Wednesday, August 31, 2011

Water Damage 101 - From Pillars to Post Home Inspectors

Water damage can come from a variety of sources: storms, flooding, broken water pipes and lines, leaking washing machines, and more. This can lead to mold and odor problems, and worse. If left unmitigated, water damage can eventually cause structural damage, which can entail significant costs to repair and can even affect a home's value.

Prevention is the first defense against water damage. Here are some basics on preventing water damage and its effects:
  • Water supply lines to and from washing machines and dishwashers should be regularly checked for leaks. Both the hoses themselves and the connections should be examined. Even a small leak can cause water damage over time, so any leaks should be repaired immediately. If the laundry room is located on the main floor or above, damage to the floor and ceiling below can be especially problematic.

  • Tank-style water heaters are prone to leaking, especially after several years of use. Over time, the bottom of the tank can rust out, causing a serious leak. Ideally, an overflow valve should be installed that will conduct leaking water to a pipe that will drain either outside or to an appropriate interior drain.

  • Another common source of water leaks is the icemaker supply line; this should be checked as well.

  • Be aware that pipe leakage can occur inside the walls or ceiling and may be impossible to detect visually before damage has already occurred.

  • Gutters and downspouts should be checked to ensure that water is flowing away from the home's foundation. Make any adjustments, and check the flow again using water from a garden hose.

  • Water leak detectors can be installed at floor level near water heaters and interior air conditioning units. Simple, inexpensive wireless models are widely available and will sound an alarm when water is detected on the floor near these appliances.

Beach front condo prices down 50 percent

A struggling housing market means dismal prices for condominiums on the Grand Strand.
Grand Strand real estate agent John Taylor says the average price of condos on the Grand Strand declined about 40 percent since 2008, but some have seen even bigger losses. "We've seen one bedroom condos drop more than half," says Taylor, "and two bedrooms went from $300,000 to about $150,000."
Beach front condos have seen the worst of the value decline. At the Ocean Forest Plaza in Myrtle Beach, one bedroom beach front condos that sold five years ago for $200,000 are now priced at $70,000.
A real estate report shows there are about 100 foreclosed condos in Horry and Georgetown counties, driving those condo prices down.
But Taylor says what's hurting Grand Strand condo prices the most is the amount of short sales listed.
A short sale is a agreement between the mortgage lender and the owner of the condo to accept a payoff less than the balance due on the loan. There are about 350 short sale condos on the market.
The average price of a foreclosed beach front condo is $196,000 and the average short sale is $166,000.
Taylor says a downward trend is continuing because of lending restrictionsand low consumer confidence.
"A lot of my market is second home or investor market," he says. "We'll probably be, my guess is, the last in the real estate industry to bounce back."
He says until something changes he doesn't see the market turning around for another couple of years.
Helene LaCaille is also a Grand Strand real estate agent. She optimistically says people should, if at all possible, hold on to their properties because the market will turn around for the better. "I know I'm one of the few telling people this," she says. "There's a lot of opportunity out there right now for people to take advantage of."

Tuesday, August 30, 2011

Pre-Foreclosure Short Sales Jump 19% in Second Quarter

Short sales shot up 19 percent between the first and second quarters, with 102,407 transactions completed during the April-to-June period, according to RealtyTrac.
Over the same timeframe, a total of 162,680 bank-owned REOhomes sold to third parties, virtually unchanged from the first quarter.
RealtyTrac’s study also found that the average time to complete a short sale is down, while the time it takes to sell an REO has increased.
Pre-foreclosure short sales took an average of 245 days to sell after receiving the initial foreclosure notice during the second quarter, RealtyTrac says. That’s down from an average of 256 days in the first quarter and follows three straight quarters in which the sales cycle has increased.
REOs that sold in the second quarter took an average of 178 days to sell after the foreclosure process was completed, which itself has been lengthening across the country. The REO sales cycle in Q2 increased slightly from 176 days in the first quarter, and is up from 164 days in the second quarter of 2010.
Discounts on both short sales and REOs increased last quarter, according to RealtyTrac’s study, but homes sold pre-foreclosure carried less of a markdown when compared to non-distressed homes.
Sales of homes in default or scheduled for auction prior to the completion of foreclosure had an average sales price nationwide of $192,129, a discount of 21 percent below the average sales price of non-foreclosure homes. The short sale price-cut is up from a 17 percent discount in the previous quarter and a 14 percent discount in the second quarter of 2010.
Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-distressed homes. The REO discount was 36 percent in the previous quarter and 34 percent in the second quarter of 2010.
Commenting on the latest short sale stats in particular, James Saccacio, RealtyTrac’s CEO, said, “The jump in pre-foreclosure sales volume coupled with bigger discounts…and a shorter average time to sell…all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales.”
Saccacio says short sales “give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO.”
Together, REOs and short sales accounted for 31 percent of all U.S. residential sales in the second quarter, RealtyTrac reports. That’s down from nearly 36 percent of all sales in the first quarter but up from 24 percent of all sales in the second quarter of 2010.
States with the highest percentage of foreclosure-related sales – REOs and short sales – in the second quarter include Nevada (65%), Arizona (57%), California (51%), Michigan (41%), and Georgia (38%).
States where foreclosure-related sales increased more than 30 percent between the first and second quarters include Delaware (33%), Wyoming (32%), and Iowa (30%).

Short sales surged in second quarter: RealtyTrac

Wednesday, August 24th, 2011, 11:00 pm

Second-quarter pre-foreclosure sales jumped 19% from the previous quarter, suggesting more banks and distressed borrowers are searching for efficient ways to offload properties near foreclosure, RealtyTrac said.
Third parties acquired 102,407 pre-foreclosures in the second quarter, while 162,680 bank-owned homes were sold in the same period.
Pre-foreclosure sales are generally short sales and properties sold within the foreclosure process.
“The jump in pre-foreclosure sales volume coupled with bigger discounts on pre-foreclosures and a shorter average time to sell pre-foreclosures all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales — at least in some areas,” said James Sacchio, CEO of RealtyTrac.
As for who is nabbing up distressed and bank-owned properties, RealtyTrac said third parties acquired 265,087 homes classified as in foreclosure or bank-owned in the second quarter. That is up 6% from the revised first quarter figure and down 11% from the second quarter of last year.
The average sales price for foreclosures or bank-owned properties hit $164,217 in the second quarter, down less than 1% from the first quarter and 5% lower than a year earlier.
The sales price for distressed real estate was 32% below the average sales price of homes not in foreclosure.
States with the largest quarterly increase in pre-foreclosure home sales included Nevada, which experienced a 43% increase; Washington (39%), California (38%); and Texas (34%).
The states with the highest number of foreclosure sales included Nevada, Arizona and California

Top Reasons to Own a Home

There's good reason that over half of all Americans are homeowners. Social and financial benefits are key factors when it comes to deciding to buy. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into chaotic lives.

Despite these facts, homeownership rates have taken a hits since the recession in 2009. Falling home prices along with reduced access to credit has kept many would-be buyers from entering the market. According to Morgan Stanley, the current homeownership rate is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965. Has this reduction been a fear-based one?

The top benefits of homeownership haven't changed, even in the face of a down economy. Here are the top five:

1. Savings: Be sure to check out the calculator at the end of this article. You'll find that long-term homeownership is still a way to get big savings.

2. Tax Breaks: They're not on the chopping block just yet. Many homeowners are still able to take the mortgage interest deduction (MID) each year, along with great rebates and credits associated with upgrades made to your home.

3. Equity: When you pay a landlord, it's money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but perhaps the home is worth $200,000. This means you have $100,000 worth of equity you've built up over time.

4. Budgeting: Unless you live in a rent-controlled apartment (and not many do), then each lease renewal could mean a jump in prices. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month payment on a 30-year mortgage is that same now as it will be in 30 years!

5. Security: When you own, it's yours. You can paint, improve, and decorate. The trees and flowers are yours to enjoy -- for a lifetime if you wish. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships. Recent studies have also shown that homeowners rank themselves as healthier than their renter counterparts.
Should you rent or buy? For a strictly financial evaluation, be sure to check out The New York Times' Interactive calculator to crunch the numbers. This advanced calculator takes into account everything from yearly costs to selling costs and broker fees.

Experts have recommended for years that if you're planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any extra expenses found in closing costs and are now making an investment in your future through home price appreciation. Once your mortgage is paid off, you'll have a real asset. That brings real stability.
Home affordability is at near record highs. Now is a good time to run the numbers and see if buying makes good financial sense. If it does, then you're in store for a wealth of benefits that only homeowners can experience.

Home prices firm in many cities, index says

WASHINGTON – Spring buying pushed home prices up for a third straight month in most major U.S. cities in June.
  • An "Open House" sign is in front of a new home for sale in Little Rock, Ark. on Aug. 22, 2011.
    By Danny Johnston, AP
    An "Open House" sign is in front of a new home for sale in Little Rock, Ark. on Aug. 22, 2011.
By Danny Johnston, AP
An "Open House" sign is in front of a new home for sale in Little Rock, Ark. on Aug. 22, 2011.
But the housing market remains shaky, and further price declines are expected this year.
The Standard & Poor's/Case-Shiller home-price index showed Tuesday that prices increased in June from May in 19 of the 20 cities tracked. Prices rose 3.6% in the April-June quarter from the previous quarter. Neither of those numbers is adjusted for seasonal factors.
Over the past 12 months, home prices have declined in all 20 cities.
Chicago, Minneapolis, Washington and Boston posted the biggest monthly increases. Metro areas hit hardest by the housing crisis, including Las Vegas and Phoenix, reported small seasonal increases.

Home price index

Metro area
Index June
Chg. from May
Chg. from June 2010
Las Vegas
Los Angeles
New York
San Diego
San Fran.
20 cities
The indexes have a base value of 100 in January 2000; so an index of 150 translates to a 50% appreciation for a typical home in the market.
Source: Standard & Poor's and Fiserv
Housing has been a drag on the economy and is a key reason it has struggled to recover two years after the recession officially ended. Home sales are on pace this year to be the worst in 14 years.
High unemployment, larger down payment requirements and tighter credit are preventing many buyers from entering the market. Many who can afford to buy are waiting because they are worried prices have yet to hit bottom.
Analysts say home prices have stabilized in coastal cities the past six months. Seasonally adjusted prices have fallen a modest 1% in that period, according to the index. That's less than a third of the decline from the previous six months.
But this year, home prices in many cities have reached their lowest points since the housing market went bust more than four years ago. Prices in Cleveland, Detroit, Las Vegas, Phoenix and Tampa are at 2000 levels.
"These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together," said David Blitzer, chairman of the S&P's index committee.
The index measures prices compared with those in January 2000 and creates a three-month moving average. The June data is the latest available.
Home prices are almost certain to fall further once banks resume millions of foreclosures, which have been delayed because of a government investigation into mortgage lending practices. If the U.S. economy slips back into recession, prices could drop even further.
"There's no theoretical floor for prices. If the economy worsens, housing will get into a vicious cycle of falling prices and foreclosures," said Mark Zandi, chief economist at Moody's Analytics. "When prices fall, confidence wanes."
Last year, a homebuyer tax credit helped boost prices temporarily. But prices began to fall shortly after the tax credit expired. They tumbled in big metro areas in March to their lowest level since 2002.
As prices have declined, so too have sales.
The pace of sales for previously occupied homes is trailing last year's 4.91 million sold, fewest since 1997. In a healthy economy, people buy roughly 6 million homes each year.
Sales of new homes dropped in July for third straight month. This year is shaping up to be the worst for sales of new homes on records dating back to 1963.
Foreclosures and short sales — when a lender agrees to sell for less than what is owed on a mortgage — made up about 30% of home sales last month, up from about 10% in past years. And 1.7 million potential foreclosures are being held up, according to real estate firm CoreLogic, either by backlogged courts or lenders awaiting state and federal probes into troubled foreclosure practices.