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)

WHAT IS THE "CONSUMER CONFIDENCE INDEX"?

The Consumer Confidence Index (CCI) is a monthly release from the Conference Board, a non-profit business group that is highly regarded by investors and the Federal Reserve. CCI is a unique indicator, formed from survey results of more than 5,000 households and designed to gauge the relative financial health, spending power and confidence of the average consumer.

There are three separate headline figures: one for how people feel currently (Index of Consumer Sentiment), one for how they feel the general economy is going (Current Economic Conditions), and the third for how they see things in six months' time (Index of Consumer Expectations).

HOMEOWNERS LOWER THEIR DEBT!

 In the 1/3 quarter of  2010, 33 % of homeowners who refinanced their first-lien home mortgage lowered their principal balance by paying-in additional money at the closing table. This is the second highest "cash-in" share since Freddie Mac began keeping records on refinancing patterns in 1985.

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.

HAPPY HOLIDAY SEASON 2010!

The Gift of Love.

The Gift of Peace.

The Gift of Happiness.

May all these gifts be yours during this holiday season and throughout the New Year!

Lani R. Sussman

NOTEWORTHY SOUTHEASTERN MICHIGAN CHARITIES

Benefits of Charity

While your primary motivation to donate to charity in time, money, or goods may be because of the deep sense of satisfaction you receive, you should know that great tax benefits exist for those who give. Here are some of the benefits you should know about.


1. A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize

2. A contribution to a qualified charity is deductible in the year in which it is paid.

3. There are limits to how much you can deduct, but they

4. Rules exist for non-cash

SHARING & CARING

This time of year, many of us are able to sit around an abundant Thanksgiving table counting our blessings, indulge in wonderful holiday gifts or travel to see family and friends. Many are not so fortunate. Included are a few of the noteworthy and deserving organizations in the greater southeastern Michigan area that strive to help out those in need. If you can - give of yourself, your time or money, or lend a helping hand to someone in need.



The Big, Bright Light - December 2010

DOWNTOWN ROCHESTER

Nov. 29 – Jan. 2, 2011, 6:00 pm – Midnight

The buildings in Downtown Rochester will be covered in more than 1.5 million points of glimmering holiday light which will be lit nightly. Entering its 5th year, the buildings of Main Street will be covered in big, bright lights beginning at the South Bridge, but this year, they will extend all the way north to Romeo Road!

WAYNE COUNTY LIGHTFEST

With 4 1/2 miles of giant animated displays and nearly a million lights along Hines Drive, it's the Midwest's largest Holiday Light Show. Drive through
7 p.m. to 10 p.m.

Nov 18 - Dec 31, 2010
Wayne Country Lightfest Website

AMERICA'S THANKSGIVING PARADE

The theme for the 84th America's Thanksgiving Parade® is Celebrate the Spirit. The theme chosen by The Parade Company, allows for everyone to celebrate in their own way. Celebrate time together with friends and family, celebrating the spirit of the holidays, and the spirit of community pride.

One of the country's oldest and most celebrated Parades, will step off at Begins 9:20 a.m. on Woodward Avenue and Mack and end at Woodward Avenue and Congress in downtown Detroit on Thursday, November 25, 2010.

America's Thanksgiving Parade Website

What is a REO?

Foreclosure is a legal process by which a defaulting borrower is deprived of their interest in the property. Real estate owned (or REO), on the other hand, is a real estate asset owned by the lender that is taken back during the foreclosure process. Foreclosures are legal proceedings not listed homes.

Should You Buy a Foreclosed Property Right Now?

These houses are tempting for scores of first-time homebuyers, second-home seekers and people looking to get an early jump on buying a retirement home while prices and interest rates are low. So given the pitfalls, are they crazy? The answer is no, not always.

It’s important to keep some things in mind. Think hard about the following 3 factors if you find foreclosed homes even remotely enticing.

THE LOAN: Many banks would prefer to sell to an investor who will pay cash. You may need a mortgage and your need for bank approval can delay the sales process. Lenders will usually only give you a loan on homes that are ready to be lived in. Many foreclosed homes need basic repairs such as installing toilets, sinks, and appliances.

THE INSPECTION: You’ll want to make any bid for a home contingent on a thorough inspection from someone familiar with foreclosed properties. Mold may be a concern given that many foreclosed homes have been uninhabited for months. You should arrange to have the power and water turned back on before the inspection if possible to ensure that pipes are sound and electrical is safe.

THE TITLE INSURANCE: This is a must in the event that a former owner somehow wins back rights to the foreclosed home you end up buying, and then tries to kick you out, you will need to make a title insurance claim.

Take your time. Assemble a panel of experts and watch the listings carefully. For better or for worse, foreclosed properties are going to be available for a very, very long time.

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

FORECLOSURE IN THE NEWS

Reported by crainsdetroit.com, Michigan is not likely to be impacted by the issues raised with national lenders, said David Trott; president of Farmington Hills based Trott

& Trott PC involved with about 2/3rds of all Michigan foreclosure filings. At issue has been a practice by banks to use so-called “robo signing,” putting signatures on some court documents without reading them. In Michigan less than 1% of all foreclosures go through the courts, so affidavits signed without being read will not likely be an issue according to Trott. “Our process is much simpler here, and we typically don’t have affidavits,” Trott said. “I’d be surprised if this is the basis to unwind any foreclosures in Michigan.”