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.

Complete 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

Complete Article

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)

CONSUMER CONFIDENCE AT 6 MONTH HIGH!

In November, University of Michigan consumer confidence rose back to the highest level since June supported by gains in both economic conditions (79.7 from 76.6) and the economic outlook (62.7 from 61.9). According to the first estimate, Michigan consumer confidence rose from 67.7 to 69.3, slightly above the consensus estimate of 69.0. The one-year inflation outlook rose to 3.0%, the highest level since May 2010. The recent positive economic news might have brightened consumer's sentiment, although labor market conditions remain very fragile.

BEFORE YOU JUMP INTO THE HOT FORECLOSURE MARKET - TEST YOUR KNOWLEDGE

As a general rule, foreclosed homes sell for less than their market value. - False

If you bid on a foreclosed property at an auction, you also may be bidding on tax liens and other debt accrued by the prior home owners. - True
Home owners who always pay their mortgage on time don't need to worry about foreclosed homes in their neighborhood. - False
Home owners can sidestep foreclosure by transferring the title of their home to a foreclosure rescue company for a year or two. - False
Once home owners default on three mortgage payments, the home automatically goes into foreclosure. - False
Owners of foreclosed homes can reclaim their property - even after someone else has already bought it - by paying off the loan along with any interest, taxes, and penalties within the redemption period. - True
Lenders stand to benefit when home owners default on their mortgage. - False
http://www.realtor.org/rmoquiz2.nsf/foreclosurequiz?openform

Once a bank takes possession of a foreclosed home, the previous owner is free of all financial obligations. - False

GET INDOOR SPACES READY FOR FALL

Maintain your pipes. Wrap your pipes with heating tape every winter. Keep your house warm - at least 65 degrees.
Check your heating systems. Be sure to maintain your furnace, boiler, water heater, and wood-burning stove and have your heating system serviced every year. Change your heating and air conditioning filters regularly.
Know your plumbing. Learn where and how to shut the water off. If your pipes freeze, the quicker the water is shut off, the less chance pipes will bust.

Clean and vacuum dust from vents, baseboard heaters and cold-air returns. Dust build-up in ducts is a major cause of indoor pollutants and can increase incidences of cold weather illnesses.


.

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.

WHERE TO FIND A QUALITY HOME INSPECTOR

1) Ask for referrals: Try to gather two or three referrals.


2) Interview the home inspectors: Find out about their education, years of experience, number of inspections they’ve performed and insurance coverage. Also, do they participate in continuing education or stay up-to-date on current laws and building codes?

3) Determine the inspection cost: Ask how much they would charge and what areas of the house it includes.

4) Make sure you are welcome at the inspection:. This is a unique opportunity to see your new home through the eyes of an expert.

5) Get the home inspection report in writing: Ensure that he or she will provide you with a comprehensive report.

HOW CAN A PRE-SALE INSPECTION BENEFIT A SELLER??

Easier and more realistic pricing. A professional home inspection helps with pricing in two important ways.
    1. It allows you to see your home through the eyes of a critical third-party and increases objectivity. It helps you to price your home realistically.
    2. The inspection report reflects the current condition of the property – good, bad, or ugly. A seller can take that true condition into consideration and set the price lower accordingly.
Enhanced marketing impact. Prospective buyers are likely to find a pre-inspected home more attractive because the “what if” factor is not as great.
Greater negotiating leverage. Sellers discover any issues that might delay or derail the transaction and can make advance repairs, thus heading off potential price concessions sought by buyers. Even if repairs are not made, disclosing any defects upfront and pointing out that the price is adjusted accordingly can deflate buyer’s objections. You have the time to get reasonably priced contractors or make the repairs yourself, if qualified.
On going safety ensured. It may alert you of items of immediate personal concern, such as radon gas or active termite infestation. Alerting you to immediate safety issues before agents and visitors tour your home.
A professional home inspection helps with pricing in two important ways.
1. It allows you to see your home through the eyes of a critical third-party and increases objectivity. It helps you to price your home realistically.
2. The inspection report reflects the current condition of the property – good, bad, or ugly. A seller can take that true condition into consideration and set the price lower accordingly.
Enhanced marketing impact.
Prospective buyers are likely to find a pre-inspected home more attractive because the "what if" factor is not as great.
Greater negotiating leverage.
Sellers discover any issues that might delay or derail the transaction and can make advance repairs, thus heading off potential price concessions sought by buyers. Even if repairs are not made, disclosing any defects upfront and pointing out that the price is adjusted accordingly can deflate buyer’s objections. You have the time to get reasonably priced contractors or make the repairs yourself, if qualified.
On going safety ensured. It may alert you of items of immediate personal concern, such as radon gas or active termite infestation. Alerting you to immediate safety issues before agents and visitors tour your home.

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

MICHIGAN'S ECONOMY CONTINUES TO GROW-SLOWLY

In an article from Crain's Detroit Business, Shawn Wright discusses some postive news for Southeast Michigan's economy. At its lowest point in January, the PMI (Purchasing Managers Index) showed a 45.2. Over the last six months, the index has indicated a consistently expanding economy to July's level of 56.7. As we see sustained growth in the economy, purchasing managers should become more comfortable with hiring once again. And, as people feel more confident in their job security, the economy, and housing prices, we should see some leveling off of the real estate market.

For Shawn's complete article, click here

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.

The Pros and Cons of Paying Cash for a House

If you have the cash on hand to purchase a house, should you?

PROS

No Credit History Required – As long as you have the cash in the bank, no one will question your ability to pay.

Risk Free Savings – If mortgage interest rates are higher than what you get on your investments, you gain by paying cash.

It All Belongs to You - You own the house free and clear. You have also freed up the money you would be paying on mortgage or rent payments to invest in other places.

Negotiating Power – With cash, there is no contingency on getting a loan, so closing can occur in a shorter period of time.

Investment Property – Second homes are considered investment properties and carry with them higher interest rates and penalties. If you are buying a home to fix and sell, it often makes sense to pay cash.

CONS

Less Liquidity – If you have all your liquid assets tied up into a house purchase, its harder to free that money up in the event you need it. If you need to get a mortgage at a later date it is considered a refinance and will carry a higher interest rate.

Tax Advantage – You are not able to take advantage of the deductible on your income taxes. Depending on your tax bracket, this could be a substantial amount.

6 Home Self Defense Tips

Tip #1
Make your home security system like an onion, not an egg. A good example of a layered defense is rosebushes outside the window, double-locked, barred and safety coated side windows and something difficult to climb over inside under the window.

Tip #2
Pretend to be a burglar Walk around your property and ask yourself: How would I break in? Examine your house from the street, where are the blind spots? What are the most vulnerable areas and, therefore, likely to be attacked?
Tip #3
Consider the area that the lock sits inA lock is not enough, you must also address the area around it. You need to extend your thinking about security measures to 18 and twenty four inches around the lock itself. That is the area you must protect.
A pinewood door frame will splinter and give way after a few savage kicks. The backdoor deadbolt can often be bypassed by just breaking a window and reaching through to unlock it.

Tip #4
Treat inside garage doors the same as an outside door Criminals often cruise neighborhoods looking for open garage doors. Once an open garage door is found, they pull in, close the door, park their car and then start piling your possessions into it.

Tip #5
Get and close blinds or shutters-- especially on rooms where there is expensive equipment.
Thin, sheer drapes --although attractive -- also allow burglars to look inside to see if there is anything worth stealing

Tip #6
Create a neighborhood watch on your block. Even just the signs often send would-be burglars elsewhere.An alert and involved community is the criminal’s nemesis. It is often reason enough for him to try business elsewhere.

Did You Know?
Over 40% of home burglaries are termed by police as "no force" entries. Open windows and unlocked doors make easy targets.

for more tips, visit http://www.nononsenseselfdefense.com/homesecurity.html

Detroit Housing Woes

Selling or refinancing a home in Detroit is further complicated by new appraisal rules while home prices continue to decline.

The odds of getting a house to the closing table are affected by appraisals done by appraisers who are completely unfamiliar with the area. The resulting appraisal comes in lower than the price the seller & buyer have agreed upon and problems with who is going to pay the difference kill the deal. Excerpts from articles in the Detroit News & New York Times pinpoint the problems . The ray of light in this challenging market is that the number of unsold homes fell in every Midwestern city last month from a year ago.

Fed appraisal rules sink home values
New regulations kill home sales, industry groups say
Louis Aguilar / The Detroit News

Federal actions intended to stabilize inflated real estate prices that led to last year's financial meltdown are instead depressing prices and killing some sales in an already weak market.

At issue is the Home Valuation Code of Conduct for mortgages securitized or held by Fannie Mae or Freddie Mac, which deal with about 70 percent of U.S. mortgages.

The new rules, which took effect May 1, were intended to prevent cozy relationships between appraisers, agents and brokers that could lead to bias, fraud and inflated home values.

But a chorus of industry groups representing builders and real estate agents say the new rules have damaging, unintended consequences: Some appraisers, they say, are unfamiliar with communities and neighborhoods, so they undervalue property. And that can kill a deal when the agreed-to sales price was significantly higher than the appraisal.

The National Association of Realtors says 20 percent of its members report losing more than one deal because an appraisal came in well below the purchase price agreed to by the buyer and seller. The National Association of Home Builders contends the code is impeding new construction as well. More than half of the 500 builders who responded to a recent survey said at least one of their new homes was appraised at less than the cost of construction.

Metro Detroit real estate agents tell horror stories about the new appraisal rules.
An out-of-state appraiser, for example, valued a Grosse Pointe home at $270,000, although the seller and buyer agreed to $360,000. A lakefront home in St. Clair Shores listed at $480,000 was appraised at just over half that. And three appraisals on a new home in Detroit's Woodbridge Estates ranged from $150,000 to $230,000.

"We lost the sale because the couple didn't know what to believe," Realtor Todd Craft, of City Life Realty in West Bloomfield, said of the Woodbridge properties. "That's what we are dealing with now."

If an appraisal falls below the negotiated sales price, the lender can refuse to finance the deal or require the buyer to come up with the difference. Or the seller may lower the price.

While home sales are up in Metro Detroit, thanks to the buyer's market, prices continue to plummet. The median sales home price in Metro Detroit in Sept. was $65,500, a 23 percent drop from a year ago, according to Realcomp II Ltd., a Farmington Hills-based real estate listing service.

Existing and new home sales aren't the only ones that are affected. The new rules also impact homeowners who want to refinance their mortgages, because they need to get an appraisal as part of the process.

"In a city like Metro Detroit, where there are pockets of stable and upcoming areas, the new appraisals make it tougher for someone who doesn't know the area to come in and get an accurate gauge," said Brian Cooley, a Realtor with O'Connor Realty Detroit in Corktown.

Midwest Home Resales Post 6 Pct Annual Increase

By THE ASSOCIATED PRESS
Published: October 23, 2009

Home sales in the Midwest increased in September as a soon-to-expire tax credit for first-time buyers and glimmers of an economic recovery brought more people to the closing table.

The National Association of Realtors said Friday that there were an estimated 110,000 resales in the Midwest, up 5.8 percent from September last year. The median sale price for the region fell 1 percent to $147,600, marking the smallest decline in the country.

Nationally, home resales rose almost 8 percent from a year ago, without adjusting for seasonal factors. The median sale price fell 8.5 percent to $174,900, the Realtors association said.
-- Biggest price decline: Detroit continued to lead in an unfortunate trend as the median sale price dropped almost 22 percent from a year ago to $65,000. The lower prices have brought in investors and bargain-hunters, however, and sales rose more than 3 percent last month.

The city, hammered by losses in its key automotive industry, has seen massive numbers of foreclosures and distressed sales, which typically sell at a significant discount and make it virtually impossible for conventional sellers to get anywhere near what they want for their homes. Michigan has also struggled with job losses, posting the nation's highest unemployment rate of 15.3 percent last month.

Thomas Bush of Real Estate One in Shelby Township, Mich., a Detroit suburb, said he estimates fewer than 10 percent of homes going on the market these days are conventional sales and prices are back to 20-year lows.

''I don't think we've seen what the auto problems are doing to the market in Detroit,'' he said. ''We're seeing the effects of bad mortgages, bad choices. What happens when all the other stuff comes?''

-- Inventory highlight: The number of unsold homes fell in every Midwestern city last month from a year ago, according to the AP-Re/Max report. Indianapolis, Detroit and Cleveland led the region, with inventory drops of more than 29 percent each. Wichita, Kan., had the smallest, shaving just 0.2 percent off its backlog.