Monday, February 28, 2011

Real Estate Outlook: Existing-Home Sales Rise

As more and more date becomes available, we are seeing a trend that looks to be a good thing! Although new home sales have been sagging for the most part, it looks as though existing homes are finally starting to come back. And yes, we will still see some price drops due to competition from foreclosures and short sales, but on the whole, the market is seeing more existing homes coming off the market. If the bottom isn't here now... it will be very soon.

By Carla Hill

The housing market continues to keep experts and analysts on their toes.

While existing-home sales rose again in January and are outpacing year-ago levels, we are still seeing a drop in home prices across much the country.

Existing-home sales increased 2.7 percent in January and are 5.3 percent above January of 2010.
Lawrence Yun, NAR chief economist, sees the rise as positive, but with room for improvement.

"The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence," Yun said. "The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."
Regionally, the West saw the largest existing-home sales increase. In the West they rose 7.9 percent and are 7.0 percent above January 2010. The Midwest and South also saw monthly rises -- up 1.8 and 3.6 percent respectively.

The Northeast didn't fare as well. The Northeastern region is down 4.6 from December and down 1.2 from year ago levels.

The most recent reports from the Case-Shiller Index have brought on a slew of comments from the experts. The Case-Shiller quarterly index showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010.

Karl Case reports that the housing market is "a rocky bottom with a down trend." And, unfortunately, he was the optimist!

Mr. Robert Shiller, on the other hand, reported that the increased precedence of foreclosures, as well as the impending decisions over the future of Freddie Mac and Fannie Mae, leaves risk of future declines at 15 to 25 percent.

Realty Trac reports that 26 percent of all homes sold in 2010 were foreclosures and short sales. The states with the largest percent of distressed sales were Nevada, at 57 percent of all sales; Arizona, at 49 percent; California, 44 percent; and Florida 36 percent.

It's the slow jobs recovery that is partially to blame for this second hit on the housing market, however, new reports from the Labor Department indicate that jobless claims fells again last week. It is now at the lowest levels since late July 2008.

This is a bit of welcome news for a market that is yearning for a bright spot.

Experts provide mixed forecast for real estate market in Myrtle Beach area

Here is a great article about how cash is really King now, more than ever! Important for prospective buyers!

Realtors across the Grand Strand, ready to put a somewhat slow winter selling season behind them, are counting on cash buyers to continue to sprout up and spur the real estate market this spring.

"We continue to see this sputtering where we get really busy, and then it kind of falls off a bit," said Rod Smith, the broker-in-charge of Coldwell Banker Chicora Real Estate. "The cash buyers are the catalyst to get things moving again."

In January, sales were slow, and the median prices for condominiums and single-family homes fell 18 percent and 14 percent from the same month last year, according to the Multiple Listing Service. Some Realtors, including Smith, said that the type of business that leads to sales - phone calls, online inquiries and showings - has picked up since then and is setting the stage for a good spring selling season. Others say the season will be about the same as spring 2010 because homebuyer tax credits have expired, and record-low mortgage rates have crept up.

There continues to be some challenges in getting financing, especially on condo-hotel properties, which may be preventing some purchases, but the cash buyers don't need to wait for the bank and can act on a great deal, Smith said. The cash purchases help take inventory off the market, which can help eventually stabilize prices in neighborhoods, he said.

The combination of early signs of an economic recovery, such as the stock market reaching over 12,000, and the cash sales may make some of the buyers that had been holding back more comfortable making a purchase, Smith said.

"Hopefully, that translates into stronger consumer confidence, which is really what is going to bring us out of this," he said.
Joanie Michael, who was looking for a home in Murrells Inlet this week, said after a particularly tough Maryland winter, she and her husband want to find a home in the area to retire to this spring so they can be settled in by summer.

Like some other retirees, the couple have already sold their Maryland home and plan to use that cash to buy the new house.
"Well you certainly can get a lot more home for your money in this area than you could up north," she said. "We're at a retirement age and will be living on a fixed income, so it just seemed at our age to pay cash right now was the best way to go."

The lure of low prices

About 47 percent of all properties bought in 2010 were paid for in cash, with 43 percent paid for using conventional financing and the remainder financed through agencies such as the Federal Housing Administration or Veterans Affairs. In a typical market, fewer than 20 percent are paid for in cash.

A number of factors are leading to the high level of cash buyers - most importantly, challenges in getting financing, especially on certain types of properties, and the low prices, said Tom Maeser, a real estate analyst with the Coastal Carolinas Association of Realtors.

Some buyers have the cash, while others refinance another property, get a line of credit or transfer investments to be able to buy, he said.

Paige Bird, a Realtor with Re/Max Ocean Forest, said the cash buyers she is working with are mainly attracted to the low prices in the area.

"I just think the pricing is bringing them here. It's amazing the value, and there is a tremendous amount of inventory that you can buy at almost 50 cents on the dollar," she said, adding that she has stepped up her social media activity to reach out to buyers.

Still, it's not all good news in the market, Bird said, because those low prices may drop further as short sales and foreclosures continue to be a significant part of the market.

"I think we're going to see the same transactional amount as we did last spring, but I think the values are going to be lower due to the high volume of short sales," she said.

Those low prices mean that sellers who don't absolutely have to sell should wait, said Penny Boling, the broker-in-charge of Century 21 Boling and Associates.

If a homeowner can't wait, they should list a property for sale now before the busy spring season, which will give it a better chance of getting seen and sold, she said. Properties have to be listed for a reasonable price to be competitive, which can be hard to swallow for homeowners, Boling said.

Cash buyers are going to be the only purchasers on condotels and some investment properties, but there is financing on other properties for qualified buyers, she said.

"If we don't have cash buyers, we'll be sitting here for a while, because there is no financing," Boling said. "The more the better to move this market forward."

Hard sell for condotels

Mark Branstrom, a regional vice president at Bank of America Home Loans, said the bank wants to make loans but didn't dispute that loans on condotels were nearly impossible to get.

The bank isn't lending money for condotels because there isn't a secondary market for those loans, and if an investor won't buy them, he can't make them, he said.

"We're selling all of our loans in the secondary market; we're not interested in shelving loans at the present time. We will be in the future ... but we need to see some stabilization in prices," Branstrom said.

For other properties, the standards haven't changed much since they tightened about two years ago, he said. The income verification process, which is required now, can take time, but he said banks shouldn't be blamed for what they are made to do by regulators.
The processing time for a mortgage has sped up; with many refinances done already, there are fewer loans to process, Branstrom said.

He said more potential buyers are coming in to get prequalified before looking at property, in part because the proof of ability to pay is required up front for many deals, especially with distressed properties.

Branstrom said there is a little bit of loosening of regulations, mainly detailed, common-sense changes such as allowing newly retired homebuyers to use their 401(k) as income, without two years of documentation.

When the area market becomes stable, then some of the lending standards will change, with smaller down payments required and possibly credit score requirements reduced, he said. Now, buyers of houses they'll live in are putting down about 10 percent of the purchase price, second-home buyers are putting down about 15 percent, and investor buyers are putting down about 20 percent, Branstrom said.

"We're ready for a normal lending environment, and we're going to get things in place to where once it does become normal, it's going to become a viable thing," Branstrom said.

In 2010, about 26 percent of single-family homes and 37 percent of condos sold were distressed properties, and those problem properties need to be cleared out of the market before prices can recover, said Laura Crowther, the CEO of the Coastal Carolinas Association of Realtors.

The number of foreclosures and short sales has begun and will continue to decline, she said.

"As that continues to happen, it will have less and less impact on the market," Crowther said. "We're never going to have zero foreclosures or short sales, they are a reality of life, but the numbers that we've seen over the past few years will diminish."
Will sales spring back?

Realtors and experts had mixed opinions on whether sales will pick up this spring and help clear out those distressed properties.
Maeser said he doesn't expect sales to be better than last spring, but that they might hold steady.

"People are attitudinally feeling a little better about the economy," he said. "They're not as nervous. They're willing to make some commitments they weren't willing to make a year ago."

Maeser said that the single-family home market will likely improve at a faster pace than the condo market.

While the past couple weeks have started to show signs that business will pick up in spring, Alex Holbert, the broker-in-charge of Re/Max Town & Country, said he doesn't expect that spring sales will be able to match last year.

Last year, the federal homebuyer tax credit spurred buyers into action at a time when there were also record low mortgage rates.
"Without incentives and even with interest rates creeping up, that's going to pour a little bit of cold water on it. I think it's going to have a dampening effect," Holbert said.

Smith disagreed. He said that he expects sales will be up and prices will stabilize.

"Each sale is one more nail in the coffin of this bad market that we've had," he said. "As we seal that coffin up, the consumer confidence is going to increase, which is going to generate more sales ... and we start that cycle of moving up out of this."

Big Banks: Foreclosure Probes Carry Financial Risk

Probes by state attorneys general and other government agencies into banks' foreclosure practices carry the risk of fines and other major costs, according to regulatory filings from three of the country's biggest banks.
Revelations that major U.S. banks rammed through hundreds of foreclosures daily without giving many borrowers a fair shot at keeping their homes triggered investigations from all 50 states' attorneys general and from state and federal regulators. They also sparked pressure from lawmakers and class-action lawsuits.

Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. called out possible financial repercussions in annual filings with the Securities and Exchange Commission Friday. None of them provided any details on how much was at risk.
"Those investigations and any irregularities that might be found in our foreclosure processes, along with any remedial steps taken in response to governmental investigations or to our own internal assessment, could have a material adverse effect on our financial condition and results of operations," Bank of America said.
The Charlotte, N.C.-based bank said it is dedicating significant resources to comply with investigations, and warned that the probes could result in "material fines, penalties" and expose the company to new lawsuits and more legal costs.
"Our costs increased in the fourth quarter of 2010 and we expect that additional costs incurred in connection with our foreclosure process assessment will continue into 2011 due to the additional resources necessary to perform the foreclosure process assessment, to revise affidavit filings and to implement other operational changes," Bank of America said in the filing.
New York-based Citigroup said investigations and scrutiny of its own foreclosure processes have "resulted in, and may continue to result in, the diversion of management's attention and increased expense, and could result in fines, penalties, other equitable remedies, such as principal reduction programs, and significant legal, negative reputational and other costs."

Sunday, February 27, 2011

Cash deals push home sales higher, prices down

WASHINGTON — More people bought previously occupied homes in January, as sales surged on a rising number of foreclosure sales and cash deals.

The rising number of distressed sales forced home prices down to their lowest level in nearly nine years, a troubling sign for the struggling housing sector.

The National Association of Realtors said Wednesday that sales of previously occupied homes rose slightly last month to a seasonally adjusted annual rate of 5.36 million. That's up 2.7% from 5.22 million in December.

Still, the pace is far below the 6 million homes per year that economists say represents a healthy market. And the number of first-time home-buyers fell to 29% of the market — lowest percentage in nearly two years. A more healthy level of first-time home-buyers is about 40%, according to the trade group.

Foreclosures represented 37% of sales in January. And all-cash transactions accounted for 32% of home sales — double the rate from two years ago, when the trade group began tracking these deals. In distressed areas such as Las Vegas and Miami, cash deals represent half of all sales.

One reasons cash sales are rising is that a growing number of purchases are being made by investors, the Realtors group said.

Millions of foreclosures have forced down home prices and more are expected this year. The median price of a home sold in January was $158,800. That's down 3.7% from a year ago and the lowest since April 2002.

"Home prices continue to languish," said Steven Wood, chief economist for Insight Economics. "Any recovery will be difficult to sustain given the still-large supplies of homes for sale and distressed properties."

A major barrier for first-time home-buyers is tighter lending standards adopted since the housing bubble burst. These have made mortgage loans tougher to acquire. Banks are also requiring buyers put down a larger down payment. During the housing boom, buyers could purchase a home with little or no money down.

And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further. High unemployment is also deterring buyers. Job growth, while expected to pick up this year, will not likely raise home sales to healthier levels.

With mortgage rates rising, mortgage applications have been volatile and are now near their lowest levels in 15 years. Economists say it could take years for home sales to return to healthy levels.

Last year, home sales fell to 4.9 million, lowest level in 13 years. And even that number, some say, was overstated.

CoreLogic, a real-estate data firm in Santa Ana, Calif., said it has found that 3.3 million homes were sold last year, vs. the trade group's 4.9 million figure. It has suggested the Realtors group inflates its numbers to make it appear that more homes are being sold.

The Realtors group, which has produced the monthly report on the number of existing homes sold since 1968 and acts as the chief advocate and lobbying arm for real estate agents, says it is reviewing its 2010 yearly estimate.

One obstacle to a housing recovery is the glut of unsold homes on the market. That fell to 3.38 million units in January. It would take 7.6 months to clear them off the market at the January sales pace. Most analysts say a six-month supply represents a healthy supply of homes.

Analysts said the situation is much worse when the "shadow inventory" of homes is taken into account. These are homes in the early stages of foreclosure but not yet on the market.

For January, sales were up in three of four regions of the country, led by a 7.9% rise in the West. Sales were up 3.6% in the South, 1.8% in the Midwest and down 4.6% in the Northeast.

The January increase was driven by a 2.4% rise in sales of single-family homes, which pushed activity in this area to an annual rate of 4.69 million units. Sales of condominiums were up 4.7% to a rate of 670,000 units.

Friday, February 25, 2011

New-home sales in January drop 12.6%

WASHINGTON — Sales of new homes fell significantly in January, a dismal sign after the worst year for that sector in nearly a half-century.

New-home sales dropped to a seasonally adjusted rate of 284,000 homes last month, the Commerce Department said Thursday. That's down from 325,000 in December and less than half the 600,000-a-year pace economists consider healthy.

Bad weather likely hampered some sales, although the industry has been struggling since the housing bubble burst in 2006.

Last year was the fifth consecutive year that new-home sales have declined after hitting record highs during the housing boom. Buyers purchased 322,000 new homes last year, lowest annual total on records going back 47 years. Economists say it could take years before new-home sales return to a healthy pace.

Builders are struggling to compete in markets saturated by foreclosures. High unemployment and uncertainty over home prices have kept many potential buyers from making purchases

Poor sales of new homes mean fewer jobs in construction, which normally powers economic recoveries. On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

New-home sales were uneven across the U.S. In January, sales fell 36.5% in the West and 12.8% in the South. But they rose 17.1% in the Midwest and 54.5% in the Northeast.

The big declines in the West came after a huge increase in December. Buyers had rushed to take advantage of a state tax credit of up to $10,000 on new home purchases in California at the end of the month, said Joshua Shapiro, chief U.S. economist for MFR.

"A surge in such activity took place in California during December, and there was payback in January," he said.

Sales of previously occupied homes have not fared much better. While sales rose slightly last month, the seasonally adjusted annual pace of 5.36 million is still far below the 6 million homes a year needed to maintain a healthy market.

Mortgage applications are near their lowest levels in 15 years.

The average rate on a 30-year fixed mortgage this week dipped to 4.95% from 5%,Freddie Mac said Thursday. It hit a 40-year low 4.17% in November, and has been trending upward since.

About 188,000 new homes were for sale at the end of January, fewest since 1967. The number of homes that have received permits to begin construction has held steady the past year while the number under construction and finished have plummeted.

The median sale price of a new home sold in January was $230,600, down 1.9% from the month before. Given the pace of new-home sales, it would take nearly 8 months to clear them off the market. Economists say a six-month supply is healthy.

Fixed Mortgage Rates This Week Better For Borrowers

After slight movement early last week,mortgage rates ended up looking better for borrowers with a decrease of .125% for conforming 30 year and 15 yearmortgage interest rates making them more competitive with FHA mortgage rates.'s daily survey of wholesale and direct lenders show that current 30 year fixed mortgage rates are at 4.750% and 15 year fixed mortgage rates are at 4.125%. 5/1 adjustable mortgage rates are at 3.250%. Still remaining below 5%, these are the best mortgage rates available with 0.7 to 1% origination fee to well qualified borrowers who can also meet lender approval.

FHA 5/1 adjustable mortgage rates increased .125% and are at 3.625%. >FHA 30 year fixed mortgage interest rates are at 4.625% and FHA 15 year fixed mortgage interest rates are at 4.000%, both remaining the same.

FHA mortgage loans continue to attract borrowers for the benefits they offer such as the low down payment requirement although FHA closing costs (APR) are higher due to the upfront mortgage insurance premium and other applicable FHA fees. Coming April 18th, FHA is increasing the annual mortgage insurance premium by .25% for FHA 30 year and FHA 15 year fixed rate mortgage loans.

Jumbo 15 year fixed mortgage rates saw the biggest jump increasing .250% and are at 5.250%. Jumbo 30 year fixed mortgage rates are at 5.500% and jumbo 5/1 ARM loan rates are at 4.125%, both remaining the same. Jumbo mortgage loans are available for borrowers in need of financing above the conforming loan limit which is $417,000 to $729,250 depending on location. Available with 0.7 to 1% origination fee, these low jumbo mortgage rates can still be obtained by borrowers who have outstanding credit.

MBS prices (mortgage backed securities) have fluctuated each day this past week depending on the news and investor reaction. Mortgage rates increase and decrease in the opposite direction of MBS prices. After Tuesday's mixed results, mortgage rates stabilized for the rest of the week upon the release of the producer price index,, the consumer price index and housing starts which all came in better than expected. surveys more than two dozen wholesale and direct lenders' rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1 point origination.

Closing Costs Explained

This is a great article on closing cost. I run into so many buyers and sellers that just don't know all the details of closing costs. The thing that most people do not know is that some of the costs are actually negotiable, either from the lender or the attorney (if your state requires one).

Here is the article:

Qualifying and being approved for a mortgage are only part of the financial responsibility of buying a home. There's also a host of closing costs that, as a buyer, you should expect. Affordability is a topic on the minds of today's buyers, so researching each of the following costs, large and small, is important.

1. Down Payment. This amount ranges widely depending on the dollar price of your home, but many financial experts recommend a down payment be at least 20 percent of the total cost of the house.

2. Credit Report and Score: Before you even think about buying a home, you need to verify the accuracy of your credit report and score. You may access your credit report three times a year for free at, but you generally must pay to view your credit score. This costs around $10 - $20.

3. Home inspection: It is imperative that you get a home inspection. Even newer homes may have hidden budget busters, such as termites, mold, or shoddy electrical work. Chances are your offer, unless you are buying "as is", has a clause that allows you to back out of the deal if the home inspection comes back unfavorably. A home inspection takes a few hours, during which you should be present, and costs around $300 to $500.

4. Loan Origination and Points: You may have agreed to pay "points" in order to get a lower interest rate. Think of this as pre-paid interest. For each point purchased, the loan rate is typically reduced by 1/8%. An origination fee is what you must pay the lender to write and process your loan. This can be up to several thousand dollars.

5. Appraisal: An appraisal protects your lender from investing in a property that is over-priced. That means if the home appraises for $200,000, but the seller wants $225,000 ... you will only be able to get financing for $200,000. An appraisal also helps you to know the real market value of the home you are interested in.

6. Private mortgage Insurance: According to the Federal Reserve Bank of San Francisco, "PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI." PMI protects your lender if you default on a loan, something that weighs heavily on the minds of lenders in today's economic climate.

7. Notary fees. Some states have a cap on the amount a notary may charge, while others don't. But you should generally expect a fee less than $10.

The good news? Your lender and real estate agent will provide a "good-faith estimate" of your expected settlement costs. These are only a few of the many costs associated with closings. Planning ahead for these expenses is important, and it is another reason to examine whether or not you can truly afford to buy a home at this time.

Obama administration says committed to helping homeowners

(Reuters) - The Obama administration on Thursday pushed back against Republican moves to kill several of its foreclosure prevention programs, saying they would close the door on struggling homeowners facing the worst U.S. housing crisis in generations.
"The administration remains committed to reaching eligible homeowners to give them every opportunity to avoid foreclosure and will continue working to make our programs as effective as possible," an Obama administration spokesperson said on Thursday.
Republicans in the House of Representatives earlier announced they would consider four bills aimed at killing different administration efforts to keep borrowers in their homes.

Foreclosure sales 26 percent of 2010 total

IRVINE, Calif., Feb. 24 (UPI) -- More than a quarter of U.S. home sales in 2010 involved homes in foreclosure, an online foreclosure marketplace said. said 26 percent of all residential sales involved a property in foreclosure, down from 29 percent in 2009, but higher than the 23 percent of 2008.

The sales price for homes in the process of foreclosure averaged 28 percent lower than homes not involved, a slightly higher discount than the previous year, the company said.

In 2010, 831,574 homes in some stage of foreclosure were sold, down 31 percent from 2009 and down 14 percent from 2008.

Sales involving properties in foreclosure tailed off toward the end of the year. In the fourth quarter, sales from foreclosures fell 22 percent from the third quarter to 149,303, Realtytrac said.

Housing Starts Jump 14.6% in January

Housing starts in January reached their highest rate in four months, increasing more than analysts expected, the Commerce Department reports. Housing starts jumped 14.6 percent to a seasonally adjusted annual rate of 596,000 units. 

Housing starts in January were helped by a 77.7 percent jump in multi-family homes. Single-family home construction, on the other hand, fell 1 percent.
Meanwhile, new home completions dropped to a record low of 512,000 units in January, falling 9.5 percent from the previous month.

And after housing permits surged in December by 15.3 percent, housing permits for future housing projects sank in January. New building permits dropped 10.4 percent to a 562,000-unit pace in January--mostly pulled down by a drop in multi-family and single-family unit permits. 

Source: “U.S. Housing Starts Surge in Jan., Permits Tumble,” Reuters News (Feb. 16, 2011)

Tuesday, February 15, 2011

Hot Trends In Bathroom Redesign

Do you want to get the most out of your bathroom renovation? Then this is a must read! Check it out, it has some great ideas from heated floors to water saving showers...

You may not know it yet, but your bathroom is begging to be redone. It dreams at night of the latest trends, colors, and fancy new gadgets. It talks with the tub about its most heartfelt desires. Maybe its time to make your bathroom's dreams come true!

Okay, so your bathroom doesn't have a mind of its own, but you do! And a bathroom redesign can be a fabulous way to increase your home's saleability. Every buyers loves a comfortable, modern bath.

What is hot right now? Let's start from the ground up. Buyers are looking for a bathroom that serves as a spa retreat, especially in an economy where regular trips to the spa are few and far between.

Heated floors are a good way to get started. Handy homeowners can even take on the project themselves! A woven mat or heating element is laid under your new tile. No more cold feet on winter mornings! This project runs about $500+.

And cover that new heat with some luxury tile. Travertine, marble, and granite are all popular choices. Travertine is a form of limestone that has a long history of use in buildings. It has a simple elegance and neutral tone that is always a great choice in updated baths.

Next, nothing makes a bigger change than a new coat of paint. Paint allows you to get the most bang for your buck. For just dollars a gallon, you can easily breathe new life into a dull space. Popular colors today include neutral taupes and grays. And while monotone is in, splashes of color (in small doses) can be a great way to add your own personality to the mix.

Are you a sucker for the latest gadgets? Start out with heated towel racks. You can find these for around $150 - $300.

Need help conserving water? Try Waterpebble. "Waterpebble is unique in the way it works to help reduce water usage," says the company's website. "The clever device monitors water going down the plug hole when you shower. Memorizing your first shower and using it as a benchmark, Waterpebble then indicates, via a series of ‘traffic lights’ flashing gently from green through to red, when to finish showering. Each time you shower Waterpebble automatically fractionally reduces your shower time helping you to save water without needing to think about it."

Another great energy saver is a tankless water heater. It only heats the water you need, instead of keeping gallons warms just in case.

And finally, make sure you have plenty of storage and counter space. Pedestal sinks look nice, but they are a nightmare for a woman's arsenal of beauty tools. Up the space quotient by offering dual vanities, or at least an extra-wide vanity to give the buyer lots of space to imagine their stuff. And be sure to have a linen closet, or at the minimum cabinet storage, for all of life's necessities.
A bathroom can be your sanctuary. Why not give in to its requests to be updated? After all, your bathroom knows best.

Dim view of housing market weighs on economy

The outlook by builders hasn't improved since the fall, when new-home sales were in the midst of their bleakest year in a half-century.
Less home building means fewer jobs for the economy. Construction work now accounts for about 5% of the nation's private employment. But nearly 2 million of the roughly 14 million unemployed Americans previously worked in construction.
Analysts say the economy needs to accelerate job creation before the housing industry can fully recover. Without more jobs and higher wages, home sales will stagnate.
"We probably won't see a strong recovery in construction jobs anytime soon," said Sal Guatieri, senior economist BMO Capital Markets. "Not a lot of people are showing up to builders' lots, not even to kick the tires. We just have to wait it out."
The National Association of Home Builders' index of builder sentiment for February was unchanged for the fourth straight month, at 16, the association said Tuesday. Any reading below 50 indicates negative sentiment. The index hasn't topped 50 since April 2006.
On Wednesday, the Commerce Department will report on home construction for January. The consensus view of economists is that builders broke ground on a seasonally adjusted annual rate of 535,000 homes last month. That's barely half the pace that economist view as healthy.
Homebuilders are struggling to compete with waves of foreclosures that are forcing prices down. Banks foreclosed on more than 1 million homes last year, and this year's figure is expected to be higher. Last year was also the worst in more than a decade for sales of previously occupied homes.
High unemployment, tight lending standards and uncertainty about prices have kept many would-be buyers away. Mortgage rates had been at their lowest levels in decades but have begun to climb. The average rate for a 30-year fixed mortgage just topped 5% for the first time since April.
Outside of housing, most signs point to a strengthening economy. The unemployment rate, now at 9%, fell over the past two months at the fastest pace in 50 years. Layoffs have sunk to their lowest levels since 1993. Economic growth is rising. And people are spending at the highest levels since 2006, when the housing market went bust.
Further declines in home prices could make people feel less secure with their finances, slowing spending and broader growth.
"It could be a fairly bad drag on the greater economy, one that would not be so easy to pull out of," said Dean Maki, chief U.S. economist for Barclay's Capital.
New-home sales represent only a small fraction of overall sales. But they drive job growth in construction. Each new home built generates, on average, the equivalent of three jobs for a year and about $90,000 in taxes, according to the homebuilders' group.
More jobs would spur demand for new homes. Increased sales would help clear some of the excess supply. Prices would stabilize, consumer confidence would rise and prices would gradually increase.
But with prices falling in most U.S. cities, new homes are less likely to be built.
"It's very hard to make a living when homes are being sold at fire-sale prices," said Patrick Newport, an economist with IHS Global Insight. "The economy's got traction, so the housing market should improve. But the numbers right now across the board are at rock-bottom levels."
Chris Schoonmaker, vice president for sales at S&A Homes in Pennsylvania and West Virginia, said he has seen a spike in the number of people looking to buy custom-built homes in Pittsburgh and State College, Pa. But he doesn't expect to hire until the housing industry achieves a full-blown recovery.
"Our goal this year is to hire back in a few spots, but we'll be very conservative with that," he said.
Analysts say the housing market should show some signs of revival this year. But it will likely be uneven. The latest regional data showed builders are becoming more optimistic in the Northeast and South but less hopeful in the Midwest and West.
"There are signs that we're starting to claw back from the bottom," said Carl J. Riccadonna, a senior U.S. economist with Global Markets Research. "As long as it's flat-lining during the winter, it's the spring that will tell the tale." Spring is the peak time for home-buying.
The latest builder sentiment report reflects a survey of 424 residential developers. They are more optimistic about single-family sales now and over the next six months than they were in January, even though foot traffic by prospective buyers remains fairly flat.
The world's biggest home-improvement retailer, Home Depot Inc., said Tuesday it plans to hire more than 60,000 seasonal workers to help with the busy spring season. But those hires, which are similar in number to the company's staffing levels last year, are tied to a seasonal promotion focused on flowers, vegetables and lawn care products.
Jill Didonna, division president for GL Homes, a Florida builder, said she is "cautiously optimistic" that buyers will be found for two master-planned communities set to open soon in Del Ray Beach and Naples. But that doesn't mean she's going to hire anytime soon.
"We don't see us expanding, but we don't see us contracting," she said. "We haven't reduced staff since 2006."

Why Hire a Real Estate Agent or REALTOR?

I know, not everyone wants to see this kind of article, and I was hesitant to even post it, but after reading it, there are some very good points. Please check it out if you get a moment and you are interested in buying or selling your property.

As spring rolls in, many people start listing their home for sale. The weather warms up and buyers, having recovered from the holidays, begin to house hunt.

Many buyers will go it alone. They hit the Internet for their first line of attack in house hunting. They peruse magazines and open houses. But they miss an important key player in their house-hunting mission–the real estate agent.

The real estate agent is not a go-between paper shuffler. Your real estate agent is the connection to the inside world of real estate. Yes, the Internet can provide you with lots of information, but it can't replace a knowledgeable real estate agent.

Finding the best agent who meets your needs is like finding a good friend. I'm not kidding. Having to work with an agent that doesn't understand your needs for housing can result in endless headaches, but working with an expert in the industry takes away the worry and stress, and streamlines the process.

It can be a jungle out there. Navigating through the foreclosures, short sales, and excessive inventory can make some buyers feel overwhelmed. The result? They continue to rent!
If you have the right team of experts surrounding you and looking out for your best interest, you're not afraid to aim high and go after exactly what you want. An agent isn't your cheerleader but is there to help you get precisely what you want and the best deal possible.

The agent has a fiduciary duty to you–to provide trust and confidence. Up to now, we've talked mostly about an agent–a person licensed to sell real estate but is that the same as a REALTOR®? The answer is no. And since the terms are often confused, it's worth taking a moment to explain how the National Association of REALTORS® (NAR) defines them.

Both are licensed to sell real estate but REALTORS® are members of the National Association of REALTORS® and are required to follow the REALTOR® Code of Ethics. According to NAR, there are 17 articles in the Code of Ethics and they are strictly enforced.

Here's what is stated in the 2011, Code of Ethics and Standards of Practice from NAR, "The term Realtor® has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations. No inducement of profit and no instruction from clients ever can justify departure from this ideal."

Whether you hire a real estate agent or a REALTOR®, the most important thing you can do is research their background, reputation in the market, and get references. This is likely the biggest financial move you'll make, so taking the time to find information about the agent or REALTOR® you're about to hire is a wise investment.

Visiting real estate offices and meeting with their staff is another good way to explore who will fit with your personality and match your needs. Contacting friends for referrals is a good start, but don't just hire your friend's agent or REALTOR® because the real estate transaction worked out for your friend. Spend a little time to effectively communicate your needs, goals, and desires, and then listen carefully to how the agent or REALTOR® responds.

It may not be a marriage but it's certainly a relationship that could last a lifetime, creating a successful financial situation for all.

Foreclosures sink California home prices

The same thing is happening in California, most of the sales were distressed and it is killing the average home price.

A surge in transactions involving "distressed properties" boosted the real estate market in the Golden State in January -- with an increase in sales for the third month in a row, at least adjusting for seasonal trends, the California Association of Realtors reported today.
At the same time, median prices statewide and in many regions throughout California were down in January, both month over month and from the year before. Statewide, the median single-family home price was $278,900, down 8.6 percent from December and down 2 percent from January 2010.
"Although prices typically fall seasonally in January and February of each year, the decline in the median price can primarily be attributed to the after effects of last fall's foreclosure moratoria," Leslie Appleton-Young, the group's chief economist and vice president, said in a news release.
"More distressed properties are coming on to the market, which led to an uptick in sales of distressed properties during January," Appleton-Young said. "We expect this trend to continue as lenders expedite the disposition of these properties."
The Realtors' data is based on transactions recorded in regional multiple listing services. By contrast, the monthly Silicon Valley real estate numbers reported by San Diego tracking firm MDA DataQuick are based on data gathered from county governments.
According to the Realtors' report, home values here in the Valley of Heart's Delight are holding up better than throughout the state. The median price in Santa Clara County last month was $530,000, down 5.5 percent from December, but up 1 percent from January 2010.
Southern California real estate: DataQuick's report on home sales in Silicon Valley and throughout the Bay Area is expected later this week. Today, however, DataQuick reported last month was theslowest January for Southern California in three years -- and the second-slowest in 15 years.
"Sales were lousy, but many investors and others looking for bargains stayed active," DataQuick President John Walsh said in a news release. "They kept working the distress-heavy, lower-cost markets through the holidays, which translated into a relatively high level of investor and cash deals closing last month."
In past, Walsh said, that explained a 6.9 percent drop from December in the median price to $270,000. That number was down 0.6 percent from January 2010. It included sales in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties.
Homebuilders: Their confidence remained weak this month -- at a level 16 for the fourth month in a row, according to the National Association of Home Builders/Wells Fargo Housing Market Index released today. (A number over 50 would indicate good sales conditions.)
"While builders are starting to see more interest among potential homebuyers, we are also dealing with a multitude of challenges, including competition from foreclosure properties," association Chairman Bob Nielsen, a Reno homebuilder, said in a news release.