By Prashant Gopal – May 10, 2011 9:00 PM PT

Financing provided by home sellers, popular in the 1980s when mortgage rates reached 18 percent, is making a comeback in markets such as Michigan that have been hit hard by foreclosures.

Sue and Douglas Reed knew no bank would give them a mortgage — not with a bankruptcy and two foreclosures fresh in their credit history.

They turned to Hilarie Walters, whose childhood home on 15 acres (6 hectares) in Marshall, Michigan, had been on the market since 2009. The unemployed single mother of twins agreed in December to sell the property to the Reeds for $105,000. She also consented to a risky payment plan that in effect makes her the couple’s mortgage lender.

Financing provided by home sellers, popular in the 1980s when mortgage rates reached 18 percent, is making a comeback in markets such as Michigan that have been hit hard by foreclosures and where tightening lending standards and years of economic distress have drained the pool of creditworthy buyers. For a small but growing number of people, it’s the only way to get a deal done.

“This is the American dream, and we’re going for it no matter what,” said Sue Reed, 56, who sells snacks from a trailer at estate auctions and going-out-of-business sales. “We’ll either make it or it will break us.”

Michigan, where unemployment is 10.3 percent, leads the nation with about 1,600 home listings advertising seller financing, according to Trulia Inc., a San Francisco-based real estate information company. It is followed by Florida, Ohio, California, Wisconsin, Minnesota and Texas.

Last year, 52,991 U.S. homes were purchased with various forms of owner financing, up 56 percent from 2008, said Realtors Property Resource LLC, a subsidiary of the Chicago-based National Association of Realtors, citing data collected from county-record offices. Such deals accounted for 1.5 percent of all transactions in 2010.

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Seattle Real Estate Tyler Freed

Mortgage rates at lowest level of the year

By MSN Money partner on Thu, May 12, 2011 1:05 PM
This post comes from Amy Hoak at partner site MarketWatch.

Meanwhile, foreclosures and other distressed homes are holding home prices down in many areas.

Mortgage rates fell for the fourth week, with rates on the 30-year fixed-rate mortgage averaging 4.63%, the lowest this year, according to Freddie Mac’s weekly survey of conforming mortgage rates.

Rates on the 30-year mortgage averaged 4.71% last week and 4.93% a year ago, according to the survey.

Compare mortgage rates
Fifteen-year fixed-rate mortgages averaged 3.82% for the week ending May 12, down from 3.89% last week and 4.3% a year ago.

Rates on adjustable-rate mortgages also dropped, with the five-year Treasury-indexed hybrid adjustable-rate mortgage averaging 3.41%, down from 3.47% last week and 3.95% a year ago. And one-year Treasury-indexed ARMs averaged 3.11%, down from 3.14% last week and 4.02% a year ago. Post continues after video.

To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the five-year ARM required an average 0.6 point and the one-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.

Is it time to refinance?
“Mortgage rates continued to decline this week following a mixed employment report. The economy added a healthy number of 244,000 workers in April, the most in 11 months, and the figures for March and February were revised up by 56,000 more jobs,” Frank Nothaft, vice president and chief economist of Freddie Mac, said in a news release.

“However, the unemployment rate rose to 9% from 8.8% in March and was the highest reading since January. In addition, wages grew by only 0.1%, which was below the market consensus forecast.”

For the housing market, distressed homes including foreclosures are holding home prices down in many areas, he said.

“The National Association of Realtors reported these homes sold at a 20% discount in the first quarter of this year and accounted for 39% of all existing home sales, up from 36% in the first quarter of 2010. As a result, only 22% of metropolitan areas exhibited higher median sales prices from a year ago, compared to 51% in the fourth quarter of 2010,” he said.

For the original article on MSN visit this link.

Seattle Real Estate Tyler Freed

By Les Christie, staff writer February 10, 2011: 11:09 AM ET

NEW YORK (CNNMoney) — Home sales volume rose sharply in the final three months of 2010, aided by more stable prices on a year-over-year basis, a real estate industry group said Thursday.

Sales jumped 15.4% in the fourth quarter to an annual rate of 4.8 million units compared with 4.16 million a quarter earlier, the National Association of Realtors said.

Prices of single-family homes stabilized, rising 0.2% compared with 12 months earlier. The national median for homes sold during the period was $170,600.

“Home sales clearly recovered in the latter part of 2010, and are helping to absorb the inventory, including many distressed properties,” said Lawrence Yun, chief economist of the Realtors’ group.

Sales volume was particularly strong in the West region, up nearly 20% compared with the three months ended Sept. 30.

“A good portion of the sales activity in the West has been driven by investors taking advantage of discounted foreclosures, with high levels of all-cash transactions,” said Yun.

The number of sales fell nearly 20% nationally, however, compared with the same period in 2009, when the homebuyer’s tax credit was in effect.

“The tax credit clearly poached demand from the second half of 2010,” said Jonathan Miller, CEO of Miller Samuel, a New York-based appraiser. “It artificially stimulated sales in the first half and artificially lowered it in the second.”

Many housing market factors were favorable through the end of the year. Prices are very affordable for working families in most markets, interest rates are extremely low and bloated inventories offer a wide choice of properties.

The missing ingredient is a positive economic environment, specifically when it comes to hiring.

“An improving housing market and job growth will go hand in hand,” said Yun. “The housing recovery will mean faster job growth.”

He projects than a 300,000 increase in 2011 home sales will lead to the creation of about 150,000 to 200,000 jobs to the overall economy.

The survey revealed that single-family home prices held up better than those of condos. The national median for condos fell 6.4% compared with 12 months earlier, to $164,200. In some markets, condo prices have rarely been so affordable.

The median condo price in the Las Vegas metro area, for example, was just $60,700; in Phoenix, $68,900; and in Miami, $81,900. Reno, Nev., had the lowest condo prices in the nation, a median of $60,300.

As for single-family homes, Youngstown, Ohio, the old steel town struggling to find its way back into the modern economy, recorded a median of just $62,800 during the fourth quarter. That was a decline of nearly 14% from already bargain-basement prices a year earlier.

Toledo, Ohio at $74,500, Lansing, Mich. at $79,500, and South Bend, Ind. at $76,800 also recorded very low prices. Outside the Rust Belt, Ocala, Fla., was the lowest priced metro area at $80,200.

Honolulu had the highest single family home prices during the quarter, a median of $598,200. San Jose, Calif.’s median was $591,000 and San Francisco’s was $558,200.

Seattle Real Estate Tyler Freed

The 5 best markets for 2010
It won’t be a high bar to be considered a top performer in this year’s housing market.
By Lisa Scherzer of SmartMoney

Tacoma, Wash., tops Moody’s list of cities where home prices will perform the best in 2010.

After a dour year when housing prices fell more than 12% nationwide, will 2010 bring sunnier tidings?

The short answer: only a tad in a select few places but overall, not really.

Yes, there have been pieces of good news over the past few months that have indicated a quiet, slow bottoming of real-estate prices. For instance, sales of existing homes rose 7.4% in November from the previous month, the highest rate since February 2007, according to data from the National Association of Realtors released last week. The tax incentives for homebuyers passed earlier this year along with historically low interest rates have nudged many buyers into the market.

Yet a recovery depends on several factors. At the top of the list is a turnaround in the labor market. More people going back to work would have a beneficial effect on household income and consumer confidence and would stabilize the housing market, says Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. As of November, one of out every 10 American workers is unemployed, according to the Bureau of Labor Statistics. And while that’s down slightly from October, Moody’s expects the jobless rate to peak in the third quarter next year at 10.6%.

What’s your home worth?
Another factor is the backlog in foreclosures, which are dragging down values and adding to the housing supply. “By all accounts, that backlog is at a historic high,” says Gabriel. “It suggests that many more homes will be sold on a distressed basis either via foreclosure or short sale.”

RealtyTrac, an online marketplace of foreclosure listings, estimates 3.2 million households will have received a foreclosure notice in 2009, up from 2.3 million in 2008. The firm projects that number could approach 4 million in 2010. “We do think 2010 will probably represent the peak, and in 2011 [foreclosures] will start to go down at least marginally,” says Rick Sharga, senior vice president at RealtyTrac. Why the acceleration next year? First, says Sharga, there have been enormous delays in processing this year. Many homes that would have gone into foreclosure in 2009 won’t actually enter and complete the process until 2010.

Seattle and Redmond: Meet our Towns

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Second, a big wave of option adjustable-rate mortgages (ARMs) will reset next year. (These are a somewhat obscure category of ARMs that were popular during the real-estate boom, which allowed borrowers to make a range of monthly payments. The options include a partial-interest payment that adds the unpaid interest to the loan’s balance. On many of the loans, balances have risen while values of the underlying properties have plummeted.) “The number of loans that will adjust starts to go up significantly in the middle of next year. A lot of those loans are underwater … and owners will be really hard-pressed to avoid going into foreclosure,” Sharga says.

Home prices, of course, are variable and depend on many factors, each of which is difficult to predict. Still, average home prices will drop by 7.9% nationwide in 2010, according to Moody’s Economy.com. In the few areas where there could be positive price growth, the projected increase is modest. “These areas will essentially be flat next year,” says Steve Cochrane, managing director at Moody’s Economy.com.

The top 5 cities for home prices

Tacoma, Wash. (+2.44%)
Memphis, Tenn. (+0.99%)
Pittsburgh (+0.89%)
Charleston, S.C. (+0.18%)
Seattle (-0.50%)
These five markets are culled from data on Moody’s Economy.com and based on the largest 100 metro areas.

These pockets of the country share a few important characteristics. One is that they are starting with a limited supply of housing stock. Another is that throughout most of the decade, prices basically stayed in sync with household income, says Cochrane.

There are other factors, too. Pittsburgh, for example, along with western Pennsylvania, is late in the traditional business cycle, and “our variations tend to be smaller,” says Robert Strauss, a professor of economics and public policy at Carnegie Mellon University in Pittsburgh. The economy has managed to stay fairly stable mostly because over the past several decades it transformed from a center of manufacturing to one of education and health care with a bit of financial services and technology.

Smaller areas across the Southeast are expected to fare well in 2010 primarily because they fared relatively decently during the housing crisis, says Jeannine Cataldi, a senior economist at IHS Global Insight. “They didn’t have such a big run-up, and they have a diverse economic base that enabled them to stay stable,” she says. Home prices in Charleston didn’t get out of line with household incomes; also, Boeing is investing in a fairly large manufacturing plant there, which could create some potential for income and job growth, says Cochrane.

As for Memphis, the city’s largest employer is FedEx. Transportation services is one of the early industries to turn around as the economy recovers, says Cochrane, and that should support the area’s housing market.

The economies of Tacoma and Seattle — which are neighboring cities — were “much stronger for much longer than much of the rest of the country,” says Cochrane. Software giant Microsoft, based in Redmond, Wash., a Seattle suburb, was one reason the area remained stable. (Microsoft is the publisher of MSN Real Estate.) Another was Boeing, which builds commercial airplanes in Seattle.

Going forward, Seattle’s position as a key hub of trans-Pacific trade should be a plus for the economy. Orders are increasing for commercial aircraft and it should see some rising demand for tech products, Cochrane says. The outlook for 2010 for the two Washington cities “is for fairly stable, moderate economic growth,” he says.

Seattle Real Estate Tyler Freed

Foreclosures weigh on home appraisals
It appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none.

By Alex Veiga

The Associated Press

LOS ANGELES — It wasn’t the first time that Katherine Scheri ruined a real-estate agent’s day with a low property appraisal.

Scheri, a real-estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller.

The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price. Then he tried good old-fashioned guilt, telling Scheri her appraisal was going to ruin the buyers’ shot at the American dream.

“That’s what he laid on me,” Scheri recalled. “And I said, ‘Don’t you care they could be potentially spending $30,000 too much for a house?’ ”

Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes.

And that gets to the heart of the problem.

Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they’ve hit more than 50 percent.

Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool or a finished basement. And generally, a foreclosure isn’t used as a comparison for a standard sale.

But in some areas, appraisers like Scheri contend they are only sizing up homes according to the reality of the market, though they concede its becoming increasingly harder to pinpoint what a home is worth.

Home prices in many large metro areas, including Los Angeles and San Diego, hit bottom earlier this year and are recovering, data shows. Yet there are many neighborhoods across the country where foreclosures and other financially distressed sales are still rising.

“It used to be a very infrequent thing that you did an appraisal and the value wasn’t supported,” says Scheri, who is based in San Diego. “Now, it’s more common than not.”

So, if you’re trying to sell your home in a neighborhood where foreclosures and short sales are predominant, an appraiser could determine your home is actually worth less than what some buyers may be willing to pay.

Part of the problem, critics contend, is that many real-estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender.

Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.

The result, however, can mean that low-cost appraisers are hired from outside the area and don’t have the local knowledge to find homes that can be a better benchmark for regular homes.

Chris Heller, agent-owner of Keller Williams Realty in northern San Diego, recently had the sale of a home nearly thwarted for the second time because of a low appraisal.

The three-bedroom, two-bath house in the Poway suburb of San Diego was appraised for $55,000 less than what the buyer agreed to pay. The seller wasn’t willing to drop the price to $400,000, but knocked off $20,000 when the buyer agreed to come up with $35,000 in cash.

“The seller is taking less because of the appraisal,” Heller said, noting that almost all of the comparable homes used to gauge the property’s value were distressed sales.

Still, the buyer is paying a premium not to have to deal with the risks involved in buying a foreclosed home or a short sale, which can take several months to close.

So, should distressed homes sales be compared with other homes? Is one inherently worth more than the other?

A new analysis of foreclosure and nonforeclosure sales by Zillow.com found that even when most of the market is made up of bank-owned homes, nonforeclosures sell for as much as 30 percent more. Another study by Harvard’s Joint Center for Housing Studies came up with a similar conclusion.

In Las Vegas, which has one of the highest foreclosure rates in the nation, the median sale price for bank-owned homes sold in September was about 23 percent less than other types of properties, according to the Zillow study.

“There are two markets, two very distinct markets,” said Zillow economist Stan Humphries.

That doesn’t mean foreclosures don’t weigh down the value of nearby homes, although there’s loud disagreement on how much.

The Joint Center for Housing Studies examined home sales over 20 years in Massachusetts and found that a foreclosure within less than 100 yards of a home lowers the price of that home by 1 percent.

So it appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none. That means you can live in one area of Las Vegas and values can be down twice as much as they are in another neighborhood just a few miles away.

When it comes to appraisals, that leaves a lot of room for interpretation.

Seattle Real Estate Tyler Freed

Realtors See a Decade of Dramatic Developments

NAR takes a look back at the many changes that have occurred over the past 10 years

NAR News Release
January 5, 2010
HousingZone
Washington, D.C. — At the beginning of the 21st century, most home buyers had never viewed a home online; the three top home sale marketing methods were yard signs, newspaper ads and open houses; and nearly nine out of 10 buyers financed their purchase with a fixed-rate, 30-year mortgage. What a difference a decade makes.

“The real estate industry has seen tremendous change and evolution over the past decade,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “As the first, best source for real estate information, Realtors® have not only anticipated and adapted to the evolving needs of their clients and customers, but also have influenced industry trends and innovations that will carry us into the future.”

In 1999, buyers who went online in search for a home were in the minority – only 37 percent of buyers used the Internet in their home search, according to data from the NAR Profile of Home Buyers and Sellers. Today, 90 percent of buyers are searching online, and the real estate industry has responded. Sites like Realtor.com, which attracts nearly 12 million total visits every month, have evolved to gives today’s buyers what they want – not just property listings, but multiple photos, online videos, mapping features, and comprehensive neighborhood information, as well.

Median home values over the past decade have increased more than 25 percent, from $137,600 in November 1999 to $172,600 in November 2009 (the most recent existing-home data available). Fewer people are buying detached, single family homes – 82 percent in 1999 compared to 78 percent in 2009 – but more people are buying homes in suburban neighborhoods – 46 percent in 1999 compared to 54 percent today.

Buyers themselves have also changed. A smaller proportion of married couples are buying homes these days; while married couples comprised 68 percent of all home purchases at the beginning of this century, they represent 60 percent of all buyers today. Single men and women have made up the difference – single men purchased 10 percent of all homes last year, compared to only 7 percent 10 years ago. Single women now represent more than one-fifth of all home buyers – 21 percent, up from 15 percent in 1999.

Other things haven’t changed. The median age for home buyers last year was 39, just as it was in 1999. Neighborhood quality, affordability, and convenience to work and school have consistently been top priorities for both past and present buyers. And eight out of 10 recently surveyed consumers believe that owning a home is an investment in their future.

“Realtors® have been around for more than 100 years, but one constant during that time has been the persistence of homeownership as the American Dream,” said Golder. “As the first decade of this century comes to a close, NAR stands ready to meet the many challenges and opportunities that lie ahead by helping our Realtor® members better serve their clients and communities and ensuring that those dreams of homeownership remain possible for all who want to achieve it.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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© 2010, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.

Seattle Real Estate Tyler Freed

Home prices in 20 U.S. cities rise for fourth month

The Standard & Poor’s/Case-Shiller home price index, which tracks prices in 20 major metropolitan markets, rose 0.3 percent in September, compared with the previous month. Prices rose in 11 areas.

By The Associated Press

A housing report showed home prices improved for the fourth straight month in September, providing further evidence of a modestly improving housing market.

The Standard & Poor’s/Case-Shiller home price index, which tracks prices in 20 major metropolitan markets, rose 0.3 percent in September, compared with the previous month. Prices rose in 11 areas.

The home price report comes a day after an upbeat report on existing home sales in October helped stocks snap a three-day losing streak. The National Association of Realtors said October home sales rose more than 10 percent, easily topping the 1.4 percent increase predicted by economists.

Seattle Real Estate Tyler Freed

Home sales rise to highest level in 2.5 years
Only a 7-month supply of homes on market; bidding wars are erupting

Reed Saxon / AP
October home sales rose 10.1 percent, beating expectations, as tax credit spurred sales.

Realty Check: Existing Home Sales
Sales of existing homes jumped, but commercial real estate has further to fall, with CNBC’s Diana Olick.
CNBC

WASHINGTON – Home sales surged for the second month in a row in October, climbing to the highest level in 2 1/2 years as first-time buyers rushed to take advantage of an expiring tax credit.

Home sales nationwide are now up nearly 36 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.

Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.

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“It’s insane,” said Wilson, who relocated from Kentucky. “I’ve never seen a market like this before.”

The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.

Without adjusting for seasonal factors, sales were up 21 percent from a year earlier and were up in all four regions of the country. The gains were led a 26 percent increase in the Midwest. Sales were up 25 percent in the Northeast, 23 percent in the South and 10 percent in the West.

The housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.

Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market.

The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.

The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.

The Realtors’ report on October home sales reflects offers made before buyers knew the tax credit would be extended.

“The incentives really did get people to go out and buy,” said Wells Fargo economist Adam York. “The question is: What does the trend look like when the credit is over with?”

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.

The new deadline means “we’re going to see some good activity coming out of the spring,” said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.

But the government support can’t last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.

“When we do kick those crutches out from under the housing market, will it be able to stand on its own?” said Mark Fleming, chief economist with real estate information company First American CoreLogic. “It’s really hard to tell.”

Another concern is that job losses are pushing once creditworthy homeowners into default. Borrowers with prime, fixed-rate loans accounted for one in three new foreclosures in the second quarter, the Mortgage Bankers Association said last week. Nationwide, a record 14 percent of homeowners with a mortgage were either behind on their payments or in foreclosure.

And in areas where foreclosures have hit hard, housing remains depressed, despite low prices and mortgage rates and the tax credit.

Cleveland real estate agent Colleen Rock notes that the city’s economy is still struggling with job losses. Another round of foreclosures could depress prices again.

“Just because we’re stabilizing, I can’t comfortably tell you we’re back to a normal market,” said Rock, an agent with Re/Max Crossroads. “It might be another year.”

Seattle Real Estate Tyler Freed