This Month in Real Estate
March 2010

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Commentary

 As the market continues to show shoots of recovery, experts believe that the roots will continue to grow. In his annual letter to the shareholders of Berkshire Hathaway, Warren Buffett said, “Within a year or so, residential housing problems should largely be behind us.”

After a steep run-up in prices during the first half of the decade, home values have readjusted back to normalized levels. Fixed mortgage rates are sitting near record lows and the number of homes available for sale is providing home buyers with more options. Also encouraging are indications that the high end of the housing market could begin moving again as luxury financing becomes more readily available.

Despite high unemployment and looming foreclosures, experts maintain their expectations that the economy will grow in 2010, while the government carries on its search for solutions to help both troubled homeowners and the unemployed.

The Housing Market

Existing Home Sales

Existing home sales slowed in January. According to Lawrence Yun, NAR chief economist, this is mainly due to the lack of urgency with the extension and expansion of the first-time buyer tax credit in November. January sales of 5.05 million remain 12 percent above the 4.53 million-unit level last year.

Median Home Price

Existing-home price was $164,700 in January, 3.4 percent below December and unchanged from January 2009. Distressed homes, which accounted for 38 percent of sales last month, continue to skew prices downward as they typically are discounted in comparison with traditional homes.

Inventory

The supply of homes continued to shrink, falling 0.5 percent to 3.27 million, representing a 7.8-month supply at the current sales pace. Compared to a year ago, there are now 10 percent fewer homes on the market. This is the lowest level of competing homes on the market since March 2006.

Mortgage Rates

Mortgage rates edged above the 5 percent threshold during the week of February 25, but remained near historically low levels. As the Federal Reserve mortgage-backed securities purchase program is scheduled to run out at the end of March, the Fed has held the door open to extending it if the economy weakens.

Affordability

Affordability remains at record levels, supported by the lowest mortgage rates in decades, low home prices, as well as the first-time buyer tax credit. So far this year, the home price-to-income ratio has fallen well below the historical average of 25 percent. The ratio now stands at 14.1 percent.

Sources: National Association of Realtors, Freddie Mac

Government Action

Jumbo Mortgages Begin to Thaw

The cost of jumbo loans, often used to purchase luxury homes, shot up during the financial crisis because lenders steered clear of anything that could be considered somewhat risky. Plus jumbo loans are too large for the government to support through the Federal Housing Administration, Fannie Mae, or Freddie Mac.

The good news:  The jumbo loan markets are beginning to unfreeze and return to normal.

The difference between interest rates on conventional loans and jumbo loans has decreased from higher levels seen last year.

In some cases, the down payment requirements are easing as well, but they often still depend on the level of borrowing – the more the mortgage, the higher the down payment percentage. In New York, mortgage professionals report the following common down payments:

Borrowers will still need a good credit score, typically at least 700, evidence of high income, and a sizable bank account.

Sources: Los Angeles Times, Inman News

Topics For Buyers & Sellers

2009 Tax Tips

Tax time is coming up.  Don’t forget about the following benefits in 2009 for homeowners.  What’s deductable in itemized deductions for homeowners?

1. Mortgage Interest

 2. Points - paid at closing if you purchased or possibly if you refinanced this year

 3. Mortgage Insurance Premiums

4. Property Tax

5. Energy Efficiency Credits - see IRS Form 5695 for qualifying projects

6. Home Buyer Tax Credit  - see IRS Form 5405 to claim your credit if you qualify

Contact me,

your local real estate expert,

for information about what's going on in our area.

Newsletter Contents

1. Commentary

2. The Housing Market

3. Government Action

4. Topics for Buyers
and Sellers

For a more detailed report with additional graphs and government action, please see the This Month in Real Estate PowerPoint Report.

* $729,750 is the upper limit in the most expensive areas. Limits vary depending on median home prices in local areas. ** Based on the week of February 25, 2010.  ***According to Bank of America’s Jeffrey Appel in Inman News.

Under a legislative provision targeting active members of the military, the Foreign Service and the intelligence communities, the tax credit was extended for one year beyond the current deadlines of April 30, 2010 for a binding sales contract and June 30, 2010 for settlement and closing.

The provision only applies to home buyers in the above mentioned groups who have served on official extended duty for 90 days or more outside the U.S. from Jan. 1, 2009 to April 30, 2010.

Also, service members who must sell their home because of official extended duty are excluded from a rule that requires buyers to repay the credit if they move out of their home within three years.

Builders — particularly in cities and towns with a large population of military personnel — should take advantage of the opportunity to market the tax credit extension to qualified military families that are looking to purchase a home.

Resources geared to helping builders spread the word about the benefits of both the tax credit and homeownership are available at www.nahb.org/taxcreditmaterials.

More information on the special provision for military service members can also be found at www.federalhousingtaxcredit.com.

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Is Now a Good Time to Buy?
In many places, real estate is still not a good investment, says Barry Ritholtz, CEO and director of equity research at FusionIQ, which ranks the profitability of investments.

Home prices in the nation’s 20 largest cities need to drop another 15 percent to return to historic norms, he says, or alternatively, prices have to stay flat while gross domestic product and incomes rise. Neither scenario is terribly attractive to investors.

Ritholtz also points out that the Federal Reserve already has said that the cost of borrowing is going to rise. Right now, the cost of borrowing $300,000 at 5 percent is $1,610 a month before taxes and insurance. If rates rise to 6 percent, that’s $188 a month more or $67,680 over 30 years.

Will this increase push down real estate costs still more? Even Ritholtz won’t go there. Instead he advises buyers to consider three factors when making a decision about real estate investment:

• The ratio of median income to median home prices.
• The cost of ownership vs. renting.
• The value of the national housing stock as a percentage of GDP.

Source: The New York Times, Damon Darlin (03/12/2010)

Victoria & Ron Brink with Keller Williams Real Estate Alaska Group

http://www.AKBRINKTEAM.com

Here is this month in real estate

Victoria Brink

Ron Brink

http://www.AKBRINKTEAM.com

Victoria & Ron Brink with Keller Williams Alaska Group

http://www.akbrinkteam.com

Fantastic condo right in the heart of Anchorage close to UAA and hospitals, new paint, flooring, remodeled kitchen bath, newer furnace and hot water heater.

Awesome townhome close to bases and shopping built in 2008 three bedrooms two baths, stainless steel appliances,

Updated and remodeled ranch home with new flooring, laminate and carpet, upgraded kitchen and bath, built in entertainment center. Two of the bedrooms have a sitting window, fenced back yard.

Fantastic ranch home with full basement and two bonus rooms, you have a living room and family room with grill and bar, detached two car garage, fenced in lot. RV parking

More apps for home shoppers

And save some money on your remodel by doing it virtually first.

Posted by Mai Ling at MSN Real Estate on Tuesday, February 23, 2010 12:04 PM

The search for a new home just keeps getting easier for people with iPhones, and it sounds like apps for other smart-phone platforms aren't far behind.

Realtor.com, an MSN Real Estate partner, earlier this year released its free iPhone application that helps users find homes for salewhen they're on the go, and also allows them to take photos and notes that they can later view on their home computer.

Social networking is a big part of the app,  which includes contact information for the real-estate agent selling the home, as well as easy access to Facebook and Twitterif you'd like to share what you find with friends and family.

• Whom to follow on Twitter for the best deals

Today, Zillow also announced an update to its free iPhone app, which now allows users to search for homes for rent as well as homes for sale and recently sold homes. Social media platforms are also a big focus, allowing you to share on Facebook and Twitter photos and the estimated values of homes, even ones that aren't for sale.

There also are apps that aim to make your decision easier, which Tracey Taylor writes about in the San Francisco Chronicle's On The Block blog:

Next time you are perusing the photos on a home listing trying to visualize what the rooms would look like with different colors on the walls or furniture that was more to your taste, wonder no more. There's an app for that.

Take a virtual tour of a home via Planomatic's PhotoPlan app, which takes you through the inside and outside of a home that's for sale.

And for all you closet decorators out there, Floor Planner offers you a little piece of virtual heaven with its demo that lets you drag around icons of chairs, patio tables, staircases and more.

• Check out other ideas on the new MSN Real Estate Design Center

But a tool like this isn't only for home seekers who want to see how their home would look with their virtual belongings in it. It also offers a great opportunity to save money on a remodel by helping you figure out what works for your home before it's too late.

Taylor writes that Planomatic is planning to release its app for the BlackBerry and Android soon, and Realtor.com said earlier that it hopes to expand its app to other platforms later this year.

Do you know of any other apps or virtual systems that can aid the hunt for a home or the remodeling process? How have they helped you?

1. Large kitchens with islands
2. Energy efficiency, including energy-efficient appliances, super insulation, and high-efficiency windows.
3. Home offices
4. Main-floor master suite
5. Outdoor living space
6. Ceiling fans
7. Soaking tub in the master suite and/or an oversize shower with a seating area
8. Stone and brick exteriors rather than stucco or vinyl
9. Community walking paths and playgrounds
10. Two-car garages, but three-car garages are even more desirable

Source: MarketWatch, Steve Kerch (01/30/2010)