Attention Home Buyers & Sellers You are not Alone!

Rates Dropped

MORTGAGE RATES REVERSE COURSE, DROP SHARPLY

Mortgage rates dropped dramatically this week in an abrupt shift following a two-month rise. The benchmark 30-year, fixed-rate mortgage fell 11 basis points to 6.31% , according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.31 discount and origination points. One year ago, the mortgage index was 6.32% ; four weeks ago, it was 6.24%. Before this week, the average 30-year fixed had risen seven out of eight weeks -- and it remained unchanged during the one week when it didn't go up. That two-month rise followed a six-week period when rates fell every week. (Source: Bankrate.com)

Thin Ice

10 Markets at Highest Risk for Declining Prices
PMI Mortgage Insurance Co. reports that its Market Risk Index scores have increased for 34 of the nation’s 50 largest metropolitan statistical areas.

The scores measure the risk that home prices will decline in the next two years. Nineteen MSAs face a greater than 50 percent chance that home prices will fall, up from 18 last quarter.

The risk of price declines continue to be concentrated in California and along the Eastern Seaboard. In fact, eight of the riskiest markets are located in California, eight are in the Northeast, and two are in Florida.

The 10 markets with the highest risk of declining prices are:

1. Sacramento-Arden-Arcade-Roseville, Calif.
2. San Diego-Carlsbad- San Marcos, Calif.
3. Oakland-Fremont-San Marcos, Calif.
4. Santa Ana-Anaheim-Irvine, Calif.
5. Nassau-Suffolk, N.Y.
6. Riverside-San Bernardino-Ontario, Calif.
7. Los Angeles-Long Beach-Glendale, Calif.
8. Boston-Quincy, Mass.
9. Providence-New Bedford-Fall River, R.I.-Mass.
10. San Jose-Sunnyvale-Santa Clara, Calif.

— REALTOR® Magazine Online

Trends

What's Hot and What's Not in Home Design
A nationwide survey of 923 real estate professionals by Mark Nash, real estate author of 1,001 Tips for Buying and Selling a Home (Thomson/South-Western, 2004), includes a list of home features that are popular among buyers and those that are so 2006.

For example, practitioners surveyed reported that the inability to keep stainless steel appliances, glass-front cabinets, and vessel-style sinks clean has caused them to fall out of favor with buyers. Also, spiral staircases have become less popular, particularly among buyers with young children.

According to the survey, here are what home buyers want in 2007:

• Glass tile. When retooling the bathroom or the kitchen, trendy remodelers choose glass tile over ceramic because of its reflective qualities.

• Engineered stone compounds. Engineered stone compound is this year’s kitchen must-have and best of all it’s less expensive than granite.

• Wrought iron. Make the back yard look classy with a wrought-iron fence.

• Colorful trim. When repainting trim around shutters, doors, and window frames, go for bright and bold.

• His-and-her home offices. Complete with fiber-optic cables for Internet connectivity.

• Extra storage space. This extra space buyers prefer in the form of linen closets, pantries, and luggage rooms.

Home trends that were strictly 2006:

• Bowl-shaped, above-the-counter sinks. Nobody can keep them clean.

• Glass kitchen cabinet doors. They look great in magazines, but lousy in real life.

• Bamboo wood. It dents and scratches easily and warps in humid weather.

Source: MarketWatch, Marshall Loeb (1/14/07) and Washington Post, Kirstin Downey (01/06/07)

PMI tax deductible in 2008!

New tax deduction created for mortgage insurance
By Holden Lewis • Bankrate.com

Mortgage insurance will be tax-deductible in 2007. For some homeowners, the new law means it will cheaper to get mortgage insurance instead of getting piggyback loans.

The 109th Congress passed the tax law in its final hours. Hundreds of thousands of homeowners will save a total of $91 million when they file their tax returns in 2008, according to estimates prepared by the mortgage insurance industry.

"This is really going to help close to a million Americans who will buy a home next year using mortgage insurance," says Kevin Schneider, president of U.S. mortgage insurance business for Genworth Financial.

Bottom line for consumers: Don't get a piggyback loan without taking a serious look at mortgage insurance, because mortgage insurance is likely to be cheaper in the long run, and it might even cost less in the short run.

According to an analysis by Bankrate, a homeowner with a $180,000 mortgage would save about $351 in taxes per year because of the law. That assumes that the borrower has good credit and is in the 25 percent tax bracket.

Where to buy in 2007

The Best Places to Own Real Estate in 2007
The housing market looks particularly healthy in the Southeast, according to Fortune and Moody’s Economy.com.

The top market, McAllen, Texas, is predicted to rise 8.5 percent in 2007, and another 9.8 percent in 2008. In all, four of the magazine’s hottest U.S. home markets forecast for next year are in Texas.

Also on the list are two markets in upstate New York: Syracuse and Rochester.

Here are the 10 housing markets projected to rise the most in 2007 and 2008:

• McAllen-Mission, Texas
• El Paso, Texas
• Albuquerque, N.M.
• Salt Lake City
• Syracuse, N.Y.
• San Antonio
• Rochester, N.Y.
• Baton Rouge, La.
• Fort Worth-Arlington, Texas
• Birmingham, Ala.

Source: Fortune (12/21/06)

Things will Improve!

Why Real Estate Markets Will Improve in 2007

There are reasons to be optimistic about real estate next year, a BusinessWeek Online analyst says.

New and existing home sales might slide further in 2007, but there won’t be a sharp decline like there was in the early ‘80s and ‘90s. Why? Because the overall economy is in good shape.

Some markets will become much more affordable, making a home purchase possible for people who never could have afforded one previously.

Speculators who drove up housing prices will move on to speculate on something else.

Fewer new homes will be built, and surplus inventory will be absorbed, so prices will stabilize.

Mortgage rates will remain at relatively low prices and could go even lower if the Federal Funds Rate falls, which it might.

Source: BusinessWeek Online, Maya Roney (12/12/2006)

Doggy Mansions

Sell a Fancy Dog House, Earn a Commission
The housing market is going to the dogs – literally.

Doggie Mansions, a company in West Palm Beach, Fla., that builds designer doghouses priced anywhere from $10,500 to $100,000, is offering 10 percent commissions to real estate professionals who make the sale.

Partners (and dog lovers) Stacy Small and Donald Gorbach, a veteran real estate practitioner, started the company last summer and quickly realized the value of paying commissions.

"On a $25,000 home, the commission comes to $2,500, and [real estate practitioners) don't have to split it with anybody," says Small, who goes by the title Chief Barketing Officer. "This way we can have a sales force in place."

Cincinnati Bengals quarterback Carson Palmer is among the company’s customers. He spent $25,000 on a two-story, brick-faced

Doggie

Mansion

for his three dogs – two Rottweilers, Chuck and Homer, and a Maltese named Muffin.

The 8-by-10-foot luxury dog retreat is equipped with air conditioning, a brushed micro-velvet suede couch, ceramic tile floors, large arched windows, a flat-screen plasma TV that loops classic canine movies like "Benji" and "Rin Tin Tin" and, of course, football-shaped doggie beds.

The mansions take two to four weeks to build, and can be shipped around the world. The company's Web site, www.doggiemansions.com, includes listings of dog houses.

Source: Newhouse News Service, Sam Ali (11/22/2006)

Curb Appeal is Important!

5 Ways to Improve Curb Appeal on the Cheap
Curb appeal is important. When the outside turns off buyers, they may never bother to look at the inside of a home.

An investment of as little as a few hundred dollars can make a huge difference in the appearance of an exterior. Here are some simple but effective suggestions:

• Wash the windows and replace any cracked or broken ones.
  
• Put a fresh coat of paint on siding, downspouts, and doors.
  
• Fill cracks in the driveway and walks.
  
• Trim bushes to below window height. Edge the lawn.
  
• Fertilize the lawn and plant blooming flowers. Put potted plants in strategic places.

Source: Chicago Tribune (11/27/06)

Not that many Bargains

Slump Doesn't Yield Expected Bargains
The housing slowdown isn’t giving buyers the big bargains that they might have hoped, and where there are discounts, buyers aren’t leaping to grab them, says Karl E. Case, an economics professor at Wellesley College, who specializes in real estate.

Case says the most recent survey he and a colleague conducted among home buyers revealed growing pessimism about buying in a down market.

“They’re scared they’re going to buy something very expensive that’s going to fall in value,” he says. Sellers, meanwhile, are being “stubborn. They seem to be holding out so far.”

The result: “People are staring each other down.”

Case described home prices as having “downward stickiness,” meaning they don’t fall nearly as much as they rise during the strong periods.

In previous down periods, Case points out, the economy has been in a general slump. This time, in most parts of the country, the economy is growing and adding jobs.

Case concludes the housing market is in “that flat period, of four to six quarters, where prices don’t plummet. They hold on.”

Source: The Boston Globe, Andrew Caffrey (11/26/06)

Make Some Money!

Daily Real Estate News  |  November 20, 2006

Tips for Jumping into Foreclosure Market

Is now the time to snap up a foreclosure? Investors Andy Heller and Scott Frank, who wrote the book Buy Even Lower: The Regular People's Guide to Real Estate Riches, say “yes.”

As fair-weather investors look for easier pickings, competition in foreclosed property market is diminishing, the authors say.

The shorter the time you intend to hold a property, the greater the "minimum investor discount" you require, Heller and Frank advise.

They recommend trying to buy homes for 20 percent to 30 percent off market value if you plan to flip the property; 10 percent to 20 percent off if you'll rent it out with the option to buy; and 5 percent to 10 percent if you intend to rent it out indefinitely.

Sources for REOs include multiple listings services, the Web sites of federal agencies and government-chartered corporations or their affiliates, such as HUD.gov, Ocwen.com (for VA-owned homes), FannieMae.com and FreddieMac.com; national online listing services, such as Realtytrac.com and Foreclosure.com, available by subscription; or property wholesalers, such as Homevestors.com (the "We buy ugly houses" people).

Source: Kiplinger’s Personal Finance Magazine, Patricia Mertz Esswein