting game with lenders in purchasing short sales.
There comes a point where distressed market competition becomes the marketplace. The appraiser may consider making an adjustment for the “terms of sale.” For example, if using a short sale or a bank-owned foreclosure comparable in an appraisal, an adjustment could be made to reflect the discounted value of that comparable. I have done this in many of my appraisals, without underwriter or appraisal reviewer concerns. The appraiser must support this adjustment and thoroughly explain why it was made.
There are other scenarios where distressed competition is a very small portion of the market, and these sub-markets appear to be doing better. But even if there are not distressed sales flooding the marketplace, we are still often challenged with finding decent comparables – and that is the volume of sales taking place.
In the entire Chicago area, according to local MLS data, in January 2006 we had over 83,000 detached homes to sell in the previous 12-month period. In July 2011 it has fallen to 38,300 detached homes to have sold in the past year. What this tells us is that on average, neighborhoods that once had 20 comps to select from for consideration in our appraisal reports, now have 8 comps to select from. And you can bet with the typical market having 30% distressed competition, this is down to 4 or 5 arm’s-length transactions. This is making the appraiser’s job more difficult than ever. Comparables are limited, and the motivations and terms of the sale are complicated.
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ALVIN “CHIP” WAGNER, SRA, SCRP, RAC Member
A. L. Wagner Appraisal Group, Inc. ~ Real Estate Appraisers & Consultants
Specializing in Relocation, Litigation & Lending Appraisals
Naperville ~ Plainfield ~ Chicago ~ Flossmoor
1807 S. Washington Street – Suite 110, Naperville, IL 60565
Telephone 630/416-6556 ~ Fax 630/416-6591
website: http://www.wagnerappraisal.com
Things to Consider Before Renting a Home You Can’t Sell?
August 16, 2011 at 6:27 PM | Posted in Real Estate News | Leave a commentTags: anaheim, brea, buying, consider, county, estate, hills, home, lease, linda, orange, real, renting, selling, yorba
In this difficult housing market, more and more homeowners are considering renting their house instead of adjusting the price. We strongly believe that residential real estate is a great investment and therefore can understand this thinking. However, if you have no desire to actually become an educated investor in this sector, you may be headed for more trouble than you were looking for.
Before renting your home, you should take the following steps to make sure this is the right course of action for you and your family.
Set a consultation appointment with an eviction attorney
People rent out their homes assuming that every tenant will pay the rent every month. We must realize, because of the current economy, there are millions of people not paying their mortgage. There is a chance you may rent to someone who at some point can’t (or simply won’t) pay you the rent. Understand what the legal challenges of eviction could potentially be before deciding to rent your home
Interview property managers
If you are not a full-time investor, hire a professional to handle the property. You need someone to find a qualified tenant, collect the rent and manage the problems. You don’t want to have to make collection calls. What would you say if a tenant told you that they had enough money to either buy food for their children or pay you your rent but not both? You need a person experienced with these situations to help.
You also don’t want to receive calls at all hours of the day and night regarding maintenance issues or challenges a neighbor may be creating for your tenant.
Create an honest budget
Sure, you will receive revenue in the form of rent. However, don’t forget you will also have expenses. Some of the expenses you should consider:
- Mortgage Payment (unless there is no mortgage on the home you will rent out)
- Property Taxes
- Maintenance Expenses such as repairing or replacing: roof, heating/air conditioning unit, appliances, etc.
- Insurance – Check with your insurance company who may suggest or demand that you increase your liability coverage.
Distressed Property Sales: Down… But Not Out
August 16, 2011 at 5:44 PM | Posted in Foreclosures, Real Estate News | Leave a commentTags: anaheim, blog, brea, county, debra, estate, hills, linda, orange, placentia, real, reo, sales, short, soudipour, yorba
There has been much written about the falling inventories of distressed properties in many market places. Some have looked at the decreasing percentage of distressed property sales reported by the National Association of Realtors over the last four months as a sign that we are finally cleaning out the last remnants of the foreclosures. If you look at the numbers, it could seem that way:
March: 40% of all sales were distressed properties
April: 37% of all sales were distressed properties
May: 31% of all sales were distressed properties
June: 30% of all sales were distressed properties
However, in reality the falling percentage of distressed property sales is not an accurate indicator. The reason the percentages are falling is because many homes are currently tied up in the process of foreclosure.
An article in HousingWire quoted James Zeldin, EVP Default Resource on the issue:
“I would absolutely expect an increase in inventory over the next 12 to 18 months. I’m personally expecting that a lot faster. I believe we’re going to see macro forces pushing these institutions to do more REO liquidation.”
Once these properties are cleared through the foreclosure process, the inventories of distressed homes will again increase and the percentage of sales will again begin to climb.
Bottom Line
We are working our way through large numbers of distressed properties every month. However, there are many more which will come to market in the next year to eighteen months.
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