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RISMEDIA, June 1, 2010—(MCT)—Although the situation is open to interpretation as well as change, there are growing concerns that the effects of this economic downturn could have a long-lasting effect on the housing market.

A study by the Mortgage Bankers Association, conducted by Kentucky economics professor Joe Peek, concludes that “the current financial crisis and recession exceeded the devastation created by other post-World War II recessions.”

Saving rates have risen substantially. Many Americans will continue to cut spending sharply out of necessity, “others out of fear of what the future holds,” Peek said.

When it comes to housing, he said, it was unlikely that the dramatic rise in loan delinquencies, foreclosures and bankruptcies would show a “meaningful” decrease in the foreseeable future.

“High unemployment and low house prices are widely projected to remain for an extended period, as well as the rise in problem loans at banks that will restrain their willingness and ability to provide credit,” Peek said.

Two groups expected to feel the pinch the most are young first-time buyers and the so-called active-adult purchasers who downsize as their children grow and move out.

“The impact of a higher unemployment rate for Americans ages 16 to 24 could have a lasting effect on lifetime earnings and attitudes toward risk and social policies,” Peek said.

In addition, those nearing retirement are delaying it and re-entering the labor force “in an effort to rebuild some of the retirement wealth that was wiped out by the recession,” he said.

The housing industry had been banking on both of these groups to sustain growth during the coming decades—especially the empty-nester baby boomers.

“The tougher economic circumstances for twenty-somethings and fifty-somethings will weigh on housing demand over the coming decade,” said Mark Zandi, Moody’s Economy.com chief economist in West Chester, Pa. “The first-time buyer and second-home markets would be most directly impacted.”

Economist Patrick Newport of IHS Global Insight of Lexington, Mass., said that Peek’s assessments “are a lot more dismal than ours, and ours is hardly rosy.”

He said today’s housing market “is imposing a bit more discipline by requiring bigger down payments and better credit scores for buying homes.”

The financial-reform package passed recently by the Senate includes provisions that, in addition to restricting prepayment penalties and controlling mortgage-broker compensation, would force lenders to consider applicants’ income, assets, and credit history before making a loan. If this change is permanent, perhaps homeownership rates will come down to pre-1995 levels—the year they started to climb. “I do not think this would be such a bad thing,” he said.

The homeownership rate slipped to 67.2% in the first quarter of 2010—its lowest reading since the first quarter of 2000. Homeownership rates averaged 64% from 1985 to 1994, but accelerated in 1995 because of government policies that encouraged homeownership, especially for previously underserved low- and moderate-income buyers. Rates reached record highs of 69% “because of easy lending during the housing boom,” Newport said.

Although it is probably likely that the lack of good-paying jobs will delay the entry of the current 16- to 24-year-olds into the home-buying market, “it’s less clear what effect the reentry into the workforce of baby boomers is going to have,” said Rick Sharga, chief economist of RealtyTrac.

“In some cases, this may keep inventory levels down, as the boomers stay in their current homes while going back to work,” Sharga said. “On the other hand, they may opt to ‘trade down’ in an effort to maximize their retirement dollars while they’re replenishing their IRAs and 401(k) accounts,” he said. “At best, this all suggests a pretty slow, marginal recovery over the next few years,” Sharga said.

(c) 2010, The Philadelphia Inquirer.

Distributed by McClatchy-Tribune Information Services.

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RISMEDIA, May 25, 2010—The Illinois housing market saw positive indicators nearly across the board in April 2010 with upward momentum in home prices and sales jumping 34.4% on the heels of the home buyer tax credit deadline.

According to the Illinois Association of Realtors’ latest report, statewide total home sales (which include single-family and condominiums) in April 2010 were up 34.4%, totaling 10,323 homes sold compared to April 2009 sales of 7,683 homes. The median price in April 2010 was $157,450, up 5.0% from $150,000 in April 2009. The median is a typical market price where half the homes sold for more, half sold for less.

“Home prices made sizeable gains statewide, up 5% for the month of April, with nearly half of Illinois counties reporting home price gains including Cook and Lake counties in Chicagoland,” said Realtor Mike Onorato, GRI, president of the Illinois Association of Realtors and broker-owner of Onorato Real Estate in Coal City. “As some local housing markets gain stability, Realtors believe it’s important to turn more attention to the higher cost areas of the Chicago region and urge increased loan limits for FHA and government-sponsored enterprise financing. Otherwise, some buyers in these markets will simply be shut out.”

Adds Onorato: “Mortgage interest rates remain at record lows. With affordable prices and new listings coming on the market, buyers will find good opportunities even after the tax credit.”

In the Chicagoland Primary Metropolitan Statistical Area (PMSA), year-over-year home sales were positive for the tenth consecutive month, up 47.1% to 7,071 homes sold (single-family and condominiums) in April 2010 compared to 4,807 homes sold in April 2009. The median home sale price for the Chicagoland PMSA was $190,000 in April 2010, down 0.5% from $191,000 in April 2009.

“For the first time since the recession began, the housing markets in Illinois and Chicagoland region almost presented positive indicators across the board. Sales continue to exhibit positive increases through April and the forecasts suggest a continuation of these trends through July,” said Dr. Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory (REAL) of the University of Illinois. “For the Illinois market as a whole, median prices are anticipated to increase in the three to five percent range, while Chicagoland will see little or no change.”

Adds Hewings: “Forecasts for employment in Illinois reveal the potential for modest job growth in the 5,000 to 10,000 range over the next 12 months; over the past 12 months the Illinois economy has shed over 148,000 jobs.”

The monthly average commitment rate for a 30-year, fixed-rate mortgage for the North Central region was 5.17% in April 2010, up from 5.03% during the previous month, according to the Federal Home Loan Mortgage Corporation. Last year in April it averaged 4.85%.

In the city of Chicago, April total home sales (single-family and condominiums) were up 41.1% to 1,985 sales compared to 1,407 homes sold in April 2009, the eighth consecutive month of year-over-year sales gains. The city of Chicago median price in April 2010 was $225,000, up 3.2% compared to $218,000 a year ago in April 2009.

“It is great to see the Chicago market’s resilience with a steady increase of volume absorption of properties, as well as traditional sales increasing at a moderate pace. We are also seeing increased movement in the city’s condo market, with nearly double the number of units sold in 2010 versus the same period last year,” said Realtor Genie Birch, president of the Chicago Association of Realtors and a broker associate with Koenig & Strey Real Living, Chicago. “Low interest rates and motivated sellers make this an opportune time for home buyers to consider their ability to purchase, today.”

According to the IAR report, total home sales (single-family and condominiums) comparing April 2010 to April 2009 were up in 57 of 99 Illinois counties reporting with 47 of 99 counties posting median price increases. The following Illinois counties reported both sales and median price increases for the month: Champaign sales up 47.9%, median price up 7.3% to $142,750; Cook sales up 45.5%, median price up 1.8% to $195,000; Lake sales up 44.0%, median price up 11.2% to $200,000; McLean sales up 29.5%, median price up 12.2% to $152,000; Peoria, sales up 21.4%, median price up 4.4% to $107,000; and Sangamon sales up 23.9%, median price up 11.3% to $120,100.

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Despite low mortgage rates and reduced home prices, an increasing percentage of consumers say they believe renting is a better choice than owning a home in the current real-estate market, according to a survey from the National Apartment Association, released this week. View full post on

RISMEDIA, May 26, 2010—Even though the home buyer tax credit expired on April 30, 2010 and won’t be renewed, there may never be a better time to buy a home than today, according to the National Association of Home Builders (NAHB). Many outstanding opportunities still exist for home buyers, but they may not be around forever.

“The home buyer tax credit was just one of many factors motivating Americans to buy homes,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “But buyers can still take advantage of today’s low interest rates and competitive prices to get a home they may not have been able to purchase just a few years ago.”

Besides mortgage interest rates that have been hovering at near-record lows, homes in many markets have become more affordable. Prices have moderated from the highs of the housing boom that occurred in most of the country, especially in major markets where they had increased significantly.

Today’s new homes are also built to be much more energy efficient than homes constructed a generation ago, making them more affordable to operate. New homes are designed to support modern lifestyles with open floorplans, flexible spaces, improved safety features and low-maintenance materials.

Consumers who are thinking about buying a home should not count on interest rates or prices staying at current levels, however. Mortgage rates are sensitive to market conditions, and even a slight increase can push monthly payments beyond a family’s budget. As the country recovers from the recession and people stabilize their financial situations, NAHB economists expect that home prices will begin to increase by 2011.

NAHB’s home buyer brochure “Opportunity Knocks for Home Buyers” describes many of the opportunities in today’s market, as well as the long-term financial benefits of homeownership. It provides examples of how interest rates affect monthly mortgage payments and the typical federal tax savings over the first five years of homeownership. The brochure can be downloaded from NAHB’s website at: .

The home buyer tax credit is still available for eligible home buyers who had a signed sales contract by the April 30 deadline and who close by June 30, 2010, as well as for qualified members of the military, foreign service and intelligence communities, who have until April 30, 2011, to sign a contract. For more information, go to .

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RISMEDIA, May 28, 2010—Single-family home sales in Massachusetts spiked 45.8% in April 2010 compared to the same month a year ago, while condominium sales soared 55.7%, according to The Warren Group, publisher of Banker & Tradesman.

Prices for both single-family homes and condos also climbed in April.

“The surge in sales activity continued in April. Single-family home sales have increased year-over-year for 10 straight months and median home prices have been on the rise for five months,” said Timothy M. Warren Jr., CEO of The Warren Group. “There is more confidence about a turnaround in the housing market, but concerns remain about foreclosure activity and unemployment, which are still high.”

Single-family home sales shot up 46% to 3,980 from 2,730 in April 2009. It was the most sales for the month of April in five years. Year-to-date sales are up 26.1% to 11,286 from 8,953.

The median price for single-family homes sold in April rose 7.1% to $285,000 from $266,125 a year ago. The median selling price for the first four months of the year was $280,000, 8.1% higher than the $259,000 median price recorded during the same period in 2009.

Statewide condominium sales jumped 56% to 1,831 from 1,176 in April 2009. A total of 5,278 condo sale transactions were recorded in the first four months of the year, a 32.6% increase from 3,981 the prior year.

The median condo price climbed 5.5% to $253,000 in April from $239,900 during the same month in 2009. The year-to-date median condo price rose 8.7% to $246,250 from $226,500.

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RISMEDIA, May 27, 2010—The road toward homeownership was a bit more difficult than self-proclaimed “country boy” Ronald Black thought it would be. He began his home search last summer in Polk County, Florida, a more rural community

outside of Tampa’s Hillsborough County. After little luck going it alone with his credit union and still more frustration, even after hiring a REALTOR®, fate finally found Black.

Black was driving down the street in early November when he saw a sign posted on a telephone pole: “Government-owned foreclosures—$100 down. FHA financeable.” After inquiring, Black found he had only 24 hours to view the four-bedroom property he was interested in before the auction began.

“The asking price was $36,900,” recalls Black, a maintenance worker who services all 308 facilities in Hillsborough County. “They told me that I needed to place a bid. I told them that I didn’t want to place a bid; I just wanted to buy the house. Well, that didn’t fly, so I placed a bid for $37,100 and 24 hours later, I got the house.”

What Black didn’t know was that although the homes at the auction qualified for FHA financing, the home he purchased didn’t because it didn’t meet eligibility standards because of its age and condition. After all, it was built in 1959.

“My Realtor® started working right away to find me a lender— and did,” says Black. Wells Fargo preapproved Black for a loan. But unfortunately for Black, getting into the Lakeland, Florida, home wasn’t easy.

Because of the home’s condition, Black faced a number of financing hurdles. However, his lender said he was eligible for the government’s 203k program, a home renovation loan that is added to the buyer’s mortgage.

Once the 203k loan was approved, Black then had issues with the home improvement retailer he chose. “They didn’t return my calls and seemed difficult to work with,” says Black.

So, he moved on to Lowe’s.

“From the minute Lowe’s got my information, they began trying to help me,” he says. “Michelle [Deatherage] at Lowe’s spent an entire weekend helping me get the loan through and working with Wells Fargo. From not knowing her to getting the loan signed, it was under 48 hours. She was amazing. I wouldn’t be in this home without her.”

It took about five months, but finally Black closed on the house in early March. Less than two weeks later, Lowe’s began the vital—and very extensive—renovations, including brand-new electrical wiring of the entire home. “The home’s electrical system was nowhere near modern-day codes,” he explains. “It would never pass inspection.”

In fact, the house didn’t even have circuit breakers; it had screw-in fuses. “They have to redo every single wire, box and breaker. There was no central heat or air conditioning. You name it, they are redoing it.”

In addition to the electrical problems, Lowe’s contractors are also doing minor plumbing work and fixing the walls. They are also adding carpeting and new floors and renovating the entire kitchen with new cabinets and kitchen appliances. Plus, they will install a new hot water heater.

At press time, Lowe’s contractors have what they believe are just weeks left before the house is ready for inspection. If it passes, Black and his family can finally move in. “When this is all done, we’ll have the inspector come in to make sure the house now meets modern-day FHA qualifications,” says Black.

This move-in is important to Black, not just for himself, but for his entire family. His son, daughter-in-law and their almost 4-year-old will move into the home as well. “This house has gone from a want to a need. We are excited to move in,” he says.

Check back next month to read more about Black’s progress and to see if his renovations went according to plan.

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