Bargains Abound: What Are Buyers Waiting for?

With low home prices and ultra-low interest rates, the housing market is offering “perhaps the best deals of a generation,” notes a recent article by Bloomberg Businessweek.
Since the housing boom of 2006, home prices have fallen about 31 percent. Also, mortgage rates have been hovering at record lows for the past few weeks (4 percent range or even lower on 30-year fixed-rate mortgages, according to Freddie Mac’s mortgage market survey).
“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker. “Prices may go lower, but not by much.”
The article notes the following scenario: Buying a $300,000 home with a 4 percent mortgage rate and a 20 percent down payment would mean a $1,145 monthly payment. The Mortgage Bankers Association recently predicted that home prices may fall another 3.5 percent by mid-2012 but mortgage rates will increase by a half-point. So for that same loan under that scenario, a home would sell for $289,000 while the monthly mortgage bill would be $1,171--only a $26 difference.
For those who can qualify for a mortgage, "playing the waiting game" won't result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek.
Daily Real Estate News
Tuesday, October 25, 2011

Mardi Gras 2011

Mardi Gras officially began tonight with the Conde Cavalier Parade. The weather was beautiful and a perfect evening to be in Downtown Mobile.

Below is a link to the Mardi Gras 2011 Parade Schedule.

http://www.mobile.org/pdf/MardiGras2011.pdf

Did you know that Mobile is home to the very first Mardi Gras celebration? That's right, Mardi Gras began in Mobile, not New Orleans, in the year 1703. Thousands of people come to Mobile each year to enjoy the sights and sounds of Mardi Gras. There are magnificent floats, live marching bands, and lots of trinkets, beads and treats thrown by the riders who are dressed in satin, sequins and glitter. Enjoyed by all ages, it's a funfilled two week celebration. Over 60,000 folks crowded the streets of downtown tonight.

20 Year Mortgage vs 30 Year Mortgage

Buyers with the ability to stretch a little might consider a 20-year fixed-rate mortgage instead of the traditional 30-year, suggests CBS Money Matters’ financial adviser Ray Martin.Martin points out that a $200,000 mortgage with a 30-year term and an interest rate of 4.75 would have a monthly payment of $1,043 and the total interest over the life of the loan would be $175,600.The same mortgage with a 20-year term at 4.5 percent would have a monthly payment of $1,265 with total interest over the life of the mortgage of $103,670.Young home buyers planning to have children will have their 20-year mortgage paid off by the time their kids enter college, a big financial advantage, Martin points out.
CBS, Ray Martin

MORTGAGE RATES DROP TO NEW LOWS

Fixed mortgage rates have maintained recent lows or set new ones for more than two months now, sinking to 4.42 percent on 30-year loans for the week ended Aug. 19. The rate is down from 4.44 percent last week and is the lowest ever recorded since Freddie Mac launched its survey almost 40 years ago. The fixed 15-year average also hit a new low, at 3.9 percent; while five- and one-year adjustable-rate mortgages remained flat at 3.56 percent and 3.53 percent, respectively.
The Wall Street Journal, Amy Hoak

YOU CAN KEEP YOUR GOOD CREDIT DURING THIS RECESSION - IF YOU KNOW THE SCORE

People are having to make tough financial choices today, but many don't have to wreck their credit scores if they know how the system works, according to credit expert Eddie Johansson, president of Credit Security Group."With the same amount of money, you can make decisions that kill your credit score or ones that keep your score - or at least give you the ability to rebuild your score quickly later," he said. "Most people have wrong or little information about how the system works, and that's a big reason scores go down when difficult decisions are made during a recession."Johansson advises major financial institutions and consumers on the FICO credit score model used by most lenders in deciding the borrower's risk and interest rate. He described three common misconceptions that needlessly lower credit scores.Misconception #1: Paying late didn't hurting my credit since I'm caught up now.Johansson said recent late payments are the credit score killers he sees most often. "It's great that you caught up," he said, "but it doesn't change the fact that you paid late. Anything other than 'paid as agreed' on accounts on your credit report hurts your score."Misconception #2: Dollar Amounts Matter in Credit Scores.An example of bad credit score advice here is "pay the highest bill first," Johansson said. "Dollar amounts don't matter in FICO scoring; ratios and recency do. The effect on your score is the same for a $1 late payment as a $1,000 late payment. The fewer late payments on your credit report, the higher your score - regardless of their dollar amounts," he said.Johansson emphasized the importance of paying all your bills on time, every time. However, he says that if you must pay late and want to avoid damage to your score, pay the accounts that report to credit bureaus first. You can find this information by getting a copy of your credit report.Misconception #3: Closing Credit Card Accounts Helps Your Score.If you cancel a card, you may have just thrown away your chance to increase your score by continuing to build on years of positive credit. "Very long term positive account history can really boost your score," Johansson said. "It's best for your score to keep cards open and active, using them for small purchases. Next best is to just keep them open so you can build your score back up quickly by using them later."Don't Make a Bad Situation Worse.In tough economic times, people often buy more on credit than they usually would. The amount they pay in interest on these purchases is largely determined by their credit scores. Poor decisions that lower scores combined with an already tight budget can be very costly, making money problems worse than they have to be. "What we're trying to do," Johansson said, "is help people get through these tough times with as little financial damage as possible. This is best for them, for lenders and for our economy."Johansson emphasized that lower credit scores may be unavoidable for some, and that credit scores are not the only factor to consider. "However," he said, "good credit is an important part of financial security and must be considered when making the best long-term decisions. Having the right information is necessary to make good choices - now more than ever."

Rismedia

SEVEN STEPS FOR SELLING YOUR HOME

It's About the Basics:

Since the housing boom ended and the market began to shift, the phrase “going back to basics” has been tossed around quite frequently. From the way agents handle their business to the way they communicate with clients, the phrase has gotten quite the workout. But what about consumers? They were caught up in the housing boom as well…with homes selling in a day, sometimes a few hours. Getting back to basics seems like something simple that sellers should look at as well. It might just mean the difference between selling within a month and selling within a year. Here are some basic tips from State Farm on selling a home: Set your price carefullyToo high and buyers may not consider it, too low and you're selling yourself short. Agents often give a free home market analysis if you ask. This gives you an idea of how your home compares financially with similar, recently sold homes in your area. The analysis may also include how much you might expect to earn after closing.Don't do major remodelingDon't break the bank preparing your home for sale. Pricey items such as a new roof may be big hits with buyers, but rarely does the buying price end up covering the payout for such costly home improvements. When possible, stick with the simpler (and less expensive) options rather than major remodeling.Make a good first impressionCurb appeal is important. Keep your lawn and other landscaping neatly trimmed, weeded and watered. Check the exterior of your home for signs of wear and damage, such as peeling paint, foundation cracks or loose shingles, and fix what is needed. Clean the outside of the house, including windows. Many people suggest giving the front door a fresh coat of paint for that warm, welcome feeling. In addition, adding a few flowers in the spring and summer, or keeping the walks cleared of leaves and snow in the fall and winter can be inviting to potential buyers.Clean!The obvious seller's commandment: thou shalt clean. Remove all clutter from every room, including closets. Organize your basement and attic. Have a garage sale with all the stuff you don't want to move to your next home! Wipe down and paint walls and trim if necessary. Many people advocate repainting with a neutral color palette to appeal to a wider range of potential buyers. Clean all windows, light fixtures and ceiling fans. Bathrooms should always be squeaky clean. Inspect and make any necessary repairs to the plumbing, heating, cooling and electrical systems. Highlight the bath and kitchen by selecting some attractive new towels, curtains or cabinetry knobs.And keep it cleanMaintain the new and improved interior and exterior of your home until you successfully sell. It's hard, but it's necessary. A professional cleaning service may be able to help maintain the new clean look with occasional visits.Light it upWhen showing your house, provide plenty of light and make your home a warm, welcoming place. Open the curtains to let in the sunshine. In the event of an evening showing, make sure you have ample lighting available in all areas. Fresh cut flowers make a nice addition, and a pleasantly scented house is very inviting.Go awayMany agents and potential buyers would prefer that the seller not be present during a showing, to avoid limiting the buyers' conversation or making them uncomfortable. Children and pets should also be absent or out of the buyers' way during a showing, if at all possible.

Stephanie Andre, Rismedia

Strong Gain in Existing Home Sales

For the first time in five years, existing-home sales have increased for four months in a row, according to the National Association of REALTORS®.Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million units in July from a level of 4.89 million in June. Sales are 5.0 percent above the 4.99 million-unit pace in July 2008. The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005.Largest Gain in a DecadeLawrence Yun, NAR chief economist, said he is encouraged. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” he said. The monthly sales gain was the largest on record for the total existing-home sales series dating back to 1999.“Because price-to-income ratios have fallen below historical trends, there are more all-cash offers. In some recovering markets like San Diego, Las Vegas, Phoenix, and Orlando, the demand for foreclosed and lower-priced homes has spiked, and a lack of inventory is becoming a common complaint,” Yun said.According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.22 percent in July from 5.42 percent in June. The rate was 6.43 percent in July 2008."First-Time Buyer Tax Credit is Working"An NAR practitioner survey showed first-time buyers purchased 30 percent of homes in July, and that distressed homes accounted for 31 percent of transactions. NAR President Charles McMillan said the first-time buyer tax credit is working. “In addition to first-time buyers, we’re also seeing increased activity by repeat buyers. While many entry-level buyers are focused on the discounted prices of distressed homes, they’re also freeing some existing owners to sell and make a move,” he said. “Realtors are the best resource for consumers in these changing market conditions because the transaction process has become more complex. Since it’s now taking longer to complete a home sale, first-time buyers who want to take advantage of the $8,000 tax credit should try to make contract offers by the end of September,” McMillan said. “Otherwise, they may miss the November 30 closing deadline.”Inventory Up, Prices DownTotal housing inventory at the end of July rose 7.3 percent to 4.09 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, which was unchanged from June because of the strong sales gain. Raw inventory totals are 10.6 percent lower than a year ago when the number of unsold homes was at a record. The national median existing-home price for all housing types was $178,400 in July, which is 15.1 percent lower than July 2008. Distressed properties continue to weigh down the median price because they typically sell for 15 to 20 percent less than traditional homes.Single-Family Homes and CondosSingle-family home sales increased 6.5 percent to a seasonally adjusted annual rate of 4.61 million in July from a pace of 4.33 million in June, and are 5.0 percent higher than the 4.39 million-unit level in July 2008. The median existing single-family home price was $178,300 in July, which is 14.6 percent below a year ago.Existing condominium and co-op sales jumped 12.5 percent to a seasonally adjusted annual rate of 630,000 units in July from 560,000 in June, and are 5.9 percent above the 595,000-unit level a year ago. The median existing condo price was $178,800 in July, down 18.9 percent from July 2008.By Region:
The Northeast surged 13.4 percent to an annual pace of 930,000 in July, and are 3.3 percent higher than July 2008. The median price in the Northeast was $236,700, down 15.0 percent from a year ago.
Existing-home sales in the Midwest jumped 10.9 percent in July to a level of 1.22 million and are 8.0 percent above a year ago. The median price in the Midwest was $157,200, which is 5.9 percent less than July 2008.
In the South, existing-home sales rose 7.1 percent to an annual pace of 1.95 million in July and are 5.4 percent higher than July 2008. The median price in the South was $164,500, down 7.1 percent from a year ago.
Existing-home sales in the West slipped 1.7 percent to an annual rate of 1.13 million in July, but are 1.8 percent above a year ago. The median price in the West was $202,300, which is 28.0 percent below July 2008.

Source: NAR