Home Builders Building Homes that Young Buyers Want

Source: NAHB - National Association of Home Builders Home Builders Building Homes that Young Buyers Want, Says NAHB

June 3, 2013 - During National Homeownership Month in June, the National Association of Home Builders (NAHB) is telling young people that the time is right to buy a home, and the nation’s builders are building the homes they want.

“As the economy recovers and young people who had to live at home with their parents move forward with their lives and achieve their dreams of homeownership, home builders are delivering homes that cater to the floor plans, features and affordability that this generation desires,” said NAHB Chairman Rick Judson, a home builder and developer from Charlotte, N.C.

More than 80 percent of Generation Y home buyers—people born in 1977 or later—said in NAHB’s 2012 consumer preference survey they prefer a highly energy efficient home that results in lower utility bills during the home’s lifetime over a lower-priced home without energy efficient features. Today’s new homes feature ENERGY STAR-rated appliances; windows, doors and insulation that better control the home’s interior climate; and other modern components such as tankless water heaters and HVAC systems that save costs on utility bills.

And cost-conscious young buyers will be happy to hear that a new home actually costs less to maintain than an older home. An NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Plus, mortgage rates are still very low, bolstering affordability for home buyers.

Generation Y buyers favor media and game rooms more than any other specialty rooms for their next home. New homes today not only contain these spaces, they are outfitted with the state-of-the-art electronic and wiring components that can accommodate high-definition televisions, full-house sound systems, hard-wired fire and security alarms and more.  

Young buyers can check out many of the outstanding designs and features being included in homes built by NAHB members at our social media communities facebook.com/homebuildrs, pinterest.com/nahbhome and google.com/+nahb. They can also access home buying and home building information and resources on NAHB’s website at nahb.org/forconsumers.

“The time has never been better for young people to become home owners, whether it be a new home or existing,” said Judson. “There are outstanding opportunities in the current market, with near record low interest rates, competitive prices and new homes being built that include open layouts, energy efficient components and other features that cater to young buyers.”

Housing Market Summer 2013

Source: The Los Angeles Times

Better times for home buyers will take a few years, experts say...

Low inventory and rising home prices are frustrating to many buyers, but unfortunately would-be buyers may have to wait a few more years for relief, according to experts.

Making sense of the story

• Institutional investors, who have been driving the market with their all-cash purchases and buying houses for rental income, need to be in and out in two to three years, according to one real estate analyst. Otherwise they cannot make a profit.

• For housing to normalize, individuals will need to come back to the marketplace and that will be driven by employment.

• Among the signs that investors are buying up swaths of homes in a specific area are the lack of bank-owned properties coming on the market despite high foreclosure rates.

• Consumer understanding has been a step behind what’s happening in the housing market. When the prices started going down, sellers were the last ones that got the memo. Today’s buyers may have to be willing to look in different locations, while prices continue to appreciate.    

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Home Prices in California - March 2013

Home prices in U.S. cities post big increase in March
Source: Los Angeles Times

Tight housing supply and strong demand continued to fuel a robust market recovery in March, with the Standard & Poor’s/Case-Shiller index of 20 U.S. cities recording a 10.9 percent year-over-year increase.

Talking Points

• Distressed home sales continued to decline in April, as previously underwater homes rose in value, and the share of REO sales registered in the single-digits for the first time in more than five years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported

• The combined share of all distressed property sales registered its lowest level since February 2008, dropping to 24.4 percent in April, down from 27.9 percent in March and down from 45.8 percent in April 2012. The share of all distressed sales in most counties also declined significantly from the previous year, with Alameda, Contra Costa, Marin, Orange, San Diego, San Mateo, and Santa Clara registering in the single- or low double-digits in April.

• The share of equity sales – or non-distressed property sales – now make up more than three-fourths of total sales, the highest share since February 2008. The share of equity sales in April increased to 75.6 percent, up from 72.1 percent in March.  Equity sales made up more than half (54.2 percent) of all sales in April 2012.

• The available supply of homes was relatively unchanged from March but remained tight. In April, the Unsold Inventory Index for REOs dipped from 1.8 months in March to 1.7 months in April.  At 2.7 months, the supply of short sales remained unchanged in April.  The April Unsold Inventory Index for equity sales was 2.9 months, down from 3 months in March.

How Much Mortgage Loan You Can Qualify?

Fixed-rate jumbo mortgages make a comeback
Source: The Wall Street Journal

Just a year ago, 30-year, fixed-rate jumbo mortgages were hard to find in some high-price markets. Now, many lenders are offering fixed jumbos – with very competitive rates.

Making sense of the story

• A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits imposed by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages from lenders. The conforming loan limit is $417,000 in most parts of the United States, but is $625,500 in the highest-cost areas, which includes California.

• During the mortgage crisis, the vast majority of jumbos were adjustable-rate mortgages and hybrid adjustable-rate mortgages, which started at low fixed rates and switched to adjustable interest rates at the end of a set time period – typically of five, seven, or 10 years.

• With the renewal of the secondary market for jumbo mortgages, more lenders today are willing to offer fixed-rates. Packaging the loans into mortgage-backed securities that are sold to investors can lessen the risk to lenders.

• While interest rates for jumbo mortgages are significantly lower than a year ago, hybrid ARMs remain attractive to borrowers with other financial priorities.

• The general wisdom when deciding between an ARM and a fixed jumbo is the same as with any mortgage. Borrowers should consider the length of time they plan to live in the house. If the length of time is near or less than the length of the ARM, then borrowers will save money with the ARM.

• Still, borrowers should keep in mind that some lenders will push hybrid ARMs because the lender stands to reap a higher return on investment. Additionally, lower ARM interest rates and monthly payments can free up cash to purchase stocks and other assets.

Real Estate Auction Purchases, Foreclosure Auctions (Trustee's Sales) and REO Sales

Top 10 Title Insurance Complications with Auction Purchases, Foreclosure Auctions (Trustee's Sales) and REO Sales

Is the Price Worth the Risk??    Foreclosures and Auctions are situations where real property is auctioned off to the highest bidder without a title policy being issued.  REO (Real Estate Owned) is the sale of real property that a bank has acquired, most often as a result of a foreclosure, and are selling pursuant to a purchase contract which may include only a basic title policy.

For more information, visit www.RealtorLisaWu.com 

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, they are subject to change. Please note that individual situations can vary, therefore, please consult a professional for specific advice.  (Source: CornerStone Title Company)

Home Warranty Policy & Coverage Pre- During and/or After Close of Escrow

Source: CALIFORNIA ASSOCIATION OF REALTORS(R)

• Some sellers wonder whether it is necessary to offer a home warranty, especially when inventory is low like it is currently.

• The biggest advantage of a home warranty – which covers breakdowns in major systems – is that it is an incentive many buyers value, particularly if they are stretching to buy and don’t have a lot of money left over for repairs.

• A home warranty is a relatively expensive form of insurance, and will set back the purchaser several hundred dollars, depending on the coverage selected. Also, there is a service fee for each call, which can be more than $100.

• Home warranties have limitations. They don’t cover static elements like the roof or siding, but do cover operating systems that often fail, like major appliances including garbage disposals, electrical wiring, plumbing, and heating and air conditioning. Some companies allow the homeowner to add riders to cover extras like the mechanical elements of a pool system or hot tub.

• Costs and exclusions vary widely, as do caps on what the warranty company will pay. Some companies also offer less coverage for systems that are near the end of their useful life. As in medical insurance, pre-existing conditions are usually exempted from coverage – and the warranty company makes the call as to whether the condition was pre-existing, as well as to whether the particular system should be replaced or just patched up.     

How To Be The Most Attractive Home Buyer

Source: Fox Business News

As home prices continue to recover and interest rates remain at near-record lows, many houses are receiving multiple offers and to win the bid, buyers need to stand out from the crowd. According to the CALIFORNIA ASSOCIATION OF REALTORS®’ most-recent housing report, the median number of days it took to sell a single-family home decreased to 29.4 days in March.

Making sense of the story

• Since markets are moving fast, housing experts recommend buyers have their loan pre-approved and their down payment ready before starting their search. With low inventory and demand high, buyers need to know their parameters.

• Multiple offers are become the norm, so buyers need to be ready to compete and do their homework to seal the deal. The longer the negotiations, the bigger the chance a buyer could lose out to someone else who made a better offer.

• Buyers also must be reasonable without being difficult because until an offer is signed, sealed, and delivered, other buyers can make offers on the property.

• Even though it’s a competitive market, buyers should maintain their budget and not pay more for a house than it’s worth. Experts also warn that buyers should not cut corners like skipping the home inspection.

• To be an attractive home buyer, consumers should plan ahead by checking their credit for accuracy and avoiding making any big purchases or taking on any big debt while house hunting.

• Buyers who spot a good deal on a house should not wait days to make an offer. Since time is not on the buyer’s side, learning how to spot a great deal by researching an area’s home prices is pertinent.

• In this market, cash is king. The more cash a buyer has, the more appealing they are as a buyer. Putting down 20 percent or more also makes a buyer look more financially stable and gives sellers comfort that they’ll qualify for a mortgage.                                                                    
• Having as few contingencies as possible to be an alluring buyer. “Don’t overcomplicate your offer to the seller.”  Certain contingencies based on your ability to get a mortgage, the appraisal and home inspection are standard, but piling on more could make the seller less inclined to work with your offer.
  
• Getting prequalified for a mortgage gives a ballpark for what you can afford to buy and will streamline your search process.  If you’re financing your house with a mortgage, have a pre-approval letter with you and if you’re paying cash, have proof of funds that shows you’re good for it.