Thursday, June 30, 2011

Pending Home Sales Turn Around in May

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.
Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and Seattle.”
Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”
“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.
The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago. In the Midwest the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010. Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago. In the West the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.
Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
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*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
NOTE: Existing-home sales for June will be reported July 20 and the next Pending Home Sales Index will be released July 28; release times are 10:00 a.m. EDT.

6 Questions to Ask Your Home's Seller Before Moving In

Half the fun of house hunting is visualizing the fun you’ll have when the seller clears out and the place is yours, all yours. But wait one second, partner – once the seller is gone, so is a rich repository of information about your new home.  Most sellers know things about their/your home, and the neighborhood, which could make your life much easier, for years to come.  
To help you tap into that treasure trove of information, here are 6 questions to ask your home’s seller -- before it’s too late! (Note - it’s not protocol, in most cases, to just knock on the seller’s door or ring them up and start firing away. If you happen to run into them during escrow or inspections, feel free to ask. Otherwise, it’s best to run your questions through your agent, who will collect answers for you or let you know if the sellers - and their agent - are up for a more casual conversation.)
1. What’s the history of the house?  Many state disclosure forms and laws require the sellers to divulge a number of things about the history of the property, from how it’s been maintained, to what systems have broken down, to whether someone has died on the property. However, you might like to go deeper, finding out such things as whether the property was a rental, whether they recommend a set maintenance schedule (grab the gardener’s number, if you like the lawn!) for any part of the property, or whether they are aware of any interesting stories about past inhabitants or uses of the property that might provide useful or just plain old interesting information.  
This also gives you the opportunity to do key things:
a)  find out whether there’s anything that works, but is kind of wonky and needs an extra nudge or a hard turn to get it open/closed/activated - I’ve known many a buyer that called a contractor out post-closing to fix something, only to realize it actually worked, and just needed a jiggle or a little extra love (e.g., the “broken” garage door opener that the seller unplugged when they moved out), and
b) learn about any upgrades or improvements the seller has done to the property, and request everything from names of paint colors, to warranties, receipts and instruction manuals for appliances that sometimes get inadvertently packed away, moved and tossed away.
2. Where to go and who to know?  Home sellers can be the best source of infomation that doesn’t seem super important, but can actually take a long time to figure out yourself, like which of the 6 dry cleaners on the main drag does the best alterations, or which neighbor organizes the Neighborhood Watch or the pug playgroups.
If your home is in a homeowner’s association, or HOA, of course you received several hundred pages worth of HOA disclosures, but the seller might be able to just point you to the community’s DVD library or the board meeting room, or show you where you can find the carts you can use to bring bulky items up in the elevator from the parking garage.  I’ve even seen above-and-beyond sellers leave binders full of menus from their favorite neighborhood delivery spots.
3. What surprised them when they moved in?  Pleasantly or otherwise - moving in is always the occasion for a surprise (or a dozen!).  They might have been surprised at how friendly the neighbors were, how much light a particular room gets at a given time of day, how many people could fit around the table in the dining room at Thanksgiving or how noisy/quiet the school across the street is.  If they were surprised, you might be, too - so it’s great to know what shocked them before you move in.
4. Where is it and how does it work?  Where do you take the trash out to, and on what day of the week?  Where are the emergency water and electrical shutoffs, the breaker box and the utility meters?  Where’s the thermostat or the special wrench that turns on the gas fireplace?  How does that work?  Some of these are things a good home inspector will cover, but if yours didn’t or you weren’t able to make the inspection, some kind home sellers will happily brief you on these items.
Then, there are things like appliances, landscape lighting, sprinkler operating systems, septic tanks, basement pumps, pool filters and covers and hot tubs, which general home inspectors might not even look at. Most home sellers will know how to operate these things - and will gladly share that information with you. (For the most part, if you want these types of speciality systems looked at and evaluated before you remove your contract’s contingencies, you have to hire the sort of contractor who works on these specific things to look at them.)
5. Is there anything you’d like to leave?  There are really two flavors of this question.  First, you might have your eye on some item of the seller’s personal property, like a perfectly-sized print or perfectly-shaped breakfast booth, that you’d like to buy from them - if so, make an offer!  
And second, the seller might get partway through their move when they realize they want no part of patching up the wall behind the flat-screen or trying to angle that impossibly long couch back out the window they had to bring it in through, so they’d rather just leave it. I’ve seen sellers offer very nice pieces of furniture and electronics to buyers, gratis or for a price, when offered the opportunity, via just this question.
6.  What did I forget to ask?  Whether you’re a new homeowner or new to the area, this is where you throw yourself on the seller’s mercy and ask them to tell you anything you might have forgotten to ask. It’s not overkill to exchange phone numbers or email addresses - now, every transaction isn’t this friendly or cordial, but many are or could be.  It’s definitely in your best interests to leave the transaction on good terms with the seller, if possible, for reasons karmic and utilitarian.
Asking this question can get you all sorts of useful information, like:
  • the fact that you get 2 free bulky trash pickups every year,
  • advance notice of the block party that’s coming up the weekend after you move in, and
  • a warning that if you let your weeds grow too tall in the spring, the fire department will ticket you.
Okay - that’s just stuff I’ve personally learned when asking sellers this catchall question, but I can’t recommend it strongly enough!
Despite the fact that real estate transactions can get adversarial on occasion, the fact remains that the average home seller wants to be helpful, and wants their home’s buyer to be happy.  When these two wants collide, if you ask the right questions (okay, so there are more than 6 - but you get the gist!), you can save yourself untold amounts of research, time and energy!

Tuesday, June 28, 2011

Yes, you can sell your home in a down market

Meredith Gray, 53, with her two dogs on the front steps of her home, is trying to leave nothing to chance in selling her four-bedroom antique colonial home in Norwalk, Conn. A freelance fashion stylist and writer, Gray has taken every precaution she could think of in working to move the house she and her ex-husband bought 17 years ago.

CHICAGO — The home next door is in foreclosure. The neighbors down the street just put their house up for sale at a ridiculous discount. And “For Sale” signs litter lawns all over town.
“It’s probably the worst time you could find to sell a house since the late ’70s or early ’80s,” says Loren Keim, professor of real estate at Lehigh University.

Meredith Gray is leaving nothing to chance in selling her four-bedroom colonial in Norwalk, Conn. A freelance fashion stylist and writer, Gray, 53, has taken every action she could think of to get an offer for the house she and her ex-husband bought 17 years ago.

She researched and interviewed four brokers before hiring one, made a YouTube video showcasing the house, and created a hardcover book of comments and photos of the house in all four seasons to display for open house visitors. And she priced her house competitively with the broker’s guidance.

She even brought in a shaman to cleanse the house of any negative vibes, figuring it couldn’t hurt. “If you really want to move your house in this kind of a market, you have to do everything,” she says. “It’s a lot of effort, but people shouldn’t leave it all in the hands of their broker.”

Unfortunately, all that work still doesn’t guarantee a sale, particularly when many buyers feel little urgency to act and assume they will get a better deal by waiting.

Indeed, the best tips for selling underscore how the market has changed:

PRICE AGGRESSIVELY. Even if you’re fully aware that prices have plummeted, it can come as a shock when a real estate agent advises you to slap a low-low price on your home. The reality is that only 4 percent to 10 percent of homes on the market nationwide sell in a given month right now, according to Keim. A typical selling time for a home the last two years has been eight to 10 weeks. But that time frame makes selling sound easier than it is, because it doesn’t factor in all the homes that never sold, or were pulled off the market and later relisted. Keim says you need to ask for at least 1 percent less than competing homes.

Two local market statistics can be helpful. The most important may be days on the market. Available through most multiple listing services, it shows the average time it takes to sell a home. The specific sales data can provide valuable insight. When reviewing comparable homes it will become clear which list prices led to fast sales and which were set too high and prolonged the sale. But don’t focus on the overall average for a specific location. This can be misleading because it accounts only for homes that sold. Also, homes that were pulled off the market and relisted start the clock back at zero.

Another useful stat is the ratio of list price to sales price. It shows that, for example, homes sold in April went for 69 percent of their list price in Santa Barbara, Calif., 87 percent in Raleigh, N.C., and 96 percent in Milwaukee, according to data compiled by Zillow, the real estate listing and information service. Your local ratio also does not reflect unsold homes. But it gives an idea of the latest price trend.

STAGE LIKE A PRO. What’s new this year is that many sellers are willing to go beyond the basics of staging to make physical upgrades.

After learning a valuable lesson about today’s persnickety buyer, Michael Ayalon went the extra mile in renovating the kitchen of his house in East Meadow, N.Y. Recognizing that their ’70s-era kitchen looked dated, he and his wife, Jennifer, first spent $2,000 on stainless steel appliances before putting the three-bedroom home on the market in April for $399,000. After 15 showings, he says, they realized that “nobody could get past the fact that a project was waiting for them in the kitchen.” So it was do-it-yourself time for Michael, 35, a website designer. They pulled the house off the market for two weeks while he installed a new floor, ceiling, cabinets and granite countertops. Then they put it back on the market in late June at the same price.

GO ALL-OUT ONLINE. Agents recommend putting lots of high- resolution photos and as much information as possible online, including citing upgrades and what you love about living in the home. If you don’t show a photo of a key area — kitchen, bathrooms, backyard — prospective buyers may assume there’s something wrong and move on. It’s important to remember that buyers are going mobile, too. The use of smartphones and apps to review listings has exploded. Nearly 1.8 million homes are viewed daily on Zillow’s apps alone, and the service says 30 percent of its weekend traffic and 20 percent overall come from mobile devices.

Summer Pool Safety Tips

Great summer memories are made in the backyard pool. Everyone, no matter their age, can enjoy cooling off and taking a dip.

Swimming is a great way to spend time together as a family and it's a perfect way to beat the heat. Precautions and care should be taken, however, to ensure all parties stay safe.

First, be sure your children (and any adults) know how to swim. Most community recreation centers and YMCA's offer swimming lessons. Parents who are proficient swimmers may even choose to become their children's swimming instructor at home. Making it a fun experience can take the pressure off the child. Everyone can learn how to swim, it just takes time and patience.
In the instance, though, that you have guests or children you can't swim, be sure they stay in the shallow end of the pool or that they wear a lifevest.

Remember, teaching children how to swim doesn't guarantee their safety. Children must be watched at all time when they are in a pool. Drownings and accidents can happen in a matter of minutes. Simply stepping inside to answer a phone call can be enough time for a child to slip into the pool and drown.

If an accident does occur, be sure that whoever is watching the children, be it a sitter or yourself, is trained in CPR. From the Red Cross to the American Heart Association, there are a number of organizations that offer certification classes.

For extra safety during any play-date or party, have an "on-duty" lifeguard at all times. That means at least one adult is in charge of watching the children at any given time. Consider taking shifts and sharing the responsibility with other parents at the gathering.

As a second line of safety, keep your pool area in tip-top shape. Toys should always be picked up, so as not to be a temptation for children. There are also numerous security features on the market. Many homeowners have security covers or fences installed to keep children and pets from entering the pool area. Fences should have gates that latch and are child proof. If you don't have pets that will trip them, alarms are a great way to keep track of who is in the pool area. Perimeter alarms can be set to sound when a subject is within a foot or so of the fence or pool. Motion detectors can be even more sensitive and will let you know when any child has made their way to the backyard.

Next, having a family discussion about pool safety is important. Talk about dangers of pools, what is off-limits and when, and what to do if someone is injured. You may even want to have practice drills. Children should always know how to call 9-1-1 if needed as well. There may come a time when it is the adult that needs help.

As the last stage of safety, be sure that you have the correct amounts of chemicals in your pool. Too much chlorine can injure your eyes and is hard on your body. Too few chemicals and you could have a breeding ground for bacteria. If you lack confidence in your own ability to maintain the pool, be sure to contract with a professional who can come weekly to clean the pool and adjust chemical levels.

The bottom line is accidents happen fast. Be sure to take all the necessary precautions that will make your summer fun ... and cool!

Spring buying boosts home prices in 13 cities

WASHINGTON — Home prices in major U.S. cities have risen for the first time in eight months, boosted by an annual flurry of spring buyers.
  • A "sold" notice sits on a  "for sale" sign of a house, in Seattle on June 9, 2011.
    Elaine Thompson, AP file
    A "sold" notice sits on a "for sale" sign of a house, in Seattle on June 9, 2011.
Elaine Thompson, AP file
A "sold" notice sits on a "for sale" sign of a house, in Seattle on June 9, 2011.
The Standard & Poor's/Case-Shiller home-price index reported Tuesday that prices rose in 13 of the 20 cities tracked in April. Washington, D.C., saw the biggest price increases, followed by San Francisco, Atlanta and Seattle.
Still, six metro areas are at their lowest levels in the nearly four years. Those markets are: Charlotte, Chicago, Detroit, Las Vegas, Miami and Tampa.
Home prices in big metro areas have sunk to their lowest since 2002. Since the bubble burst in 2006, prices have fallen more than they did during the Great Depression.
The index, which covers metro areas that include about 50% of U.S. households, rose 0.7% in April, the first increase since July. The index measures sales of select homes in those cities compared with prices in January 2000 and provides a three-month average price. The April data are the latest available.

Case-Shiller Home Price Index

Metro area
April 2011 index
Change from March
Change from April 2010
Las Vegas
New York
San Diego
San Fran.
Source: Standard & Poor's and Fiserv
The index has a base value of 100 in January 2000; so, an index of 150 translates to 50% appreciation since January 2000 for a
typical home located in the market.
David Blitzer, chairman of Standard & Poor's index committee, cautioned that while the price index increase was a "welcome shift from recent months," much of the improvement was likely because of the beginning of the traditionally busy spring and summer home-buying seasons.
A delay in processing foreclosures is also a factor. Homes in foreclosure sell at a 20% discount on average, which can hurt prices in neighborhoods. But many foreclosures have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years.
Even with the increase, housing remains the weakest part of the U.S. economy.
Sales of previously occupied homes sank in May to a seasonally adjusted annual rate of 4.81 million. That's far below the roughly 6 million sold in healthy housing markets. Since the housing boom went bust in 2006, sales have fallen in four of the past five years.
New-home sales haven't fared any better. They fell in May to a seasonally adjusted annual rate of 319,000 — fewer than half the 700,000 that economists say must be sold to sustain a healthy housing market. Sales of new homes have fallen 18% in the two years since the recession ended. Last year was the worst for new-home sales on records dating back half a century.
Larger down payment requirements, tougher lending standards and high unemployment are preventing people from buying homes. Many people who can afford to buy are holding off, worried that prices have yet to bottom out.
The depressed housing market has weighed on the broader economy. Declining home prices have kept people from selling their houses and moving to find jobs in growing areas. They have also made people feel less wealthy. That has reduced consumer spending, which drives about 70 percent of economic activity.