THIS IS MORE REALISTIC

More Rough Times Ahead for U.S. Economy, despite Recent Improvements

RISMEDIA, September 29, 2009—Despite recent signs of improvement, more rough times are ahead for the U.S. economy, according to several prominent experts in real estate and the economy who attended a recent forum at the Nixon Presidential Library.
“You look at the numbers and everything points to the fact that we not only have bottomed, but things seem to be improving,” said Christopher Thornberg of Beacon Economics, citing increases in durable goods orders, exports and auto sales. He added, “When you think about the problems we’ve been through and what government has done, in many ways, they have, in fact, stabilized the economy. But you know what? They haven’t actually solved the underlying problems in the economy.” Thornberg cited real estate as a case in point. While home sales are up in some areas of the country, 6 to 7% of home mortgages nationally are 60 to 90 days delinquent. In California alone, 250,000 mortgages are 60 to 90 days late. And there’s more economic trouble on the horizon, he said, with rising unemployment and additional waves of foreclosures. “The second half of 2010 will be very weak,” he said, adding, “2011 will be very grim.”
Thornberg was one of several nationally known experts in real estate and the economy who shared their perspectives during a Sept. 11 forum and charity event for the Orange County affiliate of Susan G. Komen for the Cure, one of the world’s largest grassroots organizations dedicated to finding a cure for breast cancer.
Real estate analyst and investor Bruce Norris of The Norris Group in Riverside organized and moderated the event, which included experts from the California Building Industry Association, the National Association of Realtors, the Mortgage Bankers Association, RealtyTrac, The Appraisal Institute and the National Auctioneers Association.
While all of the panelists agreed that the economy will rebound in another two or three years, several pointed to tough economic conditions in the interim. John Young, vice president of the California Building Industry Association, said new housing starts are at their lowest levels since the early 1950s. He added that new home sales are often stymied by appraisals coming in lower than contracted home sale amounts. Meanwhile, foreclosures continue to mount. Rick Sharga, senior vice president of RealtyTrac, one of the leading online marketplaces for foreclosure properties, said the nation has had 43 consecutive months of foreclosures. “We’re dealing with foreclosure activity that is six times what it would be in a normal market,” he said. Sharga added that legal and legislative efforts aimed at helping consumers modify the terms of their loans “merely delay the inevitable.” After all, he said, modified loan terms are not going to help someone who loses their job. Sharga also sees another big wave of foreclosures hitting the market next year, which will reflect rising unemployment rates, which are expected to peak during the first quarter, as well as the resetting of adjustable rate mortgages to higher rates. The real estate market is also negatively affected by a “shadow inventory” of perhaps 400,000 to 500,000 homes, which have been taken back by banks, but haven’t been put back on the market for resale, Sharga said.
Home sales are also being frustrated by appraisals that underestimate true market value of properties being sold, said Joseph Magdziarz, vice president of The Appraisal Institute, the Chicago-based trade association that promotes the highest standards of professionalism and ethics in the appraisal business. Many problematic appraisals are coming from appraisal management companies that use unqualified appraisers who lack geographic competency in the markets where they are accepting assignments. Banks, for their part, won’t lend money on appraisals they can’t trust, Sharga said.
Despite these negative assessments, the panelists said there are many things that Congress, consumers and the real estate industry can do to facilitate our nation’s economic recovery. Magdziarz, for his part, said The Appraisal Institute has been trying to warn Congress for years to take action to better regulate the appraisal business. One pending bill, HR 1728, includes many of the Appraisal Institute’s recommendations, has passed the House and is currently in a Senate committee with bipartisan support. The Appraisal Institute has also alerted its 26,000 members that it will take aggressive enforcement action against any members who accept assignments they are not qualified for. “We cannot sit back and allow bad appraisals to prevent deals from going forward,” Magdziarz said, adding that investors should work only with appraisers that belong to professional appraisal associations. He also encouraged consumers and investors to report incidents of substandard or incomplete appraisal work to state authorities as well as to The Appraisal Institute. While Congress considers HR 1728 to improve appraisal industry, another pending bill, Senate Bill 1230, would nearly double home purchase tax credit to $15,000.
For his part, David Kittle, chairman of the Mortgage Bankers Association, said it is up to consumers, investors and the mortgage industry itself to weed out bad apples and not to count on Congress to solve the problem. “The people in Congress making laws don’t understand our business,” he said, adding, “When somebody’s doing something wrong, call them out and get them out of our business.” Pat Vredevoogd Combs, 2007 president of the National Association of Realtors, also recommended that Congress make tax credits available to all homebuyers and not just first-timers. Tommy Williams, 2008 president of the National Auctioneers Association, said professional auctioneers could also help market recovery by selling real estate at real market values. He added that auction participants already have their financing in place before they bid on properties.
Norris, for his part, recommended that Congress do several things to boost the real estate market. These include:
Increase the number of loans made available to well capitalized investors: Expand Fannie and Freddie loan programs from a maximum of 10 loans per investor to an unlimited number of loans for qualified investors.
Make the 203K FHA loan program available to investors: A 203K loan allows a property needing work to be purchased “as is,” but included in the loan amount is money for repairs. The loan funds both the purchase and rehab of the property. Investors need this loan now, but this loan is currently only available to owner occupants. FHA previously made this loan available to investors, but stopped the practice in 1996 when HUD ran out of lender owned, fixer uppers. Banks could solve the vacant house problem by giving investors back the 203K loan program.
Eliminate the 90-day waiting period before a repaired property can be sold to a buyer using an FHA loan: Investors who purchase fixer uppers can often completely repair the property in a matter of weeks. But the current law prohibits investors from reselling the property within 90 days. The assumption is that fraud must be taking place if a property is resold within 90 days. It’s ridiculous to assume that every investor who purchases a property, improves and resells it is committing fraud. All this policy does is increase investors’ costs of purchasing and rehabbing vacant homes.
Allow loans to be taken over by credit-qualified new buyers with no down payment. Through this process, which was successfully used in the 1980s, new buyers simply step in and take over the loan payments. The only stipulation is that the loan has to be made current at the close of escrow. The U.S. currently has about one million owners who will not be capable of keeping their homes without a huge discount on the principle balance. Many of these properties have fixed rates at very favorable rates. Allowing willing and capable buyers to come in and take over these loans would help contain the spread of foreclosures across the country.
Thornberg, for his part, said it’s not realistic to assume that our nation’s economic problems will be solved by increased regulation or by presidential action. The economy simply needs some time to heal itself, he said. But despite the near term trouble, Thornberg remains optimistic about the future. “I have tremendous faith in the U.S. economy rebounding again in the future,” he said. “And when we come out of this in two or three years, we’re going to have cheap housing and a weak dollar, which will be good for exports.”


THIS HAS BEEN REPOSTED FROM RISMEDIA.

When a home is sold so many people "eat" off that sale. Not just the real estate people that have sold that home or the appraiser or the bank but the electric company and the employee of that electric company that turns on that electric and the gas company and the cable company and all the other people that is some way service that home and the people in it. That person or couple or family now "living" in that neighborhood "feed" the neighborhood people who service them. We are all interconnected and interdependent more than we have realized.


The bundling and selling of real estate with all its greedy insurance and other dastardly schemes started this mess and I believe real estate is going to get us out of this mess IF we do the right thing. Helping a clogged system has to be a systemic remedy. Just having credit for a short term for a select few is not systemic. That first timer home buyer helps the guy who was a first time home buyer move on to the next home A home that was bought to be fixed up and offered to a home shopper should be available.People that are in homes and are hurting becuase of the extreme high rates their mortgges have gotten to with some adjustments to the rate can stay in that home snd continue to "feed" the neighborhood.

We need to petition our senators/representatives, our president to really jump in there and work on the whole system. A laxative for constipation does not find out or fix what is wrong with the "system".

TO BUY OR NOT TO BUY ---THAT IS THE QUESTION

This is the age old question for someone thinking about buying real estate. It's funny that several years ago when the feeding frenzy on real estate was with us and the prices were rising and rising you couldn't stop someone from buying real estate, fighting in bidding wars and now with prices down, rates at historical lows and a great $8,000 tax credit being given, people are sitting on the fence wondering what to do. As Donald Trump said on the TV the other night, this is the BEST time to buy real estate. I would suggest reading articles from Realty Times and other informative sources. Google real estate news and get the consensus from people doing stats on new loan applications etc. so you can compare what happened last month with this month. Our company just ran stats on what is selling in our area and it appears that the higher priced homes are not selling as well as homes in the 175-275 price range. That tells me if I am a purchaser looking to buy in that higher price range I might be able to find a really good buy.Hello, is anyone out there.

SOMETHING TO CONSIDER

The housing market is looking healthier. Here are six reasons why now is the time to jump into the market.1. Uncle Sam is willing to help. First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available. 2. People have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that the housing market will tighten, even if the economy doesn’t soar.3. Borrowers leverage their investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000.4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.5. Mortgage costs stay the same. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upward.6. You own it. There is something comforting in the notion that your home is your own. You can paint it any color you want, let the dog run in the back yard and hang a swing for the kids in the front.Source: The Wall Street Journal, June Fletcher (03/27/2009)

finally someone talking about a four percent mortgage rate

http://www.foxbusiness.com/video-search/m/21829995/4-5-mortgages-a-possibility.htm

We need to get everyone included in this. Refinancing, new homes, homes in trouble. If we want to get a real stimulus going we need to do just what they are talking about in this video.

We, as Realtors, need to talk about this to everyone we can talk to. The gentleman in this video , a banker is talking about how the banks are at capacity in the filings of refinancing. Sooooo maybe you will need to hire some more people to fill the need to respond to all these refinancings and new home purchases with a mortgage rate of 4%. Imagine giving jobs to people to help people move money. What a concept.

What do you think?

CAN WE REALLY BELIEVE WHAT WE READ????

I copied an article the other day which I thought was not only interesting but positive for home sales. today I read this article and I can only ask____




JUST WHO CAN WE BELIEVE WHEN IT COMES TO STATISTICS?

The existing home sales data which was released to the market earlier was a "half empty, half full" set of data. The market seemed to take it as just full and left the empty part behind.
Home resale rates rose 5.1% in February to an annual rate of 4.72 million, according to the National Association of Realtors. In the same breath, the organization said 45% of the activity was foreclosures or short sales. Because of the huge discount that most buyers get when they buy homes in foreclosure, the average price of a house fell 15.5% to $165,400.
The increase in the rate of home sales was viewed by many as the beginning of a bottom in the housing market. The slide of nearly three years has been blamed for a great deal of the collapse in the banking and credit systems.But the rise in sales does not represent a bottom at all. It is more likely that any movement of buyers into the market will cause desperate sellers to offer homes at lower and lower prices rather than hold onto houses that they cannot afford and may not make money on even if they could hold them for another decade.
Most data that the government and national business associations will put out over the next several quarters is likely to appear two-edged, at least at first. Housing prices cannot go to zero, so, at some point, the rate at which home values are dropping will slow. Resale rates may go up, but buying homes which have been in foreclosure for months is an incorporeal piece of information. If buyers start to purchase homes on the normal economic basis of being a transaction between private buyer and private seller then the market will have something to celebrate.
The rise in the dual nature of data is where the analyst's ability to forecast gets more difficult. When unemployment, consumer confidence, GDP, manufacturing, and capital expenditures are all falling simultaneously, it is hard to find optimists, but they will grab even the slightest bit of ambiguous information and claim that the recovery is underway.
In the next quarter, the rate at which people are losing their jobs may slow, but average wages will probably drop sharply at the same time. The effect of fewer people losing jobs while those who are working make less is no clear sign that the economic world is getting better. GDP numbers which are significantly influenced by dangerous trends in inventories like the Q4 2008 figure defy clear interpretation.
Recently analysts covering the manufacturing sector said that so many factories are shut here and overseas that the businesses are eating through inventories. That is being interpreted as good news because once inventories move close to zero, factories will have to increase production to replace them. That analysis glosses over two possibilities. The first is that the economy is bad enough that inventories may not drop at expected rates. Low demand may cause them to decrease much more slowly. That could push back a renewal of manufacturing activity for months. It is also possible that some factories will simply be out of business and the sources of goods for replacing dwindling inventories will have gone away. The normal supply chain in some industries may be severely disrupted in a way that will take several quarters to repair. Retooling or replacing factories is unlikely to be a quick process.
From the middle of last year until a month or so ago, the interpretation of almost all economic information was negative because the data was unidirectional. That is changing. There are sign posts which point in two directions. It is likely that neither road sign is entirely right. In many cases both are wrong and making predictions about how the recession is going actually becomes more difficult and not less.

LOOKING FOR HOME FOR CLIENT

I'm looking for a home in the New Paltz Gardiner area with New Paltz schools. My clients require about 2200 square feet in a unique home with character. My clients do not require a great deal of land but would like it picturesque and private. The price is in the mid fours. If you have a home you are thinking of selling that is not on the multiple listing service, please contact me at 845-417-1314. We have not found a home suitable from the multiple listing service.

Thanks,

Sandy Reid ABR,CRS WESTWOOD METES & BOUNDS REAL ESTATE
licensed real estate salesperson
134 Main St.
New Paltz NY 12561

EXISTING HOMES SOLD RISE 15.6%% IN NORTHEAST IN FEBRUARY

AS PER KEN SWEET AT FOX NEWS MONDAY MARCH 23, 2009

The number of existing homes sold in February unexpectedly rose last month, an industry trade organization said Monday, as distressed home sales continued to remain the dominant force in the nation’s impaired housing market.
According to the National Association of Realtors, the number of homes sold rose 5.1% to a seasonally-adjusted rate of 4.72 million units in February up from 4.49 million annualized units.
The jump in sales was much better than what economists had predicted, who were expecting existing home sales to fall to 4.45 million units. The data helped boost stocks broadly, pushing the Dow Jones Industrial Average up nearly 300 points.
While the increased sale of homes is a welcome sign to Wall Street -- as many believe that the housing will eventually lead the nation’s economy out of this recession -- the bulk of February’s sales were distressed purchases. The average price for a home sold was $165,400, down 15.5% from a year ago.
“Because entry level buyers are shopping for bargains, distressed sales accounted for 40% to 45% of the transactions in February,” said NAR’s chief economist Lawrence Yun in a statement.
As it has been for the past couple months, existing home sales were stronger in the West than the rest of the nation -- primarily in the struggling housing market of California. Existing home sales in the region were up 2.6% from a month ago to 1.2 million annualized units, and are up 30.4% from a year ago.
In the Northeast, sales rose 15.6% to an annualized rate of 740,000 units and are down 14.9% from a year ago. In the Midwest, sales were basically flat -- up 1% -- to 1.04 million units.
In the struggling Southern market, existing home sales rose 6.1% to an annualized rate of 1.74 million units, according to the trade organization.

It is always hard to predict when a bottom is happening. I read active rain comments by Realtors in California and they feel their market is bottoming. We usually follow California so if you are thinking of buying a home or second home this might be the time to look with rates at 4.6% and in some places even lower.

Most people see the bottom AFTER it happens.

Call me at 845- 417-1314