Home values were reported unchanged in November 2010, on average, according to the Federal Home Finance Agency’s Home Price Index.

We say “on average” because the government’s Home Price Index is a data composite for the country. The index doesn’t measure citywide changes in places like Palmyra , nor does it get granular down to the neighborhood level to measure places like South Philly.

Instead, the Home Price Index groups state data in 9 regions with each regions having as few as 4 states in it, and as many as 8.

Not surprisingly, each of the regions posted different price change figures for the period of October-to-November 2010.

A sampling includes:

• Values in the Pacific region rose +1.2%
• Values in the New England region rose +0.3%
• Values in the Mountain region fell -1.9%

The complete regional list is available at the FHFA website.

That said, none of these numbers are particularly helpful to today’s home buyers and sellers and that’s because everyday people don’t buy and sell homes on the Regional Level. We do it locally and the government’s Home Price Index can’t capture data at that level.

It’s a similar reason to why the Case-Shiller Index is irrelevant to buyers and sellers.

November’s Case-Shiller Index showed home values down 1 percent in November, but that conclusion is a composite of just 20 cities nationwide — and they’re not even the 20 largest cities. Philadelphia, Houston and San Jose are conspicuously absent from the Case-Shiller list. If you have read this blog before, you know that I have a problem with a national housing price index that ignores a large metro area like ours. In 2010, the reason for this became even more obvious.

In a year when Case-Schiller says that prices have fallen, our market actually showed a 2.6% increase in the average sold price according to data from Trend MLS. Sadly, people that only read larger national periodicals will see Case-Schiller quoted again and again, not recognizing that our market has bucked that trend. Valuable information for potential home buyers who might be concerned that there is some lack of value in our market – a fear that has no basis in fact.

So why are reports like the Home Price and the Case-Shiller Index even published at all? Because, as national indicators, they help governments make policy, businesses make decisions, and banks make guidelines. Entities like that are national and require data that describe the economy as a whole. Home buyers and sellers, by contrast, need it locally, and I would hope pay more attention to local data than national indexes based upon an arbitrary data set.

With 2010 coming to a close, the “experts” are out in full force, making predictions for next year’s housing and mortgage markets on business television and in the papers.

Predictions for 2011 are wide-ranging:

• Some say home prices will rise in 2011
• Some say home prices will fall in 2011
• Some say mortgage rates will rise in 2011
• Some say mortgage rates will fall in 2011

The problem with housing and mortgage predictions is that — like all predictions — they’re just educated guesses about the future. Nobody knows what will really happen with the housing and mortgage markets in 2011. All anyone can do is theorize. As laypersons, though, it can be hard to separate theory from fact.

Television can make that task even more difficult at times.

As an example, when a well-dressed economist goes on CNBC and presents a clear, succinct argument for why home prices will fall on 2011, we’re inclined to believe the analysis and conclusion. After all, the outcome seems plausible outcome given the facts. But then, immediately after, a different economist presents an opposite argument — that home prices will rise in 2011 – and her analysis seems sound, too.

Even Freddie Mac can’t see the future.

Last year, the government group predicted mortgage rates to 6 percent in 2010. That never happened, of course. Instead, conforming mortgage rates dropped over a 7-month period this year to levels best be described as “historic”.  Freddie Mac couldn’t have been more wrong.

So, what’s a Philadelphia homeowner to believe?

About the only thing that’s certain right now is that mortgage rates remain low by historical standards, and that home prices do, too. Also, that both housing and mortgage markets appear to be riding momentum higher into 2011.  This suggests that it will be more expensive to buy and finance a home by the end of 2011. However no matter what the result, people who purchase homes for the right reasons, shelter, stability of housing expense, and a place to make their own, will always benefit.

Until that time, however, predictions are just guesses.

The number of single-family Housing Starts increased in November, adding 30,000 units as compared to October.

The Census Bureau defines a “housing start” as a home on which construction has started.

November’s starts represents a 7 percent increase from the month prior. However, if you see the Housing Starts story online or in the papers, you’ll notice that the press is calling the market gain at 4 percent.

So which result is right? The answer is both.

The government’s monthly Housing Starts data is published as a composite report; lumping activity among 3 separate housing types into a single, group reading.

The 3 housing types are:

1. Single-family homes (i.e. 1-unit)
2. Multi-unit homes (i.e. 2-4 units)
3. Apartments (5 units or more)

The group reading is a fair description of the market and it’s easy-to-understand. As a result, it’s what the press tends to report. However, for home buyers in Pennsylvania , it’s the single-family category that’s most relevant.

The reason why single-family homes accounted for 84% of November’s Housing Starts is because that’s the type of home that most buyers buy. Few purchase 2-4 unit properties, and even fewer buy entire apartment complexes.

That said, it’s possible that November’s Housing Starts data is wrong. Within the press release, the government placed an asterisk next to the data, indicating that the figure’s margin of error exceeds its actual measurement.

Against a 7 percent gain, the reported margin of error is 13.5%. There is no statistical evidence, therefore, to prove the actual change was different from zero.

If Housing Starts did fall in November, it will help to reduce the Philadelphia housing inventory, which will, in turn, help keep home prices high. For home sellers, this could mean good news. Fewer homes for sale increase competition among buyers.

According to foreclosure-tracking firm RealtyTrac, the foreclosure filings fell 21 percent in November to 262,339 units nationwide. A foreclosure filing is defined as default notice, scheduled auction, or bank repossession.

November marked the first time since February 2009 that the number of monthly filings failed to surpass 300,000 units.

There were other notable November statistics, too, included:

• November’s 21 percent month-to-month decrease was the largest in RealtyTrac’s recorded history
• November’s 14 percent year-to-year decrease was the largest in RealtyTrac’s recorded history
• Nevada led the nation in foreclosure activity for the 47th straight month

However, we can’t read into November’s RealtyTrac report too much; ultimately, history may treat it with an asterisk. Controversy surrounding the so-called robo-signers forced some of the biggest banks to institute a temporary halt to foreclosures in November. Foreclosure activity did fall last month, but the moratorium makes the figures look better for housing than if there had been no interference.

The halt in foreclosures is also why Utah leaped into the #2 state for foreclosures nationwide. Perennial foreclosure-leading states like California, Michigan and Arizona posted double-digit improvements in November whereas Utah did not.

Banks have since resumed foreclosure activity so December’s results may be a better gauge for how the market is truly performing.

Foreclosures tend to be sold at discount and low home prices can entice home buyers to make an offer. If you’re such a buyer in Philadelphia Mount Holly and want to look at foreclosed homes, talk to one of our trained agents first. Century 21 Advantage Gold has been selling foreclosed properties for  lenders for over 22 years , and our agents are familiar with the process  so your transaction will be a smoother one.

Although there’s a host of online search engines that specialize in foreclosures, a our agents have access to broader inventory, as well as some properties not yet on the market. Plus they have the  ability to negotiate more effectively.

BusinessWeek recently released its America’s Best Place to Raise a Family list. Chicago suburb Tinley Park, Illinois, topped the list.

2010 marks the second straight year that a Chicago suburb took top honors. Last year’s winner was Mount Prospect, Illinois.

The BusinessWeek survey uses data from Onboard Informatics, compiling statistics in areas including education, crime, and access to parks, jobs and affordable homes.  Selections are limited to towns with 45,000 residents or fewer, and a median income of between $40,000 and $125,000.

One winner and 2 runner-ups are named for each state; the 10 most populous of which are listed below:

1. California : Arcadia (Monterey Park, Diamond Bar)
2. Texas : San Marcos (San Antonio, Houston)
3. New York : Tonawanda (Irondequoit, Cheektowaga)
4. Florida : Pembroke Pines (Sunrise, Tamarac)
5. Illinois : Tinley Park (Arlington Heights, Schaumburg)
6. Pennsylvania : Scranton (Erie, Allentown)
7. Ohio : Lakewood (Parma, Strongsville)
8. Michigan : Ann Arbor (Royal Oak, Portage)
9. Georgia : Warner Robins (Valdosta, Roswell)
10. North Carolina : Chapel Hill (Cary, Jacksonville)

Rankings like this BusinessWeek report can be useful for home buyers, but like all of real estate, it’s important to remember that statistics don’t apply to all parts of town equally. Some parts will have better schools, or better crime prevention, or more amenities.

Therefore, before you make a buying decision, talk with a real estate agent who has local market knowledge. It’s the most reliable way to get data that matters.

Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, the cost of home ownership was extraordinarily low in New Jersey and most U.S. markets.

According to the National Association of Home Builders’ quarterly Home Opportunity Index, 72.5 percent of all new and existing homes sold between June-September 2010 were affordable to families earning the national median income. This ties the all-time high for home affordability, set in the first quarter of 2009.

The data also underscores that, when compared to historical norms, it’s a fantastic time to be a Philadelphia home buyer where 66.3 percent of all new and existing homes sold in the third quarter were affordable to families earning the national median income. Since this covers our Metropolitan Statistical Area , the actual percentage of people who can afford to buy a house in Philadelphia properis probably even higher.

Prior to 2009, the Home Opportunity Index rarely topped 65. The index has remained above 70 ever since.

All real estate is local, though, and on a city-by-city basis, home affordability varied last quarter.

For example, 96% of homes sold in Kokomo, IN are affordable for families earning the area’s median income. This handily beat the average figure and led the nation. Looking at major cities, Indianapolis led the pack.

93% of homes in Indianapolis are affordable to families earning the area’s median income. This ranks #9 nationwide.

On the opposite end of the affordability scale is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranks last in U.S. home affordability. Just 23% of homes are affordable to families earning the local median income, although this is 3 points higher versus Q1 2010.

The rankings for all 225 metro areas are available online.

Regardless of where your hometown ranks relative to its neighbors, home affordability remains high as compared to historical values. That said, with mortgage rates rising and home sales expected to climb this winter, it’s unlikely that the Home Opportunity Index will improve.

Buying a home may never be this inexpensive again. If you planned to buy in mid-2011, consider moving up your time frame.

The Pending Home Sales Index surged 10 percent in October as low mortgage rates and low home prices spurred Mount Holly buyers into action.

A “pending home sale” is an existing home under contract to sell, but not yet closed. The Pending Home Sales Index is at its highest level since April 2010 — the contract deadline date for this year’s federal home buyer tax credit program.

The jump may also explain why home builder confidence is rising even as the number of new homes sold fades. Builders are seeing buyers’ renewed interest in housing first-hand and expect the next 6 months to be dramatically better.

On a regional basis, gains in October’s Pending Home Sales Index varied as compared to September. The Midwest led the charge, and the West was the laggard.

• Northeast Region: +19.6%
• Midwest Region : +27.3%
• South Region : +7.1%
• West Region : -0.4%

Home buyers looking in areas such as South Philly should take last month’s Pending Home Sales Index to heart. According to the National Association of Realtors®, 80 percent of homes under contract close within 60 days, so we can reasonably expect November’s and December’s existing homes sales data to be similarly strong.

In other words, the housing market is heating up and may have already shifting toward sellers. Changes like that lower buyer leverage, and increase the cost of homeownership. Coupled with rising mortgage rates, the shift is even more defined.

The best time to buy a home this year may have already passed. The next best time may be right now. Activity in our offices and on our website indicates that consumers are already finding this out.

Talk to your real estate agent if you’re planning to buy a home in 2011. It may be smart to move up your time frame.

Loan-level pricing adjustments are mandatory loan fees based on a borrower’s specific default risk.

First introduced in 2008, LLPAs were Fannie Mae’s and Freddie Mac’s logical response to massive balance sheet losses. At the time, the housing market was deteriorating and mortgage delinquencies were rising.

To “better align with loan risk characteristics”, the two entities created specific fees to be associated to specific loan traits, to be charged to all borrowers.

LLPAs are still in existence today.

Today’s loan-level pricing adjustments can be grouped into 5 basic categories. Application exhibiting any of the 5 traits can trigger LLPAs, adding to a borrower’s loan fees:

1. Credit Score (i.e. the borrower’s FICO is below 740)
2. Property Type (i.e. the subject property is multi-unit)
3. Occupancy (i.e. the subject property is an investment home)
4. Structure (i.e. there is a subordinate/junior lien on title)
5. Equity (i.e. mortgage insurance is required by the lender)

In many respects, loan-level pricing adjustment are similar to auto insurance. All things equal, the driver of a “fast” car will pay higher costs than the driver of a “safe” car.  The same is true for mortgages.

Loan-level pricing adjustments are public information. Fannie Mae publishes the complete LLPA matrix on its website. The chart can be confusing, however. If you have questions about how LLPAs work, talk with your loan officer.

According to October data from foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 20th straight month last month as 1 in every 389 U.S. homes received a foreclosure filing.

The generic term “foreclosure filing” is defined to include default notices, scheduled auctions, and bank repossessions. Versus the month prior, filings fell 4 percent, and as compared to October 2009, filings were essentially the same.

As usual, foreclosure density varied by region last month, with just 5 states accounting for close to half of the nation’s repossessed homes.

• California : 14.8 percent of all bank repossessions
• Florida : 14.4 percent of all bank repossessions
• Michigan : 7.3 percent of all bank repossessions
• Texas : 6.6 percent of all bank repossessions
• Arizona : 6.0 percent of all bank repossessions

The other 45 states accounted for the remaining half.

It reminds us that, like everything else in real estate, foreclosures are local.

For today’s Philadelphia home buyers, though, foreclosures represent an interesting opportunity.

Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes and it’s one of the reasons why distressed home sales now represent 35 percent of all home resales.  But don’t confuse less expensive for less costly.  Foreclosed homes may also be in various stages of disrepair. Getting them into living condition can be expensive.

Your best real estate “deal”, therefore, may be that non-distressed home that’s in sound, move-in ready condition.

If you’re buying foreclosures — or even just thinking about it — make sure you talk with a real estate agent first. Buying distressed property is different from the “typical” home purchase. You’ll want somebody experienced in your corner, and since CENTURY 21 Advantage Gold has been representing lenders in the sale of their foreclosed properties for almost 23 years, our agents are well versed in the issues surrounding such transactions. so feel free to call anyone of our offices today or search for foreclosed properties at www.c21ag.com .

Related articles

• Foreclosure Activity By Metro Area, Q3 2010 (c21agvoices.com)
• Bank Reposessions Top 100,000 In A Month For The First Time Ever (c21agvoices.com)
• Foreclosure Activity Slows Again In June 2010 (c21agvoices.com)

Newspaper stories can be misleading sometimes — especially with respect to real estate. We saw a terrific example of this Wednesday.

A “Housing Start” is a privately-owned home on which construction has started and, according to the Commerce Department’s October 2010 data, Housing Starts data dropped by nearly 12 percent as compared to September.

The media jumped on the story, and its negative implications for the housing market overall.

A sampling of the headlines included:

• Housing Starts Plunge: Market’s ‘Pulse is Faint’ (WSJ)
• Housing Starts Tumble (Reuters)
• Housing Starts Sink 11.7 Percent In October (NPR)

Although factually correct, the headlines are misleading. Yes, Housing Starts fell sharply in October, but if we strip out the volatile “5 or more units” portion of the data — a grouping that includes apartment buildings and condominiums — Housing Starts only fell 1 percent.

That’s a big difference. Especially because most new construction buyers in Philadelphia and around the country don’t purchase entire condo buildings. They buy single-family residences.

As an illustration, 84% of October’s Housing Starts were single-family homes. The remaining starts were multi-units.

This is why the headlines don’t tell the whole story. The market that matters most to buyers — the single-family market — gets completely glossed over. The Housing Starts reading wasn’t nearly as awful as the papers would have you believe.  Furthermore, it’s never mentioned that single-family Housing Permits climbed 1 percent last month, either.

According to the Census Bureau, 82% of homes start construction within 60 days of permit-issuance. Therefore, we can expect December’s starts to be higher, too.