Real Estate News & Notes: November 2012

Thursday, November 29, 2012

S&P/Case-Shiller: 'Safe' To Say We're In Housing Recovery - The Home Front (usnews.com)

Home values continued to climb in September, marking the sixth consecutive month of increasing home prices, a widely-followed price index reported Tuesday. The S&P/Case-Shiller Home Price Indices also reported prices continued to strengthen quarter-over-quarter, with national prices almost 4 percent higher than third quarter numbers last year, and more than 2 percent above last quarter.

"With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market," David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a release.

A combination of low but improving home prices, surging rents, and rock-bottom mortgage rates have all played a role in luring would-be homebuyers back to the American real estate market and juicing demand. The share of distressed properties (which tend to sell at deep discounts and weigh down home prices) has also been steadily falling.

"The reason prices are rising is simple: the law of supply of and demand," Glenn Kelman, CEO of Seattle-based real estate website Redfin, wrote in an E-mail. "When Redfin's agents talk to homeowners about listing their place, most decide that time is now on their side, and want to wait until prices improve more. So there's hardly anything for sale. And because prices are fairly low, and interest rates are very low, demand is up. With rents at five-year highs, even the folks who hadn't planned on buying a home are reconsidering."

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The result has been bidding wars on reasonably-priced properties in hot real estate markets such as San Francisco, Phoenix, and Washington D.C., Kelman says.

But despite marked broad-based improvement in prices, the Case-Shiller indices remain roughly 30 percent off their 2006 peaks. Furthermore, headline index numbers aren't seasonally adjusted and the housing market is heading into the slow winter months. Experts also expect foreclosures to make up a larger portion of sales in coming months.

"September will likely be the last hurrah for Case-Shiller in 2012 in terms of monthly gains," Stan Humphries, chief economist at real estate website Zillow wrote in an E-mail. "We expect the monthly numbers to be negative for the balance of the year, due to seasonality and increased prevalence of foreclosures in the sales mix."

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On the bright side, the coming pullback in monthly numbers isn't a cause for concern because the indices will still end up more than 3 percent above prices seen a year ago, "clear evidence of a durable housing recovery," Humphries adds.

Why Housing Can Still Pull the United States Out of Economic Doldrums - The Home Front (usnews.com)

After years of hindering economic growth, housing added to Gross Domestic Product in 2012, an important reversal given the sector's key role in pulling the nation's economy out of the doldrums in past recessions.

But while the real estate market has seen marked improvement, further growth in housing depends on access to credit for home buying and home building. Typically, the residential real estate industry leads into a recession with declines in activity as interest rates rise and households delay making big-ticket purchases. However, the sector then leads the economy out of a recession as interest rates fall, household formations increase, and home buying accelerates.

Housing did not play this traditional economic function immediately in the wake of the Great Recession, in part because historic price declines significantly reduced the wealth of American households. This has led to a slow but necessary process of household balance sheet repair, which has produced a recovery characterized by lackluster job growth and reduced household formation, both important drivers of housing demand.

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However, while the rest of the economy slowed in 2012, housing began to assume its leading role in providing outsized contributions of economic growth during a recovery. According to Bureau of Economic Analysis estimates, housing's share of GDP stood at a little more than 15 percent as of the third quarter 2012. Of that total, nearly 3 percentage points, is due to residential fixed investment (RFI)—the construction of new single-family and multifamily housing units, remodeling and improvements to existing homes, and brokers' commissions for the sale of housing. While the share of GDP due to housing services remains relatively constant year to year, changes in RFI can have large consequences for the overall health of the economy. In more typical periods such as the year 2000, the share of GDP due to RFI was 5.2 percent, almost twice what it is today.

Driven by significant increases in housing construction, these economic gains are producing an increasingly broad-based recovery in housing, with one third of housing markets now considered to be improving. As RFI returns to its historical trend, GDP will continue to grow and more jobs will be created in the housing industry. In fact, RFI may generate more than 20 percent of total GDP growth in the final quarter of 2012, given higher construction starts and seven consecutive months of improvement in home builder confidence.

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But risks remain, including access to credit for buyers and builders, rising material costs, and policy proposals that would reduce housing demand. Some areas of the country are suffering from shortages of workers with necessary construction skills, which could also raise costs and inhibit further expansion in building.

Overall, the return of housing as a source of economic growth is something to be thankful for as 2012 comes to a close. It also represents an economic trend to watch as policy debates concerning the fiscal cliff and possible 2013 tax reform grow. With prudent policymaking, housing can continue to yield a virtuous cycle of job creation and additional housing demand.

Wednesday, November 28, 2012

Charlotte home prices fall in September but up for year | CharlotteObserver.com

Home prices rose 3 percent in September compared to last year according to the latest S&P/Case-Shiller Home Price Index, further proof that the housing market is on the rebound.

In Charlotte, home prices fell in September compared to August, ending a six-month streak of consecutive gains. On an annual basis, however, local home prices rose 3.5 percent compared with September 2011, supporting local experts’ belief that the housing market is steadily improving.

Nationally, U.S. home prices rose 0.3 percent in September from August.

Thirteen of the 20 cities tracked by the index posted monthly gains in September and two cities were flat. Charlotte, with a monthly drop of 0.3 percent, was among five cities that posted declines, according to seasonally non-adjusted figures. The others were Boston, Chicago, New York and Cleveland, which posted the index’s worst monthly drop of 0.9 percent.

The index committee attributed some of the drop to seasonal changes, noting the housing market was entering its traditionally slow time.

“It is safe to say that we are now in the midst of a recovery in the housing market,” Index committee chairman David Blitzer said in a statement.

The report is the latest to shed a positive light on the housing market.

Earlier this month, CoreLogic released its home price index showing U.S. prices rose 5 percent in September, the largest year-over-year increase since July 2006. In the Charlotte-Rock Hill-Gastonia metropolitan area, single-family home prices increased 3.9 percent, or 2.7 percent excluding distressed sales.

Charlotte had been posting regular monthly gains in the Case-Shiller data, rising 0.6 percent in August over July.

Nationally, reports have showed improvements in new home construction, home-builder confidence and existing home sales.

The biggest gainer in Tuesday’s Case-Shiller report was Phoenix, where prices soared more than 20 percent in September compared to the same time last year.

While the housing market is improving, home prices remain well off their 2006 peaks. In some cases, prices are 30 percent below what they were. There are also concerns mortgages will remain difficult for borrowers to get, despite historically low interest rates.

The widely watched Case-Shiller report lags two months. It is one of the most precise measures of home values because it tracks repeat sales of houses. Like stock market indices, it reflects changes in price, not an actual price.

Read more here: http://www.charlotteobserver.com/2012/11/28/3691126/charlotte-home-prices-fall-in.html#storylink=cpy

Tuesday, November 27, 2012

NAR Research: Infographic: How Well Do You Know the Home Buyer and Seller Trends of 2012? | realtor.org

Home sales climb 2% in October - Nov. 19, 2012

NEW YORK (CNNMoney)

The pace of sales for previously owned homes rose in October, despite the devastation of Superstorm Sandy, in the latest sign of improvement for the long-battered housing market.

Existing home sales rose to an annual rate of 4.79 million, seasonally adjusted, the National Association of Realtors reported on Monday. That's up 2.1% from September, when the revised annual rate of existing home sales was 4.69 million. And it's an increase of 11% year-over-year, when the annual rate was 4.32 million. That was also stronger than the forecast from analysts at Briefing.com, which called for an annual rate of 4.7 million existing home sales in October.

The National Association of Realtors said sales had gone up nationwide, "even with some regional impact from Hurricane Sandy," the deadly storm that caused massive disruptions in the Northeast at the end of October.

Lawrence Yun, the association's chief economist, said the market is being driven by "growing demand with limited inventory" but it could run into strong headwinds from Sandy going forward.

"We expect an impact on Northeastern home sales in the coming months ... in storm-impacted regions," he said.

Home buyers are being lured by low mortgage rates. Last week, mortgage rates dropped again, pushing 15-year and 30-year fixed-rated loans to record lows.

Also, the National Association of Realtors said last week that the median down payment has sunk to 9% for home buyers this year, its lowest level since 2009.

Meanwhile, home prices have been inching up. The average home price in 20 major citiesedged up 0.9% in August, according to the most recent figures from the S&P/Case-Shiller home price index.

Keith Gumbinger, vice president of mortgage information website HSH, said the rising sales are "a signal to fence-sitters that the market is beginning to shift, and that waiting may not yield them any lower costs."

90% of Charlotte homes are occupied, topping U.S. average - Charlotte Business Journal

Nine of every 10 houses, apartments and condominiums in the Charlotte area -- 90.4 percent, to be exact -- are occupied. That’s a full percentage point ahead of the national average, according to an On Numbers report released Monday morning.

On Numbers analyzed raw data for all 109 U.S. metropolitan areas that contain more than 200,000 housing units. Of the 85.3 million homes in those markets, 89 percent were occupied as of 2011, the year covered by the U.S. Census Bureau’s latest American Community Survey. The other 11 percent were empty.

In the Charlotte-Gastonia-Rock Hill metropolitan area, 671,191 of the 742,559 homes counted in 2011 were occupied, leaving 71,368 vacant. That translates to a vacancy rate of 9.6 percent.

The national leader is San Jose, where more than 95 percent of all housing units are occupied. Just 28,100, or 4.3 percent, of San Jose’s 650,700 housing units were empty as of last year.

Cape Coral-Fort Myers, Fla., had the nation’s worst vacancy rate at 35.9 percent.

A unit is considered vacant if it does not have permanent occupants. Seasonal homes can be classified as empty if their owners were not in residence when the Census Bureau conducted its survey.

Economically troubled communities and vacation destinations, as a result, are likely to have the highest vacancy rates.

Tuesday, November 20, 2012

CoreLogic: Housing in recovery, will boost GDP - Charlotte Business Journal

Housing data released over the past few months clearly show a market in recovery, but that’s not to say the industry has fully bounced back, according to the MarketPulse report released Tuesday byCoreLogic Inc. However, even the modest recovery is good news for the economy in general, the report says.

“Housing is typically a sector that leads the economy out of recession,” the report reads. “This time, it has been a significant drag on recovery, though one that is finally fading.”

As home prices have steadied and risen during the past year, consumer spending has increased as well, the report says. The report also shows declining numbers of delinquent mortgages and foreclosed homes and climbing home prices, though total home sales have fallen year over year.

CoreLogic (NYSE:CLGX) estimates housing recovery could boost GDP a quarter-percent in 2012 and a half-percent in 2013.

CoreLogic’s most recent Housing Price Index for the Charlotte area shows local prices improving as well, while a separate report from the data firm shows foreclosure activity flat.

Monday, November 12, 2012

News Release: Housing Statistics, Strategic Business and Vision Planning | realtor.org

ORLANDO (November 9, 2012) - The housing market recovery should continue through the coming years, assuming there are no further limitations on the availability of mortgage credit or a "fiscal cliff," according to forecast presentations at a residential forum here at the 2012 Realtors^®Conference and Expo.

Lawrence Yun , chief economist of the National Association of Realtors^®, said the housing market clearly turned around in 2012. "Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases," he said.

"Disruption from Sandy likely will be temporary, notably in New Jersey and New York, but the market is likely to pick up speed within a few months with the need to build new homes in damaged areas," Yun added.

Yun sees no threatening signs for inflation in 2013, but projects it to be in the range of 4 to 6 percent by 2015. "The huge federal budget deficit is likely to push up borrowing costs and raise inflation well above 2 percent," he said.

Rising rents, quantitative easing (the printing of money), federal spending outpacing revenue, and a national debt equal to roughly 10 percent of Gross Domestic Product are all raising inflationary pressures.

Mortgage interest rates are forecast to gradually rise and to average 4.0 percent next year, and 4.6 percent in 2014 from the inflationary pressure.

With rising demand and an ongoing decline in housing inventory, Yun expects meaningfully higher home prices. The national median existing-home price should rise 6.0 percent to $176,100 for all of 2012, and increase another 5.1 percent next year to $185,200; comparable gains are seen in 2014.

"Real estate will be a hedge against inflation, with values rising 15 percent cumulatively over the next three years, also meaning there will be fewer upside-down home owners," Yun said. "Today is a perfect opportunity for moderate-income renters to become successful home owners, but stringent mortgage credit conditions are holding them back."

Existing-home sales this year are forecast to rise 9.0 percent to 4.64 million, followed by an 8.7 percent increase to 5.05 million in 2013; a total of about 5.3 million are seen in 2014.

New-home sales are expected to increase to 368,000 this year from a record low 301,000 in 2011, and grow strongly to 575,000 in 2013. Housing starts are forecast to rise to 776,000 in 2012 from 612,000 last year, and reach 1.13 million next year.

"The growth in new construction sounds very impressive, and it does mark a genuine recovery, but it must be kept in mind that the anticipated volume remains below long-term underlying demand," Yun said. "Unless building activity returns to normal levels in the next couple years, housing shortages could cause home prices to accelerate, and the movement of home prices will be closely tied to the level of housing starts."

"Home sales and construction activity depend on steady job growth, which we are seeing, but thus far we've only regained half of the jobs lost during the recession," Yun said.

Yun projects growth in Gross Domestic Product to be 2.1 percent this year and 2.5 percent in 2013. The unemployment rate is showing slow, steady progress and is expected to decline to about 7.6 percent around the end of 2013. "Of course these projections assume Congress will largely avoid the 'fiscal cliff' scenario," Yun said. "While we're hopeful that something can be accomplished, the alternative would be a likely recession, so automatic spending cuts and tax increases need to be addressed quickly."

Regardless, Yun said that four years from now there will be an even greater disparity in wealth distribution. "People who purchased homes at low prices in the past couple years, including many investors, can expect healthy growth in home equity over the next four years, while renters who were unable to get into the market will be in a weaker position because they are unable to accumulate wealth," he said. "Not only will renters miss out on the price gains, but they'll also face rents rising at faster rates."

Also speaking was Mark Vitner, managing director and senior economist at Wells Fargo, who said the fiscal cliff is the biggest situation that needs to be addressed. "Beyond concerns about the fiscal cliff, the economic improvement seems to be broadening," he said.

"Housing will strengthen in 2013 even if the economy weakens because there is a demand for more construction, and the demand for apartments is rising at a faster rate than the need for more single-family homes," Vitner said. "Unfortunately, apartment construction is focused on about 15 submarkets, so additions to supply will be uneven.

Even with declining market shares of foreclosures and short sales, Vitner said they will continue. "Distressed homes right now are like an after-Christmas sale - most of the best stuff has been picked over, but make no mistake they'll be with us for a while."

Yun projects the market share of distressed sales will decline from about 25 percent in 2012 to 8 percent in 2014.

Friday, November 9, 2012

What Obama’s Re-Election Means for Housing - Legislation, Mortgages And Banking - Builder Magazine

Throughout the 2012 presidential campaign, both candidates were short on specifics about their housing policy, to put it very kindly. They ignored housing in the debates and acted as if the housing crisis were over. Neither their actions nor their policy statements gave a clear idea of what they might do about housing. But what the candidates DIDN’T do or say helps draw out the differences between what housing policy will look like during Obama’s second term and what housing policy would have looked like with a Romney administration. Here’s what Obama’s re-election means for housing:

1. The refinancing push continues. The Obama Administration has made it easier for homeowners to refinance at today’s low mortgage rates and plans to make refinancing available to even more borrowers. Refinancing is economic stimulus since it gives homeowners with mortgages more spending money, but it doesn’t help most people on the verge of losing their homes. Although refinancing has been a priority for Obama, Romney made no mention of refinancing in his housing plan—despite strong support for refinancing from one of his economic advisors.

2. New mortgage regulations are coming. The Consumer Financial Protection Bureau, established by the Dodd-Frank Act, will set new mortgage standards by January 2013. These standards will define which mortgages are judged to be beyond a borrower’s ability to repay and would therefore trigger legal and financial implications for lenders. These standards, yet to be established, will need to strike a delicate balance between protecting consumers from high-risk loans and giving lenders the incentive to expand mortgage credit. Romney blamed Dodd-Frank for holding back mortgage lending, pledging to “repeal and replace” it. But with Obama’s re-election, Dodd-Frank–and the coming mortgage regulations–is a reality.

3. The mortgage interest deduction lives to fight another day. Romney proposed capping overall income tax itemized deductions at $25,000, which would have, in effect, reduced the mortgage interest deduction (which accounts for 35% of the value of total itemized deductions) even for many middle-income taxpayers. Obama, in contrast, is open to cutting the mortgage interest deduction only for the wealthy. Even if deeply cutting deductions finds bipartisan agreement in Congress–and it might–Obama is likely to resist gutting the mortgage interest deduction. Why? The ten states that benefit most from the mortgage-interest-deduction ALL voted for Obama on Tuesday (see table below). The average household in an Obama-voting state claims 66% more for the mortgage interest deduction than the average household in a Romney-voting state. If Obama takes a swing at the mortgage interest deduction, he’ll be hurting his supporters and putting his fellow Democrats in a tough political spot.

4. A chance for principal reductions may have been lost. In his housing plan, Romney called for more “shared appreciation” loan modifications. This means that a borrower would get a reduction in their unpaid principal balance but would have to share some of the upside with whoever took the hit for the principal reduction if the home’s value appreciates. Shared-appreciation loan modifications reduce a borrower’s incentive to strategically fall behind on their payments in order to get a principal reduction. This “moral hazard” problem was one reason why many Republicans and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, resisted the Obama Administration’s call for more principal reductions earlier this year. Shared-appreciation loan modifications are an approach to principal reductions that Democrats, Republicans, and even a financial regulator could all learn to love. It would be a shame if this approach to keeping more people in their homes goes down in defeat.

Housing market picks up | CharlotteObserver.com

Average sale prices for Charlotte homes continue to rise. Foreclosures now account for fewer sales. Nearly 40 percent more area homes sold in October compared with last year.

Recent statistics for the Charlotte-area housing market have been pointing in one direction: up.

Local real estate agents, typically an optimistic bunch, are talking confidently about an improving market. Last week, Jennifer Frontera, president of the Charlotte Regional Realtor Association, said the area is no longer a buyer’s market.

Are things really this good?

Wells Fargo senior economist Mark Vitner concurs with the rosy outlook. His group recently raised its forecast significantly for national home sales and new-home construction in the current year, and he believes Charlotte is following the trend.

“We are in a bit of a seller’s market, as long as the seller is reasonable,” Vitner told the Observer.

Even so, Charlotte’s housing market has not fully recovered since it fell apart in the mid-2000s. Sales prices are far from their record 2007 highs. And while home values are improving, tens of thousands of Charlotteans owe more than their homes are worth.

Then there’s the uncertainty over the “fiscal cliff,” the set of automatic tax increases and spending cuts coming Jan. 1, unless Congress agrees to an alternate deficit-reduction plan. Economists have warned the fiscal cliff could send the U.S. economy back into recession.

Still, many in Charlotte real estate say buyers are back.

Upbeat in Dilworth

Real estate consultant Wendy Field said some people thought she was crazy this summer after she announced her first development project, The Cottages on Euclid – 19 new townhomes in Dilworth.

Her project sits near a separate townhome development that went up four years ago but struggled. The remaining 49 of the original 69 units sold this year at a discount.

Sales for Field’s New England-style cottages, priced between $330,000 and $450,000, she said, “are beyond my expectation.”

She planned for the project, being built in three phases, to take “a couple years” to sell out. She said she’s already sold eight units and expects to be finished with sales and construction by the end of next year.

“I just cannot build them fast enough,” she said.

Driving the housing recovery, experts say, are historically low interest rates and rising rents.

Moreover, relatively few homes are on the market, which helps boost competition and prices. Nearly 3,450 new Charlotte listings were reported last month, down 27 percent from a year ago, according to Carolina Multiple Listing Service data. That puts the area’s inventory at a six-month supply of homes, which is considered a healthy level.

The inventory excludes shadow inventory, or homes that are seriously delinquent or distressed or are in the foreclosure process but not officially on the market. It is unclear how much shadow inventory remains in Charlotte.

Vitner said the market has made “slow but steady progress” at cleaning out the backlog of foreclosures and bank-owned properties.

“There are still plenty of foreclosures in the pipeline,” he says, “but much of what remains is either geographically or physically disadvantaged relative to new construction.”

Foreclosures and short sales, where a home sells for less than its mortgage, accounted for 15.3 percent of closed sales in October, down from 20.2 percent of October 2011 sales, according to MLS data released this week.

Another positive trend: Sellers continue to get more of what they are asking for from buyers. Sellers received an average 92.4 percent of the list price, compared with 90 percent in October 2011.

Home prices remain well off their record highs. The average price in October was $204,335, down from the high of $248,048 in June 2007, according to MLS data.

Fewer underwater

Many homeowners remain underwater, or owe more than their homes are worth, according to real estate data and analytics firm CoreLogic. But the situation is improving, the firm has reported.

Nearly 66,000 Charlotte-area homeowners, or one in six, owed more than their homes were worth at the end of the second quarter, or about 17 percent of all residential properties with a mortgage. That is down from 70,716 underwater properties in the first quarter. An additional 31,000 homes were “in near negative equity” during the second quarter, down from 31,400.

Nationally, 22.3 percent of residential properties, or 10.8 million homes, were underwater at the end of the second quarter in 2012, also down from the previous quarter.

CoreLogic said 2 million borrowers currently underwater would be above water if house prices nationally rose 5 percent. CoreLogic president Anand Nallathambi said in a news release that as home prices increase, “we could see significant reductions in the number of borrowers in negative equity by next year.”

While some uncertainty remains, consultant Emma Littlejohn said demand for homes in Charlotte “is vibrant.”

She worries about a possible shortage of lots for new homes.

“No one believed us when we said we were going to be short housing,” said Littlejohn, whose Charlotte-based firm, The Littlejohn Group, advises developers and homebuilders across the country.

‘Pent-up demand’

She said one new neighborhood her firm is marketing has sold more than 20 homes, priced between the $120,000s and $320,000s. Buyers at Brightwalk, a mile north of uptown, include empty nesters, young creative professionals and people who work uptown or in Concord, she said.

“There is pent-up demand,” she said. “In general, we have not been building enough housing and rooftops to go along with population growth, replacement housing and in-migration growth.”

Vitner, the economist, recently raised his estimate for new-home sales and housing starts in 2013 and 2014 because of positive reports from homebuilders. Nationally, housing starts surged 15 percent, which Vitner’s report called “eye-opening.”

In Charlotte, homebuilders have been active this year, buying up lots.

Lenders also are making more capital available for builders, Vitner says, which strengthens the overall housing market.

“Household formations have increased and builders are clearly more optimistic,” he says. “We believe housing will strengthen even if the overall economy weakens in 2013.”

Read more here: http://www.charlotteobserver.com/2012/11/09/3653171/october-home-sales-look-up.html#storylink=cpy

Monday, November 5, 2012

Home prices climb 0.9% in August - Oct. 30, 2012

The housing market picked up more momentum in August, as the average home price for 20 major cities jumped 0.9%, according to the S&P/Case-Shiller home price index

The increase marked the fifth consecutive month of gains for the index with all but one city, Seattle, recording month-over-month price increases."The sustained good news in home prices over the past five months makes us optimistic for continued recovery in the housing market," said David Blitzer, spokesman for S&P.

The Case-Shiller report is one of many gauges of housing market health that has turned upbeat in recent months. New and existing home sales have been stronger, inventory of homes for sale has fallen and developers have stepped up building activity.

Slow improvement in the national economy has also boosted the housing market, as have record low mortgage rates. The rates for a 30-year loan have stayed below 3.7% since May. Combined with home prices that are still about a third less than they were when they hit their peak, these record-low rates have made homebuying very affordable.

Related: Obama's housing scorecard

Of the cities S&P's index covers, Phoenix has roared back the fastest, with a whopping 18.8% year-over-year gain in August. That marks the fourth month in a row of double-digit price hikes. Detroit prices rose 7.6% over the past 12 months and Miami's grew 6.7%.

Mike Larson, a financial analyst with Weiss Research, remains cautious about the outsized gains in Phoenix and some Florida markets. Much of the return represents "a resurgence in investor demand," he said. Investors now represent about 27% of the home purchases in the market, according to data from the National Association of Realtors.

Most of these buyers are looking to take advantage of beaten down prices so they can rent out the properties at a healthy profit, he said.

"The fly in the ointment is that these buyers lack emotional attachment," said Larson. So unlike regular homeowners, they will likely not stick with the homes should the market head South again.

Among the three cities to have year-over-year losses, Atlanta recorded the biggest decrease in home values, with prices down 6.1%. New York was down 2.3% and Chicago fell 1.6%.

Rising prices are expected to continue, leading some economists to predict the housing market has finally turned a corner.

"Looking forward, price increases will continue," said Jed Kolko, chief economist for Trulia. His company has more recent data, for September and October, that shows asking prices on homes have risen.

"Prices on Election Day will be almost the same as when Obama took office, probably just 1.7% below where they were in January 2009," he said.

Buffett, Brookfield Asset Management - Business Insider

Buffett, Brookfield Asset Management - Business Insider

Perhaps the most bullish indicator for U.S. housing is Warren Buffett.

The legendary investor has been buying up real-estate brokerages around the country as he bets on a housing turnaround. Now, he is partnering with Brookfield Asset Management

, a Canadian real-estate investor, to more than double the size of his brokerage business.

Bloomberg Businessweek's Noah Buhayar has the details:

Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network, according to a statement on the new company’s website. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.

Berkshire’s managers have been positioning the firm to benefit as the U.S. home market recovers from its worst slump in seven decades. The Omaha, Nebraska-based company has bought a brickmaker, won the loan portfolio of bankrupt mortgage lender Residential Capital LLC at auction and built its HomeServices unit by agreeing to acquire real-estate brokerages

in states including Oregon and Connecticut.

The press release says the brokerages that will make up the new company did a combined $72 billion in sales in 2011. That's more than twice the $32 billion in sales that Berkshire did in 2011 without the new brokerages.

Saturday, November 3, 2012

A taxing question for homeowners | CharlotteObserver.com

Could the popular $250,000-$500,000 tax-free exclusion of capital gains on sales of homes be a target in any broad-scale, post-election effort to reduce the federal debt and deficit?

Absolutely. Though far more public attention has been given to the presidential candidates’ proposals for reining in the mortgage interest deduction, the capital gains exclusion is one of a number of housing “preferences” – subsidies – embedded in the tax code that are on the table in fiscal negotiations beginning later this month on Capitol Hill and likely extending well into 2013.

Nonpartisan, corporate-backed groups such as Fix the Debt, which has nearly 100 CEOs of blue-chip companies such as GE, Dow Chemical, AT&T and Microsoft on its list of supporters, define the report of President Obama’s deficit reduction commission as the starting “framework” for their forthcoming national debt-reduction campaign. The deficit commission, headed by former Wyoming Republican Sen. Alan Simpson and Erskine Bowles, White House chief of staff for Bill Clinton, called for eliminating or restricting most current tax deductions as part of a plan to reduce the federal deficit by $4 trillion by 2020. The commission also envisioned deep cuts in federal spending and a reduction in corporate and personal income tax rates.

Though the commission carved out one possible exception for housing – converting the mortgage interest deduction to a 15 percent tax credit – tax experts say that under the Simpson-Bowles version of fiscal reform, virtually all real estate write-offs, including the capital gains exclusion, would disappear in a vastly simplified federal tax code. Others on the list: deductions for local and state property taxes; federal tax exemption for interest on state government bond issues used to help provide mortgages for moderate-income home purchasers; and exemption for income taxation of mortgage amounts forgiven by lenders in loan modifications and short sales.

The exclusion of home sale profits, which is projected to save homeowners $86 billion between 2010 and 2014 according to congressional tax estimates, allows taxpayers who have owned and used their principal residences for two years out of the five years preceding a sale to escape capital gains taxation on as much as the first $250,000 (for single filers) and $500,000 (married joint filers) of the profits they make from the transactions.

The ability to pocket home sale gains without taxation is available to all qualified owners once every two years. But it is of special importance to pre-retirees and retired owners as it allows many of them to owe no federal taxes on their home sale gains – most sales do not generate anywhere near the $250,000 or $500,000 threshold limits – and to factor this tax-free money into planning for their retirement years. A Pew Research Center study released Oct. 22 found that growing numbers of American adults are worried about having enough money for retirement – nearly 40 percent describe themselves as being in this category, up from 25 percent in a similar study in 2009. Though families’ real estate equity holdings were hit hard by the recession and housing bust, Americans still have approximately $7.3 trillion available to them, according to the latest Federal Reserve quarterly study.

In a so-called “grand bargain” comprehensive reform plan based on the Simpson-Bowles framework, as advocated by Fix the Debt, owners might pay ordinary income taxes at a lower rate but could also lose valuable preferences built into the tax code over a period of decades that were designed to encourage ownership of a home. Whether the net financial benefits of the lower tax brackets would outweigh owners’ loss of deductions for mortgage interest and other current advantages – including tax-free treatment of gains on sales of their homes – would depend on the specifics of the grand bargain, phase-in timetables for the tax code changes, and on each owner’s personal situation.

Bottom line here: Almost no one opposes the concept of reducing the federal deficit. But how this is achieved – who gets hurt, who benefits – will be key. During the coming lame-duck congressional session and into the new Congress, a variety of plans are expected to surface, some cutting spending drastically, others claiming to straighten out the tax code by ridding it of special preferences for individuals while lowering rates for big corporations.

If you own a home, keep your eye on the tax deduction ball. The largest single tax-free benefit most owners will ever receive from the federal government could be in play.

Read more here: http://www.charlotteobserver.com/2012/11/02/3637862/a-taxing-question-for-homeowners.html#storylink=cpy

How to interview a potential real estate agent | CharlotteObserver.com

Interest rates have fallen to the lowest level in decades, driving consumers into the housing market. Sellers might benefit from this advice:

Q. How can I select a good Realtor? I am in the process of getting my home ready to sell and need guidance on how to select an honest and reliable real estate agent and real estate company. What questions should I ask to find one who is reliable and honest?

Selling a home, especially in this market, can be a big task for any homeowner.

The person you hire as your real estate agent can influence how much it sells for and how quickly it sells.

Look for experienced agents with a proven history of sales in your area. Ask for references and talk to former clients whose homes the candidates have sold. You’ll get an idea whether the agent made the process smooth or rocky.

Once you’ve narrowed your list of agents, interview the finalists as you would any job candidate.

With answers to the questions that follow, you might get a better picture of the person who is best qualified to help you:

• How long has each candidate been in the business? Working full or part-time?

• How many homes has each sold during each of the past two years?

• On average, how many days were those homes on the market?

• What was the average difference between the initial asking price and the selling price?

• What was their experience selling in your area?

• Have they earned any professional designations?

• Does each candidate have a website?

• How will they market your home?

• How frequently will they communicate with you during the process?

Get a copy of the agent’s marketing plan, review it, make suggestions if appropriate, and hold your agent to it.

As competitive as the housing market is, your agent should be working hard and pulling out all the stops for your sake.

If you decide yours isn’t doing enough, find an agent who will.

Read more here: http://www.charlotteobserver.com/2012/11/01/3638370/how-to-interview-a-potential-real.html#storylink=cpy

Friday, November 2, 2012

Consumer Confidence Hits Highest Point In Nearly Five Years : The Two-Way : NPR

By at least one measure, in October consumers were the most confident they've been since February 2008, the private Conference Board reports.

Its widely watched consumer confidence index rose to 72.2 from 68.4 in September. According to a statement from the board's director of economic indicators, Lynn Franco, "consumers were considerably more positive in their assessment of current conditions, with improvements in the job market as the major driver. Consumers were modestly more upbeat about their financial situation and the short-term economic outlook, and appear to be in better spirits approaching the holiday season."

Since consumers purchase about 70 percent of all goods and services, their mood is a key economic indicator.

This news follows the morning's other major economic indicators, which included word that private payrolls may have increased last month by about 158,000 jobs.

U.S. construction spending reaches highest point since 2009 - Kansas City Business Journal

U.S. construction spending rose to $852 billion in September, up nearly 8 percent from a year prior, according to new analysis of federal data by the Associated General Contractors of America.

The highest figure since October 2009 came as builders increased spending on single and multifamily homes, as well as commercial projects.

Private construction grew 8.8 percent. Spending on private residential projects rose 21 percent, representing the largest growth sector in the private construction category.

However, public construction spending fell 4.2 percent. Education projects took the hardest hit in that category, declining 6.9 percent.

“It is heartening to see the growth in total spending, but the progress remains fragile and fragmentary,” Ken Simonson, the association’s chief economist, said in a release.

Real Estate News & Notes