Mortgage Money Will Be Cheap!

Interest rates will remain at historic lows and money will be abundantly available to those who can afford to borrow it. The problem is lending requirements have become so strict that fewer borrowers fit today's bank guidelines. To get a loan, a borrower's FICO score needs to be above 620 for FHA and 720 for conventional. Banks order FICO scores from 3 credit reporting agencies and use the middle score. To stimulate the real estate market, the Feds are likely to keep interest rates in check throughout 2011.

STARS ALIGN FOR BUYERS

Interest rates below 5% & prices bottoming out in the 1ST half of the year will drive 2 of the 3 main ingredients for buyer affordability to cyclic lows next year, Freddie Mac's chief economist said yesterday. "Buyer affordability is at the highest level in decades," said Freddie's Frank Nothaft. "With affordability high, many 1ST-time buyers will be attracted to the housing market in the new year, likely translating into more home sales in 2011 than in 2010." Though they will rise above their present level, he expects rates on 30-year fixed-rate loans to remain below 5% throughout the year. As for home prices, price indexes for the U.S. as a whole are likely close to bottoming out. The National Association of Realtors' Affordability Index for the 1/3 quarter reported one of the most affordable buying markets since the inception of the index in 1971, he noted.

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2011 HOUSING TRENDS

McMansions are out; compact housing is in: The era of the McMansion is over, according to the 2011 edition of "Emerging Trends in Real Estate," co-published by PricewaterhouseCoopers and the Urban Land Institute. Not only are baby boomers downsizing to more manageable homes, but 1st-time buyers are also entering the market with extremely different tastes than their parents. The younger generation of homebuyers, born between 1977 and 1994, are interested in smaller homes in vibrant, compact, walkable neighborhoods. As baby boomers move into smaller homes, who will they sell their large, suburban homes to?

Homebuyers are thinking long-term: In the past, many homeowners thought of their houses as "credit cards" to borrow money against -- a mindset that caused many of the financial problems. While most Americans still think buying a home is a smart financial move, they also realize that a house is more than an investment. Instead, today's buyers are looking for a home, a place to provide shelter and security for a family. As a result, homeowners are planning on stay in their dwellings longer; 1st -time homebuyers want to own their homes for a decade, while repeat buyers want to own theirs for 15 years.

More foreclosures to come: Foreclosure processing was delayed this fall by the "robo-signing scandal" raising concerns that many homeowners may have been unfairly evicted. Though the controversy caused a dip in foreclosures in October, it won't cause a huge drop-off in the number of distressed properties entering the market, says Rick Sharga, senior vice president of RealtyTrac. At the rate the banks are going, it will likely take several more years to work through the millions of delinquent mortgages. But on the bright side, if banks continue to foreclose homes gradually, home prices are likely to stay stable.

Mortgage rates remain low: It's not too late to take advantage of low mortgage rates. While rates are expected to rise slightly in 2011, they will likely remain low, even under 5

Housing recovery contingent on jobs: Above all, a healthy workforce is key to housing recovery. While the unemployment rate remains high, current homeowners will continue to lose their homes to foreclosure, and potential homebuyers will find it difficult to qualify for loans. According to the National Association for Business Economics, unemployment will stay above 9 percent in 2011, which could hold back a housing recovery next year.

HGTV Frontdoor Article

THE HOUSING MARKET IN 2011

According to Dan Elsea, President of Real Estate One, the largest Real Estate Brokerage in Michigan: The November Michigan Real Estate market was down from the frantic activity of last fall, but up over the market bottom of 2008. Values have stabilized (price per square foot) in the past 6 months & available homes for sale have continued to fall, which are both positive signs towards a more stable market. Overall the number of months inventory (MSI) is still in the Buyer's market range, but at 5.1 months, it is getting close to balanced.

The average days on market (DOM) for homes sold has remained about the same over the past 2 years. The reason seems to be a small segment of the market is well priced & selling quickly while the majority remains priced out of the main stream, taking months or even years to sell. For Sellers, that means they need to be fully aware of the total market and focus on Solds over active listings. Those still on the market after 6 months are priced out of the market & not relevant competition.

So what will next year look like for Michigan real estate? We would expect it to look and feel a lot like 2010, maybe down a bit in number of homes sold, but growing stability in pricing. Also a continued decline in available home inventories, but not falling as fast as 2010 (more bank properties and an improving market will bring out those sitting on the fence). If we simply match 2010, that would be a great success, since it would mean our core economic improvement has made up for the artificial market push this year from the tax credits.

HOUSING SHORTAGE COMING IN 2011?

The focus of the U.S. real-estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don't start focusing on building new houses, the market will have a much bigger problem on its hands. "We need one and a half million houses per year just to keep up with population growth," Wesbury said in an interview with Steve Forbes. "And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we're down to about 6 & 1/2, 7 months' inventory whether you look at new homes or existing homes."

By: Alexandra Zendrian of Forbes

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2011 REAL ESTATE PREDICTIONS

Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:


1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market.

2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.

3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.

4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.

5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings - known as the "seriously delinquent rate" - generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.

Source: Freddie Mac (12/09/2010)

GREEN BUILDING TAKES OFF IN REAL ESTATE SLUMP

Green building remains the bright spot in an otherwise dull U.S. real estate market as companies and homeowners look to lower utility bills according to an article in the USA TODAY. In fact, green building has increased from 2% in 2005 to nearly one-third now.


The Washington based USGBC (U.S. Green Building Council) LEED (Leadership in Energy & Environmental Design) program is set up like an arbiter of a sort of building Olympics. Projects earn points for various features. Use renewable cork flooring, for instance, get a point in the materials and resources category. Use paint that doesn't give off toxic substances — score a point for indoor environmental quality. There are categories for water efficiency and energy. Pay the fees, rack up enough points, and win a basic, silver, gold or platinum rating. Around 155,000 designers, contractors, consultants and others have studied up online using courses, and then passed the test to earn the designation LEED Accredited Professional — or "green associate." Employ a LEED AP on a project and you get a point for that.

The number of homes receiving LEED approval tripled last year, from 1,151 in 2008 to more than 3,000 in 2009. Homes, like office buildings, get points for water conservation, energy efficiency, durability, location, air quality and other factors.

BRIGHTER OUTLOOK FOR REAL ESTATE WITH JOBS COMING TO MICHIGAN

There are signs of positive growth for the Southeastern Michigan job market.  With companies adding jobs, consumer confidence is also on the upswing and more people are looking to buy or lease in the area.

A recent Free Press article claims "Jobs are trickling back into southeastern Michigan as technology and government-related fields grow. That's great news for local relocation experts, who say they are working with a diverse client base to help employees coming to Michigan find housing. Some are leasing and some are buying.

The companies with employees coming to metro Detroit include GE, General Dynamics Land Systems and Harman International, maker of high-end audio systems. Warren is to gain 1,200 positions from transfers at the Rock Island Arsenal in Illinois, and more jobs are likely in coming years at the Warren Tank-Automotive and Armaments Command."

BY GRETA GUEST

FREE PRESS BUSINESS WRITER
Free Press Article

Tony Robbins Offers Tip on How to Weather the Economic Storm

Tony Robbins, who has worked as a personal adviser to some of the world's top financial leaders, encourages people to be smart about the financial decisions they make in the coming months and years. "This is a season called winter and it doesn't last forever. Winter's followed by spring. There will be another great set of opportunities," says Robbins. "It'll probably take longer than we want, but if you're smart and don't let things stop you, you can see where these opportunities are."
The Huffinton Post has included his video on this subject and is truely work watching: Tony Robbins Video http://www.huffingtonpost.com/2010/08/11/how-to-weather-the-econom_n_677769.html

Lani's July 2010 Real Estate Update

Optimism – “a disposition or tendency to look on the more favorable side of events or conditions and to expect the most favorable outcome"  As the economy recovers, so does the real estate market, buyer optimism and our biggest investment – our homes. This month’s News You Can Use! newsletter contains articles about a glass half full!  To view the newsletter, click on: http://www.lanisussman.com/

To Subscribe to Lani's Monthly Newsletter: respond to lani@maxbroock.com

Our Current Real Estate Market

Sales of Houses in Birmingham, Bloomfield Hills,

Franklin, & W. Bloomfield

JULY 2010 -- 110 Houses Sold - 29% Were Forclosures/Short Sales
Lowest: 2250 Island View - List $35,00 -- Sold $35,250
Highest: 1016 Lake Park - List - $2,748,000 --Sold-$2,450,000
JULY 2009 -- 121 Houses Sold - 54% Were Forclosures/Short Sales
Lowest: 6725 Cooley Lake - List $43,500 -- Sold $34,000
Highest: 360 Woodbridge - List - $2,999,000 --Sold-$2,350,000

ROLLERCOASTER RIDE!!!

The residential real estate market went on quite a roller-coaster ride in the past decade, rising to mid-decade peaks only to fall into the trough it remains in as of late 2009. While it may seem like real estate prices will never rise again - just like it seemed that they would never stop rising earlier in the decade - the real estate market is, at its heart, cyclical, and what goes down is bound to rise again.

Many experts believe that the market will continue to fall through mid-2010 but will find a bottom by the end of the year. The exception: extremely distressed real estate markets in California, Nevada, Arizona and Florida, which are likely to continue to fall into 2011. In the longer term, a number of factors - including interest rates, foreclosures, currency valuations and unemployment rates - will determine how quickly home prices begin to appreciate again.

Signs of Improvement Make 2010 a Promising Year, but more challenges are yet to come

But more challenges are yet to come . . .

2010 looks to be another year of low sales prices & fierce competition from other sellers. Foreclosures at bare-bones prices continue to give sellers plenty of competition.

Fortunately, today’s buyers are looking for move-in ready homes which excludes many foreclosures that are not in the best shape when they hit the market. Preparing your home for sale -- which can include cleaning, making repairs, making upgrades and staging -- can help your home stand out from the foreclosure down the street and get you a higher sales price.

#1: More Buyers Entering the Market
The First-Time Homebuyers credit extension and expansion to existing homeowners with higher incomes should encourage more 1st time buyers to purchase a home or move-up buyers to make the move.
#2: More Foreclosures to Come
Home values may be stabilizing in some markets, but challenges still lie ahead. Between rising unemployment rates, a backlog of homes already in the foreclosure process and many adjustable rate mortgages scheduled to reset next year, more foreclosures are expected to hit the market in 2010.
In an attempt to mitigate the effect of these new foreclosures, Fannie Mae has come up with a potential solution: The mortgage giant will allow some people losing their homes to foreclosure to lease those properties back for up to a year at market rental rates. (D4L or “Deed for Lease” program)The agency hopes this program will help stabilize neighborhoods by keeping more people in their homes. https://www.efanniemae.com/sf/servicing/d4l/
#3: Lending Standards Still Tight
According to the Federal Reserve, fewer banks tightened their lending standards in the third quarter of 2009. However, that doesn't mean lending standards have gotten looser, either. In 2010, banks will continue to keep the subprime mortgage debacle in mind and require extensive documentation and stellar credit from borrowers.
#4: Rising Mortgage Rates
In 2009, the Federal Reserve bought up a massive amount of mortgage-backed securities, keeping mortgage rates at historic lows for much of the year. However, the Fed is scheduled to end those efforts in March 2010, meaning mortgage rates could jump as much as a full percentage point next year. If you're considering buying a home, now would be the time to take advantage of historically low interest rates. If you're a current homeowner thinking about refinancing, act now.
#5: Tricky Appraisal Rules
Ridiculously inflated home prices in many markets contributed to the housing crisis, motivating the federal government to pass the Home Valuation Code of Conduct (HVCC) -- a set of rules that determines how appraisals should be made -- in May 2009. The law aims to distance appraisers from the real estate transaction so they can provide an unbiased, objective analysis of a property's market value.
Real estate agents argue that the system is flawed and deals are falling through because of the ever-changing, lengthy maze of rules. Long story short: With the new rules in place, appraisals now take longer, are more expensive and are often conducted by appraisers unfamiliar with the local market.
#6: Smoother Short Sales
In 2010, this problematic process should become much smoother. Lenders and real estate professionals alike are working on ways to streamline the short-sale process. More real estate companies are training their agents to do these specialized sales, and lenders will be more open to processing them.
#10: Cash Is King
If you plan on buying a home in 2010, especially a low-priced foreclosure or short sale, be prepared for competition. Demand is high for these properties, so it's not uncommon for bidding wars to break out over them. Real estate investors are particularly tough for regular buyers to contend with: Many investors are making all-cash offers, and banks -- who are often more concerned with making a speedy sale than with getting the highest price possible -- are accepting these offers over higher-priced offers where loans are involved. To stand out from the competition, make your offer as attractive as possible. That means saving up a sizable amount of cash for a down payment and making an offer that's close to -- or even above -- asking price.

2010 Trends In Home Decor

It is interesting how the economy effects how we arrange our home around us and what feels comforting depending on which way the economy is trending. With the economy in a downward trend, people are getting back to basics. Homemade, homegrown & recycled are the buzzwords these days. In addition to seeking out more economical lifestyles, people seem to be going back to times they remember as "better". The following predicted trends demonstrate that back to home desire.

To Grandmother’s house we go:

Patricia Shackelford thinks we’ll see more patchwork quilts, hooked rugs, needlepoint and chintz. “On ‘Top Design,’ a contestant (Ondine Karady) was criticized for being too ‘grandma’ for using a crocheted throw,” Shackelford said. “Actually, she was on to the next trend.” Shackelford said it’s the return of Sister Parish design, using heirlooms or pieces with history. “It’s a way to bring comfort to formality,” she said.

Graffiti furniture:

Antiques in recent years have become more affordable, but some pieces can be unwanted, drab even, and call for help. “Antiques don’t always have to be these sacred things,” Keith Johnson said. “They can be reinterpreted.”

Made in the U.S.A.:

In 2010 and beyond, a “made in the U.S.” label will resonate strongly with buyers, because people want to strengthen the economy. Buying more local items also is better for the environment.

Homestead chic:

More of us are growing vegetables, crafting our own cheeses and battling city hall to keep chickens in our backyards. Just as we’ve been reconnecting with the land, look for that bond to strengthen in the rest of the home. We’ll use more locally harvested wood and reclaimed barn wood. We’re becoming fonder of burlap-style grain-sack and rustic linen pillows. The fabrics follow on the heels of the classic rural European look popularized by Belgian designer Axel Vervoordt. He sparingly mixes industrial furniture with worm-holed unstained wooden pieces.

Flea market frenzy:

Many homeowners made their first visits to flea markets and thrift stores in 2009, a trend that will get even bigger in the New Year. “People aren’t doing the full-scale bathroom and kitchen re-dos they were a few years ago,” Dunham said. “But they can easily perk up a room with textiles or a new lamp.”

Article By susanne On January 9, 2010 http://rismedia.com/2010-01-09/6-home-trends-you-can-bank-on-in-2010/