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®

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)

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

What’s Holding Potential Sellers Back?

Existing-home sales are up nearly 5 percent from last year, but sales would be much higher if it wasn't for the negative equity overhang, economists say.

The National Association of REALTORS® recently reported that existing-home sales increased 4.7 percent in February compared to a year ago.

But with an improving labor market, home sales should be even higher, Mark Fleming, chief economist at First American Financial Corp., told The New York Times. Home prices are higher too, which often correlates with rising home sales, according to Fleming's research.

"Rising prices only crimp affordability for the first-time buyer who doesn’t yet own the asset," Fleming told The New York Times. "But the vast majority of home sales are to existing home owners. And for existing home owners, what changes affordability is their own income and the price of money."

However, too many home owners still lack sufficient equity in their homes to sell, Fleming notes. Home owners who have equity below 20 percent are less likely to sell because they may not be able to cover the costs of the transaction.

About 35 percent of home owners nationwide are either in a negative equity position or have equity below 20 percent, according to some industry estimates.

The equity picture has shown much improvement recently. CoreLogic reported earlier this month that 89 percent – or about 44.5 million -- of all U.S. properties with a mortgage had equity by the end of the fourth quarter of 2014. 

What’s more, if home prices rise by an additional 5 percent, about 1 million more home owners in negative equity stand to inch back into the black. However, much of the equity is concentrated at the high-end of the housing market (94% of homes valued at more than $200,000 have equity compared to 84% of homes valued less than $200,000).

Also, many home owners remain "under-equitied" – having less than 20 percent of equity in their homes. Nearly 50 million properties – or 20 percent – are considered “under-equitied” in the U.S., and about 1.4 million of those properties have less than 5 percent equity, which his considered “near-negative equity.”

According to CoreLogic’s report, the states with the largest number of negative equity, as of the fourth quarter of 2014, are: Nevada (24%); Florida (23.3%); Arizona (18.7%); Illinois (16.2%), and Rhode Island (15.8%).

Source: "Negative Equity a Drag on Home Sales," The New York Times (March 27, 2015) and "89% of U.S. Homes Ended 2014 With Equity," REALTOR® Magazine Daily News (March 18, 2015)

Home Prices Are Up, Supply Is Down—Expect Bidding Wars

It’s getting more expensive to buy a house. Prices rose 6% in the fourth quarter of 2014 as buyers competed for fewer and fewer available homes for sale, according to new data from the National Association of Realtors®.

The NAR report shows most cities (86%) are experiencing rising prices, with fewer available homes to choose from. Just 24 cities, or 14%, recorded lower median prices in 2014 than in 2013.

“Home prices in metro areas throughout the country continue to show solid price growth, up 25% over the past three years on average,” said Lawrence Yun, chief economist at NAR. “This is good news for current homeowners but remains a challenge for buyers who are seeing home prices continue to outpace their wages.”

Still, as more jobs are created, consumer confidence rises, driving the demand for housing. But with fewer sellers putting their homes on the market, the housing market just chugs along.

“This should signal existing home owners, who may have been slow to think of selling, to consider now a great time to list,” said Jonathan Smoke, chief economist at realtor.com®. With prices rising by double digits in 24 areas across the country, according to the report, many sellers would find a pool of buyers vying for their homes.

To be sure, Smoke scoured 200 of the largest metro areas across the country on realtor.com and found that the prices in 98 of them had increased by 6% or more. In 66 of those markets, houses are spending 8% less time on the market, he said.

Prices and inventory go hand in hand. The average supply of available homes for sale was 4.9 months’ worth, according to the report. In a normal market, there would be a six- to seven-month supply of available homes.

“This is a clear sign that demand is growing faster than supply,” said Smoke. Once more homes are listed, prices would moderate, he said.

The NAR wants more new construction. “Unless homebuilders significantly boost construction, housing supply shortages could develop and lead to further price acceleration this spring,” said Yun.

The five most expensive housing markets in the fourth quarter of 2014, according to the report, were:

San Jose, CA, $855,000

San Francisco, CA, $742,000

Honolulu, HI, $701,300

Anaheim-Santa Ana, CA, $688,500

San Diego, CA, $493,100

The five lowest-cost metro areas were:

Youngstown-Warren-Boardman, OH, $78,000

Rockford, IL, $86,800

Toledo, OH $87,100

Decatur, IL $90,400

Cumberland, MD, $90,500

Housing demand is rising as buyers look to take advantage of low interest rates and a slight uptick in median income ($65,782). To afford a single-family home at the national median price of $208,700, a buyer making a 5% down payment would need an income of $45,863, while a 10% down payment would require an income of $43,449 and $38,621 for a 20% down payment, according to the report.

Regional breakdown

In the Northeast, sales rose 2.5% in the fourth quarter of 2014 but are 4.1% below the fourth quarter of 2013, according to the report. The median price of the home rose 2.2% to $246,300.

In the Midwest, sales of existing homes declined 4.7% in the fourth quarter and are 0.6% below their 2013 level. The median price of an existing single-family home in the Midwest increased 6.2% to $162,000.

In the South, sales climbed 2.7% in the fourth quarter of 2014 and were 5.8% over 2013 levels. Median prices also increased 6.2% to $183,000, according to the report.

In the West, sales fell 6%; however, the median price of a home jumped 4.8% to $299,500 in the fourth quarter.

Source: Realtor.com - By: Chrystal Caruthers

Owners and appraisers are almost on the same page

NEW YORK – Dec. 12, 2014 – The discrepancy between appraisers' and homeowners' opinions of home values is narrowing. In November, appraisers valued homes 1.56 percent higher than homeowners, according to Quicken Loans' Home Price Perception Index.

"Mortgage financing often hinges on whether the appraised value coincides with the home values agreed upon by the home buyer and seller in the case of a home purchase, and the homeowner's estimated value in the case of a refinance," says Quicken Loans Chief Economist Bob Walters. He called it "reassuring to see the gap between appraiser opinions and homeowner opinions" draw closer.

"If we had to choose a side of the fence, it makes for a much smoother mortgage process if appraisers are valuing homes above homeowners' estimates like we're seeing, as compared to the opposite," Walters adds.

In three-quarters of the metro areas Quicken Loans analyzed, appraiser opinions were higher than homeowners' estimates, though the difference varies widely among those metro areas. For example, in San Jose, Calif., appraisers valued homes 6 percent higher than homeowners on average, while in San Francisco, appraisers valued homes 4.35 percent higher. In Dallas, it was 4.22 percent.

On the other end of the spectrum, in Kansas City, Mo., appraisers' opinions were found to be 2.53 percent lower than homeowners' estimates.

On a national scale, real estate professionals reported fewer appraisal issues as the cause of derailed deals. Realtors® blamed appraisals for only 2 percent of failures to close a deal, according to the November Realtors® Confidence Index survey.

Instead, the top closing challenges cited by Realtors were difficulty obtaining credit and a lack of affordable homes. About 15 percent of Realtors cited clients who could not obtain financing, while about 13 percent say the buyer and seller couldn't agree on the price.

Eight percent reported that the buyer lost out in a multiple-offer situation.

Prepare to Sell Your House

Millions of existing homes are sold each year and, while each transaction is different, every owner wants the same thing: the best possible deal with the least amount of hassle and aggravation. preparing home for sale

Home selling has become more complex than it used to be. New seller disclosure statements, longer and more mysterious form agreements, and a range of environmental concerns have all emerged in the past decade.

More importantly, the home selling process has changed. Buyer brokerage, the process in which REALTORS® represent home buyers, is now common nationwide and good buyer-brokers want the best for their clients.

The result is that, while hundreds of thousands of existing homes may be sold each week, the process is not as easy for sellers as it was five or 10 years ago. Surviving in today’s real estate world requires experience and training in such fields as real estate marketing, financing, negotiating and closing, the very expertise available from local REALTORS®.

Are You Ready?

The home-selling process typically starts several months before a property is made available for sale. It’s necessary to look at a home through the eyes of a prospective buyer and determine what needs to be cleaned, painted, repaired and tossed out.

Ask yourself: If you were buying this home, what would you want to see? The goal is to show a home that looks good, maximizes space and attracts as many buyers as possible.

While part of the “getting ready” phase relates to repairs, painting and other home improvements, it is also a good time to ask why you really want to sell. Selling a home is an important matter and you should have a good reason to sell, perhaps a job change to a new community or the need for more space. Your reason for selling can impact the negotiating process, so it’s important to discuss your needs and wants in private with the REALTOR® who lists your home.

When Should You Sell?

The marketplace tends to be more active in the summer because parents want to enroll children in classes at the beginning of the school year (usually in August). Summer is also typically when most homes are likely to be available.

Generally speaking, markets tend to have some balance between buyers and sellers year-round. For example, a given community may have fewer buyers in late December, but it’s also likely to have fewer homes available for purchase. As a result, home prices tend to rise or fall due to general patterns of supply and demand, rather than the time of year.

Owners are encouraged to sell when the property is ready for sale, there is a need or desire to sell, and the services of a local REALTOR® have been retained.

How Do You Improve Your Home’s Value?

The general rule in real estate is that buyers seek the least expensive home in the best neighborhood they can afford. This means you want to put on the market a home that fits with the neighborhood but is not over-improved. For example, if most homes in your neighborhood have three bedrooms, two baths and 2,500 square feet of finished space, a property with five bedrooms, more baths and far more space would likely be priced much higher and would be more difficult to sell.

Improvements should be made so that the property shows well, reflects community preferences and does not involve capital investments, the cost of which cannot be recovered from the sale.

Cosmetic improvements, paint, wallpaper, landscaping, etc., help a home show better and often are good investments. Mechanical repairs that ensure all systems and appliances are in good working condition are required to get a top price.

Ideally, you want to be sure your property is competitive with other homes available in the community. REALTORS®, who see numerous homes, can provide suggestions that are consistent with your marketplace.

By: Realtor.com Team

Black Cats and 8 Other Real Estate Omens to Know

Believe in it or not, there are plenty of bad—and good—omens woven into our culture.

Whether you’re facing seven years’ bad luck from that broken mirror or carrying around a rabbit’s foot in the hopes of turning your luck around, omens are all around us—even in real estate.

If you’re selling your home or looking to buy a new one, be on the lookout for these nine real estate omens.

Black Cat

Possibly one of those most well-known omens: If a black cat crosses your path during an open house, it could be a warning that bad luck is coming your way. Maybe you should think twice before submitting that lowball offer.

Swarm of Bees

While most people aren’t thrilled to see bees swarming around their home, where they land could be a bad real estate omen: It is said a swam of bees on your roof is a warning of a house fire.

Single Crow

Watch out for crows when you’re heading to your closing. A lone crow appearing is bad luck and may make the deal fall through.

Umbrella

Love the house you just saw? Don’t open your umbrella before you leave—wait until you step out on the porch. Opening an umbrella indoors might bring you bad luck when you make your offer.

Picture on the Wall

Taking your personal photos off the wall isn’t only a good idea for home staging, it can also help preserve your luck. If a picture falls off the wall while you’re trying to sell your home, you could bring bad luck to the deal.

Resident Blackbird

Think you may have a bird living in your house? Look for the breed before you shoo the guest away. A blackbird nesting in your roof could bring good luck, and some buyers might find the chirping charming.

White Butterfly

If the first butterfly you see in the spring is white, you’re in luck. A white butterfly at the beginning of the season brings good fortune in all of your business dealings, even real estate.

Frog

A frog showing up in your mud room around the time you decide to sell your house may seem like an odd coincidence, but a frog indoors could mean you’re about to come into money: Get ready to make a deal!

Peas in a Pod

You might want to have peas for dinner if you’re planning on going house hunting the next day. Finding nine peas in one pod is an omen that good luck is headed your way.

Autumn Advantage: 4 Tips for Selling Your Home in Fall

A crisp chill in the air, the turning of leaves and the scent of pumpkin spice are all hallmarks of fall.

There’s no doubt it’s a beautiful season, and if you’re planning on selling your home by the end of the year, you can capitalize on all the good work nature already provides for us.

Accentuate the Positives When Selling Your Home

You want your home to stand out when you put it on the market, so start at the curb.

To play up the fall feel outside of your home, clean up flower beds and rake any leaves off your lawn—the first thing buyers should notice is the changing colors on your trees, not the muddled dead leaves on the grass.

Add a wreath of seasonal plants on the front door for a finishing touch.

In the backyard, store away any summer items like pool floats, inflatable water slides and tiki torches. Add fall-related decor like a self-contained fire pit and warm-colored cushions on your patio furniture to create an outdoor space perfect for chilly evenings.

You can also add a pumpkin to the front stoop, but don’t carve it up because it will spoil much faster.

Remember to avoid using a pumpkin altogether if the weather is bitterly cold already, as it will rot faster—that will only attract flies.

Bring the Colors Indoors

Autumn’s natural color scheme is warm and earthy, reminiscent of cozy, fireside nights.

To bring some of that warmth inside for your open house, fill vases with red, orange and deep yellow flowers like marigolds, Mexican sunflowers or strawflowers. Place vases in the entryway, in the master bedroom and on top of mantles to add color throughout the house.

To make your home feel cozy and inviting, invest in throw blankets or pillows in the same shades as your floral arrangements. Place the pieces around your living room and bedroom to draw out the fall colors.

Add dried decorations, like dried wheat or dried cornstalks, to fill in empty wall spaces with that fall feeling.

Use Favorite Fall Foods

The pleasant scent of fresh-baked cookies or a warm apple pie wafting through the house can trigger memories of comfort and home.

To tie in with the season—and the much-beloved holiday foods—light some candles scented with apple spice, pumpkin spice, cinnamon, cranberries or ginger spice.

Add warmth and a touch of the holidays to your kitchen or dining room by creating a cornucopia centerpiece on your table or countertop. Fill the centerpiece with gourds, miniature pumpkins and maize to help potential buyers picture themselves cooking their first Thanksgiving dinner in their new home.

Don’t Overwhelm

While adding a bit of color and warmth will help buyers picture holidays ahead, keep your decorations clean and minimal.

Avoid overpowering a room with too many flowers and candles, and always remember keep personal items tucked away.

Even if the piece is holiday or fall themed, buyers like to picture their own decorations in a home.