Real Estate Ranks Tops Among Investments

Real estate is Americans' top investment choice, according to a new Bankrate survey. The survey asks Americans what kind of investments made the most sense and 27 percent said they'd invest in property if they had a pool of spare cash.

CDs and other cash investments – previously the top answer in Bankrate's 2013 and 2014 surveys – came in second at 23 percent. Only 17 percent of survey respondents said they’d purchase stocks; 14 percent said gold and other precious metals; and 5 percent said bonds.

"We're not seeing the bunker mentality from individual investors to the same extent of the past few years," says Greg McBride, CFA, Bankrate's chief financial analyst. "But the preference for real estate over, say, the stock market, does beg the question of whether or not Americans are again viewing residential housing as a golden ticket."

Geographically, Americans living in the West or in urban areas showed the biggest preference toward real estate investments at 35 percent and 31 percent, respectively. Americans living in the South also showed a strong preference for real estate and cash investments, while those living in the Midwest said they preferred cash and stocks over real estate.

Source: "Survey Reveals Americans’ Top Investment Choice: Real Estate," Bankrate.com (July 2015) 

Builders Get Ready to Ramp Up Production

Building permits for single-family and multifamily construction surged to an eight-year high in June, signaling a pick up in homebuilding is on the horizon, the Commerce Department reports.

Permits for future home construction rose 7.4 percent to a 1.34 million unit pace in June, the highest level since June 2007. All four regions of the U.S. – Northeast, Midwest, South, and West – reported gains in housing permits.

Multifamily permits posted the largest increase at 15.3 percent in June, while permits for buildings with five units or more increased to the highest level since January 1990. Permits for single-family homebuilding also rose, increasing 0.9 percent last month.

Economists point to a rise in household formation and an improving labor market that is prompting more young adults to leave their parents' homes and spark a rise in demand for housing, notably apartments.

A rise in multifamily production helped push housing starts 9.8 percent higher in June month-over-month, reaching a seasonally adjusted annual rate of 1.17 million units, according to the Commerce Department. Multifamily production surged 29.4 percent last month, reaching a seasonally adjusted annual rate of 489,000 units, while single-family housing starts dropped 0.9 percent to 685,000 units.

"The multifamily gains this month are encouraging and show that the millennial generation continues to be drawn to the rental market," says Tom Woods, chairman at the National Association of Home Builders.

Combined single- and multifamily starts rose by the largest amount in the Northeast, increasing 35.5 percent month-over-month, and by 13.5 percent in the South. The West posted a 6 percent decrease in housing starts and the Midwest a 0.7 percent loss.

Source: "Multifamily Surge Pushes Housing Starts Up 9.8 Percent in June," National Association of Home Builders (July 17, 2015) and "Strong U.S. Groundbreaking, Building Permits Boost Housing Outlook," Reuters (July 17, 2015)

FHA loans to boost affordable housing development

WASHINGTON – July 17, 2015 – The Federal Housing Administration (FHA) published guidance on its new Small Buildings Risk Sharing (SBRS) Initiative.

Under SBRS, new private-sector lenders can partner with FHA to provide long-term fixed-rate lending products to multifamily property owners. It applies to mortgages of $3 million, and up to $5 million in high-cost areas.

SBRS builds on the Department of Housing and Urban Development's (HUD) existing risk sharing programs with state and local housing finance agencies, as well as Fannie Mae and Freddie Mac.

"Communities across the nation are seeking ways to support affordable housing production and preservation," says Ed Golding, principal deputy assistant secretary for HUD's Office of Housing. The initiative "allows us to target our products to an important and underserved part of the rental market by partnering with CDFIs (Community Development Financial Institutions) and other lenders who have on-the-ground relationships with small building owners in their communities."

Small buildings make up 34 percent of the 17.5 million multifamily rental units in the U.S., according to HUD. They house nearly 6 million households and, on average, offer lower rents than larger properties.

Nearly 60 percent of small rental property owners are individuals, households and estates, and they often have trouble securing financing thanks to credit standards than are more stringent than those offered to larger property owners.

If successful, SBRS will encourage lenders to enter this smaller-investor market and provide long-term, fixed rate capital.

How the SBRS program works

In return for assuming 50 percent of the risk, approved lenders will underwrite and service the loans subject to minimum standards that reduce processing times relative to traditional FHA mortgage insurance programs.

FHA's willingness to assume half the risk can free up lenders' balance sheets and allow them to increase their lending activities without an additional federal subsidy or new regulations.

Given the challenges of accessing long-term fixed rate capital even with an FHA guaranty, the Administration has asked Congress for statutory relief to allow SBRS lenders to access funding through Ginnie Mae; in the interim, lenders will be eligible to access capital from the United States Treasury's Federal Financing Bank at prevailing Ginnie Mae rates.

Lending will be limited to properties that are willing to ensure that at least 20 percent of the units rent for no more than 50 percent of an area's median income, or 40 percent of the units rent for 60 percent of the area's median income.

HUD says rural communities, specifically, have a high share of small multifamily properties that could benefit from this program.

© 2015 Florida Realtors®

Fewer Foreclosures May Bring Bigger Deals

Banks may be showing greater motivation to price at a discount some foreclosed homes they’ve had on their books for a long time, unlocking potential bigger discounts for investors, says Daren Blomquist, vice president at RealtyTrac.

As foreclosure timelines swell, some banks are taking possession of homes that have stood vacant for three years or even more, in some cases.

“Many of the properties that are in foreclosure in 2015 have been in the [foreclosure] process for years and many are likely to be in poor condition … Investors may be able to get a bigger discount because banks may be more highly motivated to sell,” Blomquist says.  

The average price of a distressed or foreclosed property in May was 40 percent below the average price of a non-distressed property, Blomquist says, noting that is the largest price disparity that RealtyTrac has ever noted in its surveys.

Many of the homes have sat vacant for years. Foreclosures completed in the second quarter of 2015, on average, were in foreclosure a record amount of 629 days. That marks the longest average time to foreclose since RealtyTrac began tracking in the first quarter of 2007.

The states with the longest foreclosure timelines in May were:

1. New Jersey: 1,206 days
2. Hawaii: 1,060 days
3. Montana: 1,028 days
4. New York: 1,000 days
5. Florida: 989 days

Source: “Why Fewer Foreclosures Means Better Foreclosure Deals,” RealtyTrac (July 15, 2015)

Builders Feel Like It's 2005

Homebuilders are feeling upbeat about where the new-home market stands currently as well as where it’s heading. Builder confidence in the newly built single-family home market surged in July, reaching the highest level since November 2005.

The National Association of Home Builders/Wells Fargo Housing Market Index reached a level of 60 in July. Levels over 50 indicate more builders are optimistic about sales expectations and buyer traffic.

“The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace,” says NAHB Chairman Tom Woods. “As we head into the second half of 2015, we should expect a continued recovery of the housing market.”

The increase in optimism coincides with recent data showing a pick-up in new and existing-home sales, as well as strong job growth, says NAHB Chief Economist David Crowe. However, Crowe notes, builders still face several headwinds, including shortages of lots and labor.

The NAHB/Wells Fargo Housing Market Index gauges builder sentiment over current single-family home sales and sales expectations for the next six months as well as builders’ view on buyer traffic. The components measuring current sales conditions increased one point in July to 66, while the index measuring sales expectations in the next six months increased two points to 71. The component measuring buyer traffic, on the other hand, slipped by a single point to 43.

Builders are most optimistic in the South, which had an HMI score at 61, followed by the West at 60; Midwest at 55; and Northeast at 47.

Source: National Association of Home Builders

Study: Student loans don’t hinder mortgages

NEW YORK – May 19, 2015 – Young buyers aren't being held back from obtaining a mortgage due to their student loan debt, according to a new report released from TransUnion.

Consumers between the ages of 18 and 29 with a student loan in repayment are "generally able" to qualify for new loans. Not only that, the study finds that those loans tend to perform as well or better than new loans to similarly aged consumers without student loans.

For its analysis, TransUnion researchers studied borrowers with student loans who entered repayment from three different timeframes: the fourth quarter of 2005, fourth quarter of 2009 and fourth quarter of 2012.

The report finds that student loan consumers in their 20s pass similarly aged consumers without a student loan after making payments for only three to six years. Student loans often have decades-long payoff periods. The study included mortgage loans but also auto loans and credit cards.

"Going to school impacts young consumers' access to credit; while in school, students may be less likely to have a job and generate the income necessary for loan approval," says Steve Chaouki, executive vice president and head of TransUnion's financial services business unit. "However, most catch up once they leave school – and their ability to catch up has not changed over the past decade. Our study demonstrates that consumers in their 20s with student loans in repayment – that is, once they finish school – are in fact able to access credit at levels similar to or better than their peers who do not have student loans."

The study found that the changing economy between 2005 and 2012 impacted young consumers' access to credit, and the percentage of consumers aged 18-29 with mortgages, credit cards or auto loans dropped significantly. But the study showed that the drop impacted consumers without student loans, as well as those with student loans.

"This is an especially important finding, because it shows the dramatic rise in student loan balances has not materially impacted young consumers in gaining access to mortgages, auto loans or credit cards, or in their ability to successfully manage their new credit obligations," says Charlie Wise, co-author of the study and vice president in TransUnion's Innovative Solutions Group.

Source: "TransUnion: Student Loans Do Not Impact Housing," HousingWire (May 13, 2015)

NAR: Pending home sales at 17-month high

WASHINGTON – April 29, 2015 – Pending home sales in March continued their recent momentum, rising for the third straight month and remaining at their highest level since June 2013, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, climbed 1.1 percent to 108.6 in March from an upward revision of 107.4 in February. It's now 11.1 percent above March 2014 (97.7).

The index has increased year-over-year for seven consecutive months and is at its highest level since June 2013 (109.4).

"Demand appears to be stronger in several parts of the country, especially in metro areas that have seen solid job gains and firmer economic growth over the past year," says Lawrence Yun, NAR chief economist. "While (it's) certainly good news, the increased number of traditional buyers who appear to be replacing investors paying in cash is even better news. It indicates this year's activity is being driven by more long-term homeowners."

Yun expects a gradual improvement in home sales in the coming months, but he says insufficient supply and accelerating prices could be a speed bump.

"Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer," Yun says. "This in turn has pushed home prices to unhealthy levels – nearly four or more times above the pace of wage growth in some parts of the country.

"Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability," Yun adds.

The PHSI in the Northeast fell (1.5 percent) for the fourth straight month to 80.2 in March, but it's 0.6 percent above a year ago. In the Midwest, the index declined 2.5 percent to 107.5 in March, but it's 11.3 percent above March 2014.

Pending home sales in the South increased 4.0 percent to an index of 126.5 in March and they're 12.4 percent above last March. The index in the West rose 1.7 percent in March to 103.7, and it's now 15.6 percent above a year ago.

Source: Florida Realtors®

Cash-out refinances on the rise

NEW YORK – April 27, 2015 – Could it be time to cash out some home equity by refinancing your mortgage? For growing numbers of owners, the answer this year is an emphatic yes, at least according to new data from some major lenders.

In a cash-out refinancing, you convert part of your home equity into money, adding to your mortgage balance. Say you have a $400,000 home with a $200,000 first mortgage. You have $200,000 of equity and a couple of worthwhile projects in mind – paying off high interest-rate credit card balances and renovating the house – that will cost you around $50,000.

Since mortgage rates remain attractive in the 4 percent range, and you can handle the higher monthly payments on a larger balance loan, you refinance your $200,000 existing loan and take out a new $250,000 loan to replace it. You end up with more debt, but you also walk away with roughly the $50,000 you need, less transaction fees.

Cash-outs were the rage during the housing boom years of 2004-2007. At their peak, in the third quarter of 2006, nearly nine out of 10 owners who refinanced pulled out money from their homes, according to mortgage investor Freddie Mac. But by late 2008, the bubble had imploded. Equity holdings plunged. Cash-out refis virtually disappeared.

Now, with home equity higher in many markets – especially along the Pacific and Atlantic coasts – cash-outs are making a comeback. Consider these summaries of in-house corporate data provided to me last week:

Bank of America saw the number of cash-out refinancings funded during the first quarter jump by 47 percent compared with the same period in 2014.

LoanDepot, a major non-bank mortgage originator, says its cash-outs during the first quarter were up by an extraordinary 78 percent compared with the same period a year earlier.

LendingTree, which connects borrowers online with multiple lenders, reports that requests for cash-outs rose in the first quarter by 40 percent over the same period last year.

Though not all lenders are seeing the same trend, something significant appears to be underway. Quicken Loans, one of the largest mortgage originators, says total dollar volume of cash-outs is up this year, even though the cash-out percentage of all refinancings is slightly below what it was last year – around 20 percent of total refi business.

Freddie Mac, which has not completed its first-quarter refi analysis, said preliminary data indicate that there has been only a modest increase in cash-outs. Wells Fargo, the country's highest-volume mortgage lender, said that it is not seeing anything like the splashy jumps in cash-out volume reported by Bank of America or LoanDepot.

What's going on? Some lenders clearly are tapping into pent-up demand from owners who find themselves with growing equity and have financial needs prompting them to put some of it to use. Even lenders who are not recording dramatic growth in volume agree that a cash-out refi can be an important – and responsible – financial option for owners who can qualify.

But qualifying for a cash-out in 2015 is much tougher than it was during the see-no-evil underwriting years of the boom. As a general rule, you need to retain at least 20 percent equity in your home after the addition of the new debt. And you've got to document that you have the income to support payments on the higher debt load.

Allyson Knudsen, executive vice president for national underwriting at Wells Fargo, says cash-out underwriting guidelines are "stricter than for traditional rate and term refinancings." That means banks pay special attention to applicants' debt-to-income ratios, purposes of the additional debt and credit profiles.

Bob Walters, chief economist for Quicken, told me that cash-outs are nothing like they were a decade ago. "People are not feeling like their homes are piggy banks" to dip into for everyday expenses, vacations and the like. Instead, most cash-out refi proceeds now go to debt consolidation and home remodelings.

John Schleck, who heads Bank of America's centralized and online sales, said in an interview that cash-outs "should never be the first thing borrowers think of" but rather be part of a thorough evaluation of their financial needs, resources and ability to handle more debt.

Bottom line: If you have a productive purpose for the money and can pass the underwriting tests, consider a cash-out while interest rates are still favorable.

Source: The Jerusalem Post Provided by SyndiGate Media Inc. (Syndigate.info).

Why buy a home? The reasons have changed

IRVINE, Calif. – April 27, 2015 – The first quarterly Homeowner Sentiment Survey finds that people's perception of home value in the post-crash era runs deeper than standard measures of price and location. Today's owners and prospective buyers define value in broader terms – personal confidence in their housing investment and how a property will meet their family's needs now and in the future.

The study was conducted by Berkshire Hathaway HomeServices, part of the HSF Affiliates LLC family of real estate brokerage franchise networks.

"Homeowners today seem to have a longer-term perspective for their properties," says HSF Affiliates CEO Gino Blefari. "Owners are telling us a home is more than its price tag, and they're placing more value in a home's intrinsic qualities of wealth building, safety, satisfaction and a place to raise a family."

A large majority of owners (89 percent) expressed satisfaction with their home and current living situation; about a third said they've considered selling their home in the near future. Those selling their homes seek properties that better fit their changing lifestyles and life events, among other reasons.

Home-value perception varies through the lenses of different age groups. Boomers and Gen Xers embrace homeownership first as a "smart, long-term investment." By contrast, millennials are "thinking in the now" about real estate, placing highest priority on the "ease of a purchase decision," including the ability to close quickly on a property, secure financing and afford monthly payments.

Of homeownership's benefits, millennials want a place they're proud to show family and friends. They value a community with great schools, and they seek locations that encourage healthier lifestyles. They also want a lively neighborhood: 61 percent said it's important to live in a neighborhood with a variety of trendy dining and retail options.

"As millennials become a larger part of the home buying market, their preferences become better defined and seemingly more traditional," says Stephen Phillips, president of Berkshire Hathaway HomeServices. "We have always believed there is more similarity than difference among home buying groups, and this new data seems to support that view."

With an eye toward enhancing long-term value, 88 percent of current homeowners say it's important to update or renovate their home over time, and they want improvements that stress energy efficiency and eco-friendly systems and materials. More than 60 percent of current homeowners favored "green" improvements even before kitchen, bath and flooring projects. Millennials are most enthusiastic about renovating: 61 percent want a home they can upgrade to their preferences.

Overall, homeowners and prospective buyers believe housing has turned the corner. A full 94 percent said homeownership is important to their long-term financial planning. With interest rates hovering near historic lows and the economy and job market growing, respondents said today is a more ideal time to buy a home than a year ago.

Still, a strong majority of respondents expect more competition for homes as housing inventory remains tight in many U.S. markets. A skilled sales professional will help in the search: Of prospective homeowners who hired agent, 93 percent said the agent has been effective in that home-finding process.

"This magnifies the value of sound real estate guidance today," says Blefari. "Sales professionals are the local-market experts with a keen understanding of home value, availability and negotiation. All things considered, when your agent finds you a great home in the right location and price point, it's time to make your move."

Source: Florida Realtors®

Credit unions: A not-so-secret mortgage source

CHICAGO – April 20, 2015 – Credit unions that proactively promote their mortgage business are offering much better terms than most banks. Some help buyers with expenses by refunding portions of real estate agents' commissions, for example, while others lower downpayment criteria or offer closing cost assistance.

NASA Federal Credit Union, for example, offers zero-down mortgages up to $650,000 with no private mortgage insurance.

Navy Federal offers zero downpayments, no private mortgage insurance premiums and, for those who qualify, the standard menu of mortgage products from FHA (3.5 percent minimum down) and the Department of Veterans Affairs (nothing down).

Potential mortgage borrowers looking for great credit union deals can explore local membership opportunities at http://www.culookup.com.

Source: Washington Post (04/18/15) P. 8; Harney, Kenneth R.

Why rents will rise again this year

LOS ANGELES (AP) – April 15, 2015 – Living in an apartment? Expect your rent to go up again.

Renting has gotten increasingly expensive over the last five years. The average U.S. rent has climbed 14 percent to $1,124 since 2010, according to commercial property tracker Reis Inc. That's four percentage points faster than inflation, and more than double the rise in U.S. home prices over the same period.

Now, even with a surge in apartment construction, rents are projected to rise yet another 3.3 percent this year, to an average $1,161, according to Reis. While that's slower than last year's 3.6 percent increase, the broader upward trend isn't going away.

"The only relief in sight is rents in the hottest markets are going to go up at a slower pace, but they're still going to go up," says Hessam Nadji, chief strategy officer at Marcus & Millichap, a commercial real estate services firm.

The main reason: More people than ever are apartment hunting.

Young people who have been living with their parents are increasingly finding jobs and moving out. Rising home prices are leading many long-time renters to stay put.

In addition, most of the new apartments coming on the market are aimed at affluent tenants and carry higher-than-average rents. That's especially true in cities where new buildings are going up in urban core areas, which means builders need to recoup higher land and development costs.

Consider Denver, where rents have increased more than 5 percent a year since 2010 — 9.2 percent in 2014 — according to Marcus & Millichap. Of the 9,400 new apartment units added last year, 23 percent were in urban core areas.

Competition for apartments means renters are less likely to be able to negotiate with landlords, or win concessions such as a free month's rent.

Here's a closer look at why apartment dwellers will probably see rents go up for a sixth straight year.

More jobs, more competition

During the last recession many workers who lost their jobs moved in with relatives or took on roommates. About 32 percent of U.S. adults were living with roommates or adult family members in 2012, up from 27.4 percent in 2006, according to Zillow, an online real estate firm.

Stepped-up hiring has begun to reverse that trend. About 2.8 million more Americans have jobs than 12 months ago.

"The share of young adults with jobs has climbed in the past year, and that will help many of them move out of their parents' homes," says Jed Kolko, chief economist at online real estate firm Trulia. "Most of them will be renters first."

More people vying for apartments helps drive rents higher. And metropolitan areas with faster job growth are generally seeing higher-than-average rent hikes as well.

The three metro areas with the biggest annual increase in rent in January, according to Trulia: Denver (14.2 percent), Oakland, California (12.1 percent), and San Francisco (11.6 percent).

Job growth in each of those cities also eclipsed the national growth rate of 2.3 percent over the 12 months ended in January. Employment grew 3.7 percent in Denver, 2.7 percent in Oakland and 4.5 percent in San Francisco.

Home buying delayed

Traditionally, renting has been a stepping stone toward homeownership. When rents rise, tenants are motivated to buy sooner, especially when interest rates are near historic lows, as they are now.

But these days, renters are taking longer to buy. The U.S. homeownership rate ended last year at a 19-year low of 64.4 percent.

Between higher rents taking a bigger bite out of the bank account and sharply higher home prices, potential buyers are having more trouble saving for a downpayment and qualifying for a mortgage.

And many millennials, or 18- to 34-year-olds, simply prefer renting.

That's true for Alyssa Hankins, a marketing and social media strategist in Los Angeles. She moved in February to a newly opened complex where rents range from $2,325 for a studio to $5,920 for a two-bedroom unit. She wants to be able to move quickly if a job opportunity comes up.

"It's less about affordability and more about flexibility," says Hankins, 29.

When renters stay put, fewer apartments are available for new tenants, which in turn drives up rents.

New apartments are pricey

Developers added 238,000 apartments nationwide last year, a 14-year high, with another 210,000 expected this year, according to Marcus & Millichap.

In theory, more apartment construction should help bring down rents because landlords would compete for tenants. But 80 percent of new complexes, Nadji estimates, are high-end projects aimed at renters willing to pay a premium for amenities like gourmet kitchens and concierge service.

How much of a premium? The average rent for apartments completed last year was $1,721. That's 46 percent higher than the average apartment rent for older units, according to Marcus & Millichap and data provider MPF Research.

"There's very little new supply being added anywhere else," says Nadji, "so that's why there's so much pressure on rents and very little choice for the average renter."

Source: The Associated Press, Alex Veiga

What Lenders Are Looking for: The 4 C's

Low mortgage rates are helping to bring home ownership within reach for some borrowers. But qualifying for a mortgage remains a big challenge for many, as tight underwriting standards persist in the wake of the financial crisis.

Christina Boyle, a senior vice president of single-family sales and relationship management for Freddie Mac, explains how your clients can be better prepared to qualify. Boyle writes at the mortgage giant’s website about the four C’s that lenders are evaluating when deciding whether to grant a borrower a loan. They are:

Capacity: “Your current and future ability to pay back the loan,” Boyle explains. “Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations, to make sure that you have the means to take on a mortgage comfortably.”

Collateral: The value of the home that you intend to purchase.

Capital: “The money and savings that you have on hand plus investments, properties, and other assets that could be sold fairly quickly for cash,” Boyle says. “Having these reserves proves that you can manage your money and have funds, in addition to your income, to help pay the debt.”

Credit: How well you’ve done paying your bills and other debts on time.

The down payment is also an important piece that lenders consider, Boyle adds. In 2014, buyers put down an average of 14 percent on their home purchase, according to a report by RealtyTrac. Freddie Mac’s new Home Possible Advantages mortgage allows qualified borrowers to put down as little as 3 percent. But those who put down less than 20 percent should expect to pay a higher interest rate as well as pay mortgage insurance, Boyle says.

Source: “The 4 C’s of Qualifying for a Mortgage,” Freddie Mac (April 6, 2015)

3 Mistakes Sellers Often Make

Home owners can get emotional about their home when it's time to sell. Here are a few mistakes sellers often make in letting emotions override logic during a transaction:

1. Being unrealistic about the home’s value.

Too often, what the seller believes their home is worth is not realistic. Despite tight inventories of homes for-sale in many markets, sellers still need to be careful not to get too greedy with their list price, say real estate professionals.

Home owners tend to get a much lower price when they overprice a home at the onset and then drop the price several times. The longer the home lingers on a market, the more likely it will receive a deeper discount, notes realtor.com®. McEnearney Associates, a real estate company in McLean, Va., found that to be true. Homes for sale in August 2013 sold within the first week on the market for an average of 2.08 percent above list price, while homes that stayed on the market four months sold for an average of 11.53 percent below the original price.

A reasonable price would be based on comparable properties that are selling for and the home's appraised value. "No offers within a 30-day period means the price is too high," real estate sales associate Djana Morris told The Washington Post.

2. Not making a better home presentation.

Another big mistake: Home owners who fail to spruce up their home's interiors and exteriors. "At a minimum, home owners should conduct a thorough cleaning, haul out clutter, make sure the home is well-lit and fix any major aesthetic issues," Chris Polychron, the president of the National Association of REALTORS®, said in a statement about findings from NAR's 2015 Profile of Home Staging, a survey of more than 2,300 REALTORS® representing buyers and sellers. 

Eighty-one percent of REALTORS® who represent buyers surveyed by NAR said that staged homes make it easier for their home buyers to visualize a property as their future home. Forty-six percent of buyer agents also reported that staging makes their buyers more willing to tour a home they viewed online, and 45 percent say that buyers tend to view the value of the home more positively if it is decorated to buyers’ tastes. 28 percent of agents said their buyers are even more willing to overlook other property faults if a home is staged.

3. Not being honest about the home’s history.

It can be tempting for some home owners to hide their home's history and fail to disclose flaws. But agents need to remind their sellers that covering up serious flaws – such as foundation problems, leaky roofs, mold, or more – could come back to haunt them later. The buyer may uncover the flaws during the home inspection and may want to then back out of the deal or ask the seller to fix the problem then. If the issues aren't discovered until after the sale, sellers may even find themselves in a legal battle later on. It's important to remind sellers upfront about any potential issues with the home.

Source: "5 Mistakes People Make When Selling a Home," CheatSheet.com (April 11, 2015) and "Your Home’s First Price Should Be Its Best Price," realtor.com® (2015)

Owning cheaper than renting in 76% of U.S. metros

IRVINE, Calif. – April 9, 2015 – RealtyTrac released its Residential Rental Property Analysis the first quarter of 2015 and found that the monthly house payment (median-priced three-bedroom home) is more affordable than the monthly fair market in 76 percent of U.S. counties included in the analysis.

The report also ranked the markets with the best – and worst – potential returns on residential rental properties from a real estate investor perspective, along with the most affordable – and least affordable – markets for renting from a renter perspective.

The analysis included 461 U.S. counties with a population of at least 100,000 and sufficient home price, income and rental data.

On average, fair market rents (set by the U.S. Department of Housing and Urban Development) were 28 percent of estimated median household income; monthly house payments on a median-priced home (10 percent downpayment with property taxes, home insurance and mortgage insurance included) were 24 percent of the estimated median income.

"From a purely affordability standpoint, renters who have saved enough to make a 10 percent downpayment are better off buying in the majority of markets across the country," says Daren Blomquist, vice president at RealtyTrac.

However, Blomquist says "factors other than affordability are keeping many renters from becoming buyers – a reality that means real estate investors buying residential properties as rentals still have the opportunity to make strong returns in many markets across the country." He also notes that the data RealtyTrac analyzed are not the only variables in a buy-versus-rent decision.

Florida

Only two metro areas and cities in Florida ranked in any of RealtyTrac's top 10 or bottom 10 lists for renting or investing. Miami-Dade (including Fort Lauderdale and Pompano Beach) ranked No. 4 nationwide in the "least affordable rental markets" list. The analysis finds it takes 45 percent of an owner's median income to rent, while it takes only 34 percent of median income to buy a home.

For real estate investors, only Pasco County made the top 10 list for annual investment return. According to RealtyTrac, the annual gross rental yield for a cash buyer in February 2015 at 19.20 percent compared to the nation's top investment city, Baltimore, Maryland, which saw 24.82 percent returns.

Nation

Among the 56 counties with most favorable conditions for buying, the most affordable for buying was Bay County, Michigan in the Bay City metro area, where it takes only 11 percent of the area's median income to make house payments on a median priced-home.

The top U.S. market for renting is Delaware County, Ohio, in the Columbus metro area, where it takes only 14 percent of the area's median income.

While the Miami-Dade area ranked fourth for high market rents, Bronx County, New York, led the list. In the Bronx, a median-income home pays 69 percent monthly in rent. However, the cost of ownership is so high that renting remains the preferred option there.

Investment returns

The average potential annual gross rental yield for homes purchased in February 2015 was 9.34 percent for all metro areas, calculated by annualizing the rental income and dividing that amount into the purchase price of the property.

Markets with the highest potential annual gross rental yields for homes purchased in February 2015 were:

Baltimore City, Maryland (24.82 percent),

Clayton County, Georgia (24.26 percent),

Wayne County, Michigan (21.08 percent)

Pasco County, Florida (19.20 percent)

Trumbull County, Ohio (18.36 percent)

Markets with lowest returns on residential rental properties:

New York County/Manhattan, New York (2.34 percent)

San Francisco County, California (3.20 percent)

Kings County/Brooklyn, New York (3.63 percent)

Marin County, California (3.84 percent)

Williamson County, Tennessee (3.89 percent)

Investment markets with rising rental returns

Douglas County, Oregon (potential returns up 119 basis points from a year ago)

 Linn County, Iowa (109 basis point increase)

Henderson County, North Carolina (109 basis point increase)

Kendall County, Illinois (89 basis point increase)

Sussex County, Delaware (80 basis point increase).

Cook County, Illinois (43 basis points increase)

King County, Washington (12 basis point increase)

Long Island, New York (49 basis point increase)

Nassau, New York (24 basis point increase)

Wake County, North Carolina (30 basis point increase)

Source: 2015 Florida Realtors®  

Tips for increasing a home’s property value

SAN FRANCISCO – April 2, 2015 – With the spring selling season in full swing, now is the time for clients to improve their home and make it more appealing to potential buyers, even if they don't plan to put it on the market right away.

Where to start? Peter Chovanes, a Realtor® with Van Guard Properties in San Francisco, advises clients to start with the four home improvement basics: foundation, roof, plumbing and electrical.

Of these, the roof is most important.

"I am almost always asked 'How old is the roof?'" he says. "And keeping the roof in good shape alleviates other problems. For example, water can run laterally, and once a leak starts it can follow plumbing and even electrical conduits. So what you think is a plumbing leak might really be a hole in the roof."

Fix-up steps with an eye toward selling one day

Repair: First take a good look at the state of the home, inside and out. Fix the obvious areas that need maintenance.

De-clutter: Find ways to store odds-and-ends in containers and cabinets, or donate belongings to charity. 

Lighten up: Brighter, light-filled rooms are more appealing and make a house feel more spacious. Consider replacing heavy drapes with shutters, shades or blinds.

Add eco value: Replace old windows with energy-efficient versions to reduce home energy costs and add value.

Update: Water heaters, furnaces and toilets are also good to update for energy and water conservation, though newer ones probably won't add significantly to the home's value. 

Refinish: If wood floors are looking tired, refinish them. Replace worn carpeting where possible.

Kitchen cleanup: The kitchen is an obvious focal point for buyers. Consider a light upgrade in the kitchen by replacing the sink or replacing cabinets. If you're planning to replace counters, try solid surface quartz-based materials, which have become the popular alternative to granite.

Better bathrooms: Bathrooms are typically less expensive to remodel than kitchens, so there is more potential for a return on the investment. Buyers frequently request double vanities and a walk-in shower, so consider upgrading accordingly.

Remodel: It's usually more cost-effective to remodel attics and basements than to add entirely new rooms.

Spruce up: Add curb appeal by weeding and sprucing up the garden with low maintenance, drought-tolerant plantings – also called xeriscaping. Giving the front door a new coat of paint is a low cost way to add curb appeal.

Source: Houseplans.com

Vacation home sales rose to record high in 2014

WASHINGTON – April 2, 2015 – Vacation home sales boomed in 2014 to above their most recent peak level in 2006, while investment purchases fell for the fourth straight year, according to an annual survey of residential homebuyers released by the National Association of Realtors® (NAR).

NAR's 2015 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2014, shows vacation-home sales catapulted to an estimated 1.13 million last year, the highest amount since NAR began the survey in 2003. Vacation sales were up 57.4 percent from 717,000 in 2013.

Investment-home sales in 2014 decreased 7.4 percent to an estimated 1.02 million in 2014 from 1.10 million in 2013. Owner-occupied purchases fell 12.8 percent to 3.23 million last year from 3.70 million in 2013. The sales estimates are based on responses from nearly 2,000 U.S. adults who purchased a residential property in 2014, and exclude institutional investment activity.

NAR Chief Economist Lawrence Yun says vacation sales in 2014 showed astonishing growth, nearly doubling the combined total of the previous two years.

"Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment," he said. "Furthermore, last year's impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years."

Vacation-home sales accounted for 21 percent of all transactions in 2014, their highest market share since the survey was first conducted. The portion of investment sales fell to 19 percent (20 percent in 2013); owner-occupied purchases declined to 60 percent (67 percent in 2013).

"Despite strong rental demand in many markets, investment property sales have declined four consecutive years to their lowest share since 2010 as rising home prices and fewer distressed properties coming onto the market have further reduced the number of bargains available to turn into profitable rentals," says Yun.

The median sales price of both vacation and investment homes declined in 2014. The median vacation home price was $150,000, down 11.1 percent from $168,700 in 2013. The median investment-home sales price was $125,000, down 3.8 percent from $130,000 a year ago.

According to Yun, the decrease in vacation and investment sales prices is likely due to the increase in vacation and investment buyers purchasing condos and townhouses, which contributed to a decline in the median size of 200 square feet for both. Additionally, the rise in vacation buyers purchasing distressed properties and buying in the South, where home prices are often lower, contributed to the overall decline in the sales price of vacation homes.

The share of vacation buyers who paid in cash fell to 30 percent from 38 percent in 2013. Investment buyers who paid in cash decreased to 41 percent from 46 percent a year ago. Of buyers who financed their purchase with a mortgage, nearly half (48 percent) of vacation buyers and 41 percent of investment buyers financed less than 70 percent of the purchase price.

Forty-five percent of vacation homes and 44 percent of investment homes purchased in 2014 were distressed properties – either a home in foreclosure or a short sale. In 2013, 42 percent of vacation homes and 47 percent of investment home purchases were distressed.

Characteristics of Vacation-Home Purchases

The typical vacation-home buyer in 2014 had a higher median household income ($94,380) than those in 2013 ($85,600) and purchased a property that was further away (median distance of 200 miles) than a year ago (180 miles). Buyers plan to own their property for a median of 6 years, unchanged from 2013.

Although a majority (54 percent) of vacation buyers bought a single-family home, the share of those buying a condo (27 percent) or a townhouse or row house (18 percent) increased from a year ago. Forty-percent of vacation buyers purchased in a beach area, 19 percent purchased in the country and 17 percent purchased a vacation home in the mountains.

One-third of vacation buyers plan to use their property for vacations or as a family retreat, 19 percent plan to convert their vacation home into their primary residence in the future, and 13 percent bought for potential price appreciation; the same share purchased because of low real estate prices and because the buyer found a good deal.

Forty-six percent of vacation homes purchased last year were in the South (41 percent in 2013), 25 percent in the West (28 percent in 2013), 15 percent in the Northeast (18 percent in 2013) and 14 percent in the Midwest (unchanged from a year ago).

NAR released a study in late 2014 that identified the top housing markets likely to see a boost in home sales to leading-edge baby boomers. The findings revealed that metro areas – including many in the South and Southwest – with a lower cost of living and sunnier weather are poised to see an increased number of baby boomers moving in and buying a home in coming years.

Characteristics of Investment-Home Purchases

Investment-home buyers in 2014 had a median household income of $87,680 ($111,400 in 2013) and typically bought a detached single-family home (61 percent) that was a median distance of 24 miles from their primary residence (20 miles in 2013).

Thirty-seven percent of investment buyers last year purchased a property in the South, 26 percent in the West, 20 percent in the Midwest and 17 percent in the Northeast. Investors were most likely (32 percent) to buy in a suburban area, followed by an urban or central city (26 percent), rural area (21 percent) and small town (16 percent). Five percent of investment buyers bought in a resort area.

Investment buyers purchased property for a variety of reasons, including for rental income (37 percent), because of low prices and the buyer found a good deal (17 percent) and for potential price appreciation (15 percent). Overall, investment buyers plan to hold onto the property for a median of five years (unchanged from a year ago), and a majority (68 percent) are very or somewhat likely to buy another investment property in the next two years.

The bulk of investment buyers (86 percent) and vacation buyers (85 percent) reported that now is a good time to purchase real estate.

NAR's 2015 Investment and Vacation Home Buyers Survey, conducted in March 2015, surveyed a sample of adults that had purchased any type of residential real estate during 2014. The survey sample was drawn from a representative panel of U.S. adults monitored and maintained by an established survey research firm. A total of 1,971 qualified adults responded to the survey. Consumers were sampled to meet age and income quotas representative of all home buyers drawn from NAR's 2014 Profile of Home Buyers and Sellers.

Source: Florida Realtors®

7 Florida’s cities best in for real estate investment

SAN FRANCISCO, Calif. – The JWB Group, a real estate analysis company, created a list of top U.S. cities for investors who want to buy real estate for use as a passive investment. JWB says several sources of independent data were used to compile the list, but it did not include rental communities that can have fluctuating rent indexes.

Seven Florida cities made the top 25 for passive real estate investment, with Jacksonville landing in JWB's No. 1 spot, followed by Ocala and Palm Bay.

"People who have money to invest are not always experts in housing industry investments and can have many questions before investing an IRA or cash funds," JWB's report said.

Top 25 U.S. cities for passive real estate investment

1. Jacksonville, Fla.

2. Ocala, Fla.

3. Palm Bay, Fla.

4. Memphis, Tenn.

5. Las Vegas, Nev.

6. Toledo, Ohio

7. Detroit, Mich.

8. Orlando, Fla.

9. Syracuse, New York

10. Atlanta, Ga.

11. Richmond, Va.

12. Kissimmee, Fla.

13. Homosassa Springs, Fla.

14. Muskegon, Mich.

15. Tampa, Fla.

16. Mobile, Ala.

17. East Stroudsburg, Penna.

18. Marietta, Ga.

19. Baltimore, Md.

20. Clarksville, Tenn.

21. New Orleans, La.

22. Cincinnati, Ohio

23. Indianapolis, Ind.

24. Tacoma, Wash.

25. Milwaukee, Wis.

Source: Florida Realtors®