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Housing Starts Fall 8.5% in New Year: Analyst Disappointed, but Expected During Winter

New Home Construction Rebound

Home building fell in January after surging 15.7% the month before, even though the new permits for construction rose to third-highest since 2008. This disappointed many analysts who were expecting January to be evidence of a housing market rebound.

The Commerce Department said on Wednesday that building starts at sites for homes fell 8.5 percent last month to a 890,000-unit annual rate. Mostly due to a sharp decline in the multi-family unit category, which fell 24.1 percent.

Starts for single-family units, which makes up two thirds of the total, went up a whopping 0.8 percent to their highest level since July 2008.

Meanwhile, Permits for future home construction rose to a 925,000-unit rate, the quickest since June 2008. If this continues to rise, it will be the most home-building year in quite some time.

The National Association of Home Builders said Tuesday that confidence among U.S. homebuilders slipped in February from a 6 1/2-year high in January. Many builders reported less traffic by prospective customers before the critical spring home-buying season begins.

“Following solid gains over the past year, builder confidence has essentially leveled out and held in the same three-point range over the last four months,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit, but it’s also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labor and lots as demand for new homes strengthens.”

“Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” observed NAHB Chief Economist David Crowe. “The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year.”

The housing market is on a very slow pace to a rebound, reports USA Today. Saying, “The U.S. housing market is slowly recovering after five years of markedly sub-par performance that followed the collapse of the residential real estate bubble in 2007. Ultra-low borrowing rates and the Federal Reserve’s aggressive bond-buying program aimed at stimulating job growth in the economy have helped the housing market to rebound.”

A good sign for an improving market is foreclosures. Foreclosures are slowly down on a national basis.

Even though new homes only make up a small percentage of the housing market, they still make an impact on the economy. According to statistics from the home builders, each new home built creates an average of three jobs for a year and generates about $90,000 in tax revenue.

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Best and Worst Places to Buy a Foreclosed Home

Top Foreclosure Cities

A study released by RealtyTrac found that the best area for a great deal on a foreclosure is Florida. Meanwhile, on that same report, Washington D.C. metro area was among the worst places to buy a foreclosure.

RealtyTrac broke it down and used four criteria’s for the list: the month’s supply of foreclosed properties; the percentage of foreclosure sales; the foreclosure discount; and the increase in the percentage of foreclosure activity in 2012

“The challenge of the 2013 market, for many cities, is a lack of foreclosure inventory,” said Daren Blomquist, RealtyTrac’s vice president. “The best places to buy are where a lot of homes will become available.”

For example, in Palm Bay, Florida, people who are in the market of buying a foreclosure, have a huge inventory of foreclosed homes to chose from.

A person who buys a foreclosed home will pay an average of 28% less than in conventional sales, according to RealtyTrac.

Another bad area to find a foreclosure deal is McAllen, Texas. The inventory of foreclosed home in that area are limited. According to RealtyTrac, foreclosed homes only made up 7% of all home sales last year. Other markets where it’s tough to find a deal on a foreclosed home include Ogden, Utah, Little Rock, Ark., Las Vegas, and Salt Lake City.

Daren Blomquist, vice president at RealtyTrac says, “It’s worse from the perspective of a buyer coming into that market to buy foreclosures. But from a macro level and from the perspective of homeowners in the market, I think it’s a good thing because there are fewer foreclosures that you are competing against if you go to sell your home and foreclosures are not going to be weighing down on home values as much as they have in the past.”

The worst metro area in the country to buy a foreclosure is McAllen, Texas, followed by cities in the west, including Ogden, Utah; Las Vegas; Salt Lake City; Phoenix; Portland, Ore.; San Jose, Calif.; and Honolulu.

The best places to buy foreclosures — where the best deals are to be had — are Palm Bay-Melbourne, Fla.; Rochester, N.Y.; Albany, N.Y.; New York-Northern N.J.-Long Island, N.Y.; and Lakeland, Fla.

Foreclosures in 2012 have decreased from 2010, when foreclosures peaked the most, in 85% of the 212 markets tracked in the report.

“Markets with increasing foreclosure activity in 2012 took the first step in finally purging delayed distress left over from the bursting housing bubble,” said RealtyTrac Vice President Daren Blomquist. “Meanwhile, the underlying fundamentals in many of those markets are slowly improving, making it an opportune time to absorb additional foreclosure inventory this year–and that is particularly good news for buyers and investors hungry for more inventory to purchase in those markets.”

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Super Bowl Real Estate Prices

Real Estate Home Median Prices Sometimes Correlate With Super Bowl Appearances

Super Bowl Real Estate Prices

The big game is almost upon us and the excitement and buzz around the Super Bowl is all around. While many new Super Bowl advertisements and even some controversy surrounding them is typically the hot item, we found one story at RealEstate.com that had us pretty intrigued. It seems that a peculiar trend in the data of median home prices shows that higher median home values more often than not lead to a Super Bowl team.

Lucky for you, there is an infographic to help you sort through all the information. Essentially what the data says when all Super Bowls were analyzed along with median home prices it started to reveal the high priced home theory. If you look at teams that have went to the Super Bowl the most, 7 of those cities are actually cities that have high home prices. The home median prices were compared to the national median home price.

So you’re probably wondering, what about the 10 teams that have went to the Super Bowl the least? Well, that is where the data keeps the anomaly going. Of the 10 NFL Teams that have went to the Super Bowl the least, most of them have low median home prices when compared to the nation median home price.

Don’t worry, it doesn’t all work out like perfect Real Estate magic with the data always working out to fit the theory. Some exceptions to the rule are NFL teams like Green Bay Packers, Dallas Cowboys and Pittsburgh Steelers which are in the Super Bowl a lot. With as much as these NFL teams make it to the Super Bowl their median home values aren’t too hot.

There’s more teams in the National Football League that don’t fit into the high home value and high Super Bowl appearance correlation. Unfortunately, one of the teams is a team I root for a lot, the San Diego Chargers. The Chargers have one of the highest home median prices and they’ve only been graced with a Super Bowl appearance once. I know, I’m upset about it too. The other team that has high home values but has only been to the Super Bowl once is the Seattle Seahawks.

So as excited as we got, the fun analysis of real estate values and Super Bowl teams coinciding together has fell apart. There does still seem to be some truth to the whole thing and you can’t beat telling someone about this possibility at the water cooler! You can view the Super Bowl Appearances vs. Real Estate Prices infographic below:

Do cities with higher home prices make more Super Bowl appearances

Super Bowl Appearances vs. Real Estate Prices

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Sales of Preowned Houses Drop, Prices Go Up Due to Lack of Inventory

Lack of Housing Inventory

Sales of previously owned homes dropped in December from November, but the national median home prices rose to it’s highest best price in seven years.

With all that said, 4.65 million homes were sold for all of 2012, up from 9.2% in 2011, the most in five years and a sign that the housing market is slowly taking steps toward recovery.

“This isn’t worrisome at all,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate. “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.”

“We remain convinced that the housing recovery is well under way and should continue through 2013,” said Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage.

Meanwhile, only 1.82 million homes were listed for sale in December, according to the National Association of Realtors. That is a 22 percent drop from a year ago and the lowest supply since May of 2005.

“The greatest concern in the market is the inventory situation,” said Lawrence Yun, chief economist for the NAR. “Even if we see an increase in the Spring and Summer, if home sales hold at the current level or even a 5 to 6-month supply, price increases are guaranteed. We don’t want to see rapid appreciation in prices faster than income.”

First-time home buyers, who are the crucial to the housing recovery, made up only 30 percent of sales in December. Banks have started to make tighter credit standards and also requiring larger down payments since the housing bust, six years ago. That means the buyers that are “would-be buyers” aren’t able to qualify for even the lowest mortgage rates.

The rate on the 30-year fixed mortgage averaged 3.66 percent in 2012, the lowest annual average in 65 years, according to Freddie Mac.

“Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” the Realtors group’s chief economist, Lawrence Yun, said in a news release.

Sales for expensive houses priced at $1 million or more rose 62 percent in 2012. While the sales of homes below $100,000 fell 17 percent.

The median price of an existing home rose to $180,800 in December 2012, up 11.5 percent from $162,200 in December 2011. It was the biggest year-over-year gain since November 2005.

“The only concern going into 2013 is the inventory situation,” Lawrence Yun, NAR chief economist, said in a news conference as the figures were released. “Price increases are almost guaranteed going into 2013,” Yun said, adding that the group’s projection of a 4 percent to 5 percent increase this year may be exceeded.

How to play the 2013 housing market

2013 could bring on more home price appreciation and changes in the popular mortgage interest tax deduction.

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New Home Start Four Year High

New Home Starts Reach Four Year High in October

New Home Start Four Year High

New construction in housing hit the strongest for two months starting in October since four years ago. The Commerce Department said on Tuesday housing starts increased 3.6 percent to a seasonally adjusted annual rate of 894,000 units, the highest it’s been since July 2008.

The biggest increase was from multi-family construction, which was up 11.9 percent. Single-family construction went down only 0.2 percent compared to September but was back up 35.3 percent from October 2011. Despite Hurricane Sandy hitting the east coast during this survey period, outcome was still good and the drive for the housing market is starting to boom.

“Single-family housing starts and permits were above expectations for October, suggesting more residential investment in the fourth quarter,” Macroeconomic Advisers analysts wrote in a research note.

The rise in starts was mostly apartment buildings, which were up by 10 per cent, while new houses held steady. Foreclosures may have pushed many people into renting rather than owning a home. This is leading to a surge in apartment rental. Higher rents are making it especially profitable to build new apartments.

David Crowe, National Association of Home Builders chief economist, said in a statement, “Today’s report bears out similar changes in other economic indicators that housing continues to recover at a slow but steady place, and is right in line with our expectations of modest month-to-month growth. However, we still have a long way to go to get back to normal production as inaccurate appraisals, tight lending conditions for home buyers and policy uncertainties continue to impede the recovery.”

“The foundations for housing are getting better. Prices have stabilized, and people are feeling a bit more confident,” said Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut.

With all the reports of recovery numbers, this could mean the the US and world economy could start to build in 2013. From the report, it showed confidence among builders that has reached its highest level since the last days of the housing boom in 2006.

Eric Green, chief economist at TD Securities in New York said, “The broad improvement in home prices, home equity, starts, and inventory clearing are key developments that position the economy for stronger growth next year, and beyond.”

Housing Starts Highest in Four Years

New economic data today as October housing starts hit their highest rate in more than four years. This is very good news for the housing market, a segment of the economy that has continued to struggle since the recession. Reports indicate that for the first time since 2005, homebuilding is expected to add to gross domestic product.

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Housing Market Recovering Slowly

Housing Market Recovering Slowly

The housing market may be on a rebound, at last. New data is showing that price declines entering big cities, sales of new homes improving nationally and foreclosures in California dropping to levels that haven’t been seen since before the start of the credit crunch almost five years ago.

Eric S. Belsky, managing director of Harvard’s Joint Center for Housing Studies said in a news release, “With new home inventories at record lows, unless the broader economy goes into a tailspin, stronger sales should further stabilize prices and pave the way for a pickup in single-family housing construction over the course of 2012.”

Dan McCue, research manager for the Joint Center added, “We did want to highlight the differences we saw between this year and last year, and signs that seem to indicate that a recovery is beginning. In addition to the fact that it might be a long haul to get out of the deep hole we’re in. I do think that every time we talk about the return [of the housing market] we need to talk about how far the housing markets have gone. Never before has a downturn been so strong and a recovery so weak.”

The economy overall is starting to improve, but the housing market was the last one to stabilize. Good news, notices of default fell to 56,258 statewide in the first three months of the year, a 17.6% drop from the same period last year, DataQuick of San Diego reported. That was the fewest number of default notices filed since the second quarter of 2007.

Many homebuyers are young adults who have been sitting on the sidelines waiting for the job market to improve before jumping into a house loan. Finally, they feel comfortable to buy. “As markets tighten, these young adults may begin to take advantage of today’s lower home prices and unusually low mortgage rates. With rents up, home prices sharply down and mortgage interest rates at record lows, monthly mortgage costs relative to monthly rents haven’t been this favorable since the early 1970s,” Belsky said in the release.

The Standard & Poor’s/Case-Shiller index of 20 U.S. cities is the most watched measure for home values and it showed price declines in January to February.  With pricing falling 0.8% from January to February, and were down 3.5% from February 2011.  Economists are trying to take this data with a grain of salt because the sales of homes are typically slow during those months.  The index’s year-over-year decline in home values has also been steadily shrinking in recent months.

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Foreclosure Investments in US Foreign Buyers

Foreclosure Investing Growing In US From Foreign Markets

Foreclosure Investments in US Foreign Buyers

While there is certainly interest and demand domestically in America for foreclosure properties on the market, it seems interest is only building across the ocean. We caught wind of a press release that seems to tout the amazing investment opportunities in the US Real Estate market and the possible returns that are sitting there ripe for the taking.

Used as one of the pieces of advice in the press release was some quotes from Warren Buffet. Mr. Buffet was recently interviewed on CNBC’s Squawk Box and mentioned his feelings on the housing market and how he wouldn’t mind to invest on a large scale effort.

Mr. Buffet was quoted as saying, “If I had a way of buying a couple of hundred thousand single family homes and had a way to manage them…..i would load up on them.” It was also pointed out that with Warren Buffet saying that he had no self bias at the time because Berkshire Hathaway has little investments in the US real estate market.

The owner of the business offering these foreclosure opportunities as investments was quoted as saying, “”We are managing to secure family homes that are achieving rents of $900-$1200 per month for between $50,000 and $75,000 in quality cities where jobs growth is stimulating rental demand.” Phil Gerathy was talking about the Michigan market and he seems to have some connections to be able to land deals on the houses at $50,000 when average listing prices are pushing $200k.

The press release focused on the Australian investments they’re trying to perfect and build. If you live in the US and you’re trying to decide whether to invest in a home or in foreclosures, it’s probably a good sign that you should act if other groups from foreign countries are. Foreclosure properties are still out there but demand is certainly picking up almost nationwide.

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Realtor Arrested Grow Operation

Realtor Arrested For Having Ties With Marijuana Growing Operations

Realtor Arrested Grow Operation

A marijuana growing operation had wide reaching effects from London to Ontario and was coordinated by a realtor. The realtor was arrested by police after an 18 month investigation for being part of a grow-op network that facilitated purchases of houses on the market for growing operations.

The realtor’s name was Thu Tran who worked for Sutton Group Preferred Realty of London and had a license with the Real Estate Council of Ontario.

The connection started to fall together after a series of marijuana grower busts by police. With some investigation police and others started to notice that homes that were being busted for grow operations were often sold by Thu Tran, the grow-op realtor of choice. The first person to really notice this connection was the owner of Sutton Group Preferred Realty, Gerry Weir. Mr. Weir was told not to terminate the realtor until an investigation was final so that they could properly prosecute Ms. Tran.

In all it was reported in the London Community News that Thu Tran was the seller of a minimum of eight houses that were busted for marijuana grow operations. The houses were all in different parts of the city and were not necessarily related by location. The new crackdown is to kill off connections from realtors that are assisting organized criminals in these grow operations.

The sting was revealed in the LF Press and detailed how Ms. Tran was finally caught. It seems that an undercover operation was setup to actually find homes for grow operations and then were actually stocked with grow lights and power bypasses. Before the marijuana was produced police stepped in and made the arrest.

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Meth Testing Loopholes

Meth Testing Loopholes on Real Estate Leave Houses Contaminated

Meth Testing Loopholes

Just recently a realtor in Utah came out and exposes a “loophole” in the real estate market that could leave houses contaminated with methamphetamine. The report was revealed by Utah’s KSL TV and reported on by Lori Prichard.

The realtor’s name is Brandon Hacker and he actively goes out and gets meth tests done on homes that his buyers are interested in. The main tip the Mr. Hacker has said can help expose the current loophole of meth testing in real estate is getting a certified decontamination specialist.

Apparently if you don’t use a certified meth decontamination specialist and do a self test there is no requirement to report it. When a specialist does the testing they are required to report it to the health department. Mr. Hacker told KSL, “If they get a certified test done, the health department will step in and protect us.”

You’d think that everyone would want to try and make sure that houses were tested for previous drug house problems. The truth is that realtors are facing tough markets and some don’t want to know the truth. Mr. Hacker also said, “With inventory low, a lot of (realtors) say ‘I don’t want to know, let’s hope the next person doesn’t want to know either.”

The easy fix is to definitely test a house no matter what if you’re looking to purchase the home. You don’t know for sure if it has been tested by a certified tester or not. MSN reports that testing, decontamination and re-testing a house can cost as much as $16,000. It’s not a cheap thing to get done but it can save your life and the health of your family.

The DEA gives some tips on how to detect whether a house might be a previous meth house that you should avoid on the real estate market or not:

  • A large amount of cold tablet containers that list Ephedrine or Pseudoephedrine as ingredients.
  • Jars containing clear liquid with a white or red colored solid on the bottom.
  • Jars labeled as containing Iodine or dark shiny metallic purple crystals inside of jars.
  • Jars labeled as containing Red Phosphorus or a fine dark red or purple powder.
  • Coffee filters containing a white pasty substance, a dark red sludge, or small amounts of shiny white crystals.
  • Bottles labeled as containing Sulfuric, Muriatic or Hydrochloric Acid.
  • Bottles or jars with rubber tubing attached.
  • Glass cookware or frying pans containing a powdery residue.
  • An unusually large number of cans of Camp Fuel, paint thinner, acetone, starter fluid, Lye, and drain cleaners containing Sulfuric Acid or bottles containing Muriatic Acid.
  • Large amounts of lithium batteries, especially ones that have been stripped.
  • Soft silver or gray metallic ribbon (in chunk form) stored in oil or Kerosene.
  • Propane tanks with fittings that have turned blue.
  • Occupants of residence going outside to smoke.
  • Strong smell of urine, or unusual chemical smells like ether, ammonia or acetone.

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Houston Home Prices Break Records

Houston Home Prices Break Records, Sales Highest in 4 Years

Houston Home Prices Break Records

 

There are certainly some really depressed markets in the real estate market right now. Las Vegas is dragging the entire US market into a gloomy state with low sales, high foreclosures and a lot of rough positions. Houston, Texas however is busting out of the gates and making Realtors across the country take notice.

If the Houston Real Estate market isn’t screaming at least a temporary recovery we just don’t know what else would do it. The Houston Association of Realtors (HAR) have announced with a report that home prices have now broken records and sales volume has reached the highest it has been in four years.

In interviews it was revealed that jobs are making a big impact on the real estate economy in Houston. “Both buyers and sellers are reaping the benefits of an extremely healthy and robust real estate climate in Houston, driven largely by continued job gains that have been responsible for drawing many new consumers to this market,” said Wayne A. Stroman, HAR chairman and CEO of Stroman Realty. “Buyers are able to take advantage of the lowest interest rates in history as they shop for homes, and we’re also hearing accounts of sellers receiving the asking price for their homes, and in some cases getting even more.”

A single-family home has seen price increases that have been pegged at about 8.5% from 2011 to 2012. The single-family home average price is now $237,083 which is the highest that Houston has ever seen.

So the prices of the Houston home values are on a steamy rise what about the sales volume? May 2012 saw sales volume in the Houston home market see gains of 10.5% from a comparison of last year to May in 2012. The total pending sales in the Houston area were 4,476.

HAR MLS Market Update Video for May 2012

Join David Mendel and HAR Chairman Wayne Stroman, as they discuss property sales for May 2012.

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