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I don’t usually like the Case-Shiller Home Price Index because it doesn’t include our Metropolitan Statistical Area, and without data from Philadelphia (which is usually better than most parts of the nation) I don’t think the study can have validity to us, But even with their poorly weighted (IMHO) information, it seems that we may have hit the bottom of the real estate market in many parts of the country.

According to the June 2008 Case-Shiller Home Price Index, home prices in 15 of the 20 largest U.S. real estate markets either improved, or showed growth from the month prior.

This is the fourth straight month in which that happened which means that a national housing recovery may already be underway.

Now, it’s worth stating that all real estate is local and that there’s no such thing as a “national real estate market”, but for home buyers looking to to maximize their negotiation power to get the best possible “deal”, spotting trends like this before the media does is a good thing.

So far, only Bloomberg and a few others have chosen to highlight the positives from the otherwise-negative Case-Shiller report. By contrast, most publishers are focusing on annual home price figures which show a hefty drop of 15.9 percent.

We shouldn’t dismiss annual trends because they’re helpful in the theoretical sense, but for real, live home buyers trying to identify trends and market bottoms, it’s the month-to-month data that matters most.

After looking at 4 consecutive months of Case-Shiller data, the month-to-month data appears to show that home prices have stabilized in most major markets. And, in some, they’ve already started to recover from their lows.

Source
U.S. House-Price Slide Eases, S&P/Case-Shiller Shows
Courtney Schlisserman
Bloomberg.com, August 26, 2008

Three years to the week after Hurricane Katrina caused $81.2 million in damages, Tropical Storm Gustav is charting a similar Gulf of Mexico path.

Memories of Katrina are making oil traders nervous.  The 2005 storm shut down 30 platforms and 9 refineries.  And, this week, oil prices are up nearly 4 percent on fears that the market, once again, may be disrupted by storm. 

Mortgage rates are edging higher on the news.

The link between oil prices and mortgage rates is not a direct one, but it’s worth paying attention to. 

Rising oil prices strain business and consumer budgets, creating inflationary pressures on the economy.  And at no time was this relationship more evident than in May and June of this year.  As oil prices reached new, all-time highs almost daily, Americans felt the impact each time they opened their wallets — the Cost of Living inflation gauge reached a 17-year high in July 2008.

Inflation is the enemy of mortgage rates so as inflation rises, mortgage rates tend to rise, too. 

And this is one reason why mortgage rates are ticking higher this morning — there is an overriding fear that Gustav will strengthen into a full-fledged Hurricane before making landfall, causing damage to oil refineries and shipping ports around the Gulf of Mexico.

Damage reduces oil supplies and that causes oil prices to rise.  It’s basic supply and demand.

Gustav is expected to make landfall Monday or Tuesday.  If the storm continues on its path, we may see mortgage rates continue to trend higher.  If the storm dissipates, rates should reverse.

The end of summer is quickly approaching and with an increase in home inventory

right now, a potential homebuyer has a huge range of home choices..

Here are some great reasons why right now is a great time to buy a

home.

Income Tax Savings

Because of income tax deductions, the government is subsidizing your

purchase of a home. All of the interest and property taxes you pay in

a given year can be deducted from your gross income to reduce your

taxable income.

Stable Monthly Housing Costs

When you rent a place to live, you can certainly expect your rent to

increase each year – or even more often. If you get a fixed rate

mortgage when you buy a home, you have the same monthly payment amount

for thirty years. Even if you get an adjustable rate mortgage, your

payment will stay within a certain range for the entire life of the

mortgage – and interest rates aren’t as volatile now as they were in

the late seventies and early eighties.

Imagine how much rent might be ten, fifteen, or even thirty years from

now? Which makes more sense?

Forced Savings

Some people are just lousy at saving money, and a house is an

automatic savings account. You accumulate savings in two ways. Every

month, a portion of your payment goes toward the principal.

Admittedly, in the early years of the mortgage, this is not much. Over

time, however, it accelerates.

Appreciation

Over the long run, your home appreciates. Average appreciation on a home is

approximately five percent, though it will vary from year to year, and

in some years may even depreciate.. Over time, history has shown that

owning a home is one of the very best financial investments.

Private Mortgage Insurance (PMI) is an insurance policy paid to a lender in the event that a homeowner defaults on his home loan.

With the growing number of mortgage defaults nationwide, mortgage insurers are finding their balance sheets under attack and their revenues in the red.

So far this year, mortgage insurers have paid out $6 billion in claims.

In response to the losses, the mortgage insurance industry is using two tactics to return to profitability — and both mean bad news for homeowners.

1. Raise the minimum standards to get insurance
2. Raise the annual mortgage insurance cost

This is very similar to what Fannie Mae and Freddie Mac are doing to shore up their respective balance sheets; lending to only the most credit worthy, and making sure to charge them for their commensurate risk.

Because of the higher PMI rates, it’s getting more expensive for small-downpayment home buyers to finance their homes. And that’s if they can even still get mortgage insurance.

Some mortgage insurers now require a 10 percent minimum downpayment in certain states.

So with the number of mortgage defaults expected to rise through 2009, qualifying for PMI should get more expensive and more difficult. If you plan to make a small downpayment on your next home — or plan to remortgage your current low equity home — consider moving up your timeframe.

It may not be as cheap or as easy to get financing as it is today.

(Image courtesy: The Wall Street Journal)

Housing Starts measure the number of new housing “units” on which construction has started and in July, Housing Starts fell to its lowest levels since March 1991.

For homeowners, this is a welcome bit of good news because as fewer homes are built, there is less inventory from which home buyers can choose.

With fewer homes for sale, the supply-and-demand curve shifts in favor of home sellers and this adds a support floor for home prices.

For home buyers, though — and for the opposite reason — the low number of Housing Starts may not be as welcome.

With fewer new homes on the market, owners of “used” homes may feel less pressure to lower their asking prices or to make other concessions to interested buyers. This means that home buyers may pay more for a home, or get fewer “throw-ins” on the contract.

For all of the hocus-pocus that surrounds real estate data, in the end, home prices are based on the supply of homes versus the demand for homes. When supply outpaces demand, home prices fall.

Homebuilders learned this lesson and July’s Housing Starts data supports that.

(Image Courtesy: Wall Street Journal Online)

Photo courtesy of creativecommon.org and Post406

As a future first time home buyer in the Philadelphia area there are many things I’m going to look for in a real estate website: multiple property photos, detailed neighborhood information, financing options and moving tips.

CENTURY 21Advantage Gold teamed up with REALTOR.com to provide buyers and sellers with the best real estate experience possible. It is like other real estate sites you can search for properties by area, price range, and preferred number of bedrooms. But unlike those sites, the Realtor.com experience provides you with finely detailed information that sets them apart from other search results and helps me make a better decision.

Once you enter your search preferences a list of properties will appear with a percentage of how close they match to your entries. Click on a property you are interested in and you are provided with detailed information.  A large photo gallery will appear along with property features and direct contact information for the selling agent. Of of the more unique and useful options is to look at the neighborhood info. This page tells you how close the property is to shopping, places of worship, public services and recreation areas.

Whether you’re looking to buy or sell for the first time or the third time, I enjoyed the Realtor.com as a unique website that made my real estate experience simple and enjoyable.

Photo Courtesy of CreativeCommons.org

If it weren’t for having a 4 year old, HGTV would be on my television 24 hours a day. Shows like Designed to Sell, Buy Me, Get It Sold, and Hidden Potential can be great “tools” to ask clients to watch.

On shows geared towards sellers, real estate “experts” walk through the property picking out all of the reasons why they feel the home is not selling while the owners sit back, watch, listen and cringe. Typically for about 2,000.00 designers will come in and stage the home. The transformation is amazing sometimes netting a seller thousands in return. While not everyone will have $2000.00 to spend getting their home ready for sale, uncluttering a room and a can of paint can work wonders and can completely change the feel of any room.

Other shows like Hidden Potential (which brings an architect along for the ride with buyers through homes they would typically run from upon entering) and shows them the “hidden potential” of the home within the specified budget of the buyer. The show can really help buyers have an open mind and more importantly, vision.

On the down side of reality TV and real estate, some of the things that personally make me either laugh or scream are … how hiliarious is it when the agent sits down with the client to write an offer and it’s one piece of paper and they’re done!?! While I am sure they must stay within a specified time frame for the show, this is not true reality TV. For example, the other night I was watching a show geared toward first time home buyers. Part of the show was  a bidding war on a condominium.  The agent suggested to her clients they drop the mortgage contingency on their offer to get the condo. That would mean that they would have to buy the unit even if they didn’t get a mortgage, or be forced to lose their deposit. My jaw just dropped and I wondered who’s best interest she was looking out for … fortunately the virgin buyer told the agent absolutely not and although they lost the condo to another bid, they didn’t lose their shirts!

There is a lot of conversation in the real estate industry about print advertising being overtaken by on-line alternatives.

There are surveys that show that most buyers start their search for homes on th Internet, and obviously it is better for the consumer to see more photos,in color, with maps and statistics,then it is to read a classified print ad.

When I started in the business, the real estate section of the Sunday paper was thick, bulging with ads and articles about neighborhoods, new construction,mortgages and more. And of course there were just tons of ads- and it was because of that concentration of ads that the real estate section existed. The content that was written was to attract the attention of the newspaper reader that needed information on the housing process.

Over the years, the ads became more expensive,covering smaller areas, and real estate professionals worked to find alternatives to print ads. And as that happened , the real estate section got thinner and thinner.

Even so, the real estate section is such a tradition that one would have thought that its demise lay far in the future. At least I would have thought that before I read this in the LA Times real estate blog.

In case you missed the announcement today in Real Estate, because of reductions in staff and space, the Sunday Real Estate section has printed its final edition.”

With some much information available to the consumer online from photos to maps, to street views, and demographics, people just don;t need to sit with the newspaper to get their information. And as the sources of news expand electronically as well, the competition for the attention of the consumer just became too great.

Obviously, the amount of real estate print advertising was no longer concentrated enough to warrant generating articles for the consumer. The Times will continue their real estate blog which will have the same quality writing that the paper is known for, but this may be the most obvious signpost to date that consumers want to find their real estate information on-line, and the providers of that information will need to be where the readers are if they wish to remain relevant.

Real Estate “Back in the Day”

The more things change, the more they stay the same. 25 Years ago, Century 21 was helping consumers look for homes, dealing with affordability concenrs, and using computers that look like they were powered by hand cranks.

Century 21 Advantage Gold agents still use technology to help consumers, and still help them find affordable housing for their families – and just for your consideration – inerest rates today are lower then they were 25 years ago when this commercial was airing on television!

The connection between the world’s political events and home affordability here at home is not always clear, but Russia’s invasion of Georgia provides a strong working lesson.

Georgia is a former Soviet republic on the eastern shores of the Black Sea. Oil pipelines within its territory supply about 1 percent of the world’s daily oil needs, mostly to ports in Western Europe.

Week before last, Russia bombed Georgia’s oil and natural gas transport systems. None of the bombs struck the pipelines, but several exploded close to it. Pipeline part-owner BP shut down two of its oil lines as a precaution, but Russia is reported to have struck one of BP’s other pipelines last week.

The cost of oil is generally based on the normal economics of supply and demand so when oil supplies are threatened, damaged, or shutdown — because of war, weather or otherwise — oil prices respond by moving higher.

Higher oil prices, of course, are considered inflationary and that causes mortgage rates to rise here in the United States. High oil prices, for example, are one reason why mortgage rates spiked throughout June and July of this year. And as oil prices have settled, rates have calmed a bit, too.

It’s easy to ignore politics and news when it’s not happening in your own country, let alone your own hometown. But that doesn’t make it any less important.

When you’re buying a home, or thinking of refinancing one, you’ll likely need a mortgage and the rate you pay on that mortgage will be influenced by every geopolitical event in the world.

Especially when the event involves oil.

Source
Russia-Georgia conflict raises worries over oil and gas pipelines
Elizabeth Douglass
Los Angeles Times, August 13, 2008

(Image courtesy: LA Times)