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At the end of February, 1.89 million existing homes were available for sale on the market, a 4.6-month supply at the current sales pace. Inventory was down 0.5 percent below last year. This shortage of housing stock helped to drive price growth to its fastest pace in a year. In February, the median existing-home price reached $202,600, a climb of 7.5 percent from last year. For the 36th month in a row, home prices have increased year-over-year. What's more, every region of the country saw an increase in home prices. Median prices in the Northeast and West were up 3.3 percent and 4.2 percent from last year's prices. In the South, prices climbed 8.5 percent above February 2014. The Midwest saw the biggest gains, with home prices 8.8 percent higher than a year ago.

 

Rising Home Prices Will Affect Renters
A lack of inventory can negatively affect home sales, as can higher home prices. Homeowners benefit from the growth in housing prices, since higher prices lead to more home equity. But the more prices climb, the more difficult it is for new buyers to find a home they can afford. Income growth has not kept pace with typical rent rates; over the past five years, rents climbed 15 percent, but the average income of renters rose only 11 percent. With rents continuing to climb in some areas of the country, the gap is expected to widen to unsustainable levels, which will make it more difficult for renters to transition to homeowners. Fortunately mortgage rates remain near 2015 lows. For the week ending April 16, the 30-year fixed-rate mortgage (FRM) averaged 3.66 percent. Last year, the 30-year FRM averaged 4.27 percent.

National Home Sales Increase
Nationally, existing-home sales increased 1.2 percent in February. Sales climbed 4.7 percent higher than a year ago, marking the fifth consecutive month sales have risen above year-over-year totals. The Northeast was the only region of the country to see existing-home sales drop month-to-month, by 6.5 percent; sales were still 3.6 percent higher than a year earlier. In the Midwest, sales were stagnant from January but 4.9 percent above last year's sales. The South and the West, meanwhile, reported only gains. From January to February, existing-home sales were up 1.9 percent in the South and 5.7 percent in the West. Compared with a year ago, sales in the South and the West climbed 6.0 percent and 2.8 percent, respectively.

Positive Signs from the Housing Market

by Joanne Hiller

The national housing market is continuing to stabilize. According to Freddie Mac's Multi-Indicator Market Index (MiMi), half of the markets across the country are showing positive gains. While the national MiMi value of 74.4 indicates a weak housing market overall, the index posted a 0.51 percent improvement from August to September. Year-over-year, the index is up 3.68 percent. Since the market's all-time low of 59.8 in September 2011, the market has rebounded 24.4 percent.

More Construction
The National Association of Home Builders/Wells Fargo Housing Market Index is on the upswing as builder confidence climbed four points on the index to 58. Builders are more confident in today's market because consumers are more confident. Low interest rates, reasonable home prices, and an improving job market make home buying not only an attractive option but a viable one. As a result, builders are seeing more committed buyers walking through their sales centers and signing contracts. The news is welcome after the slow start to 2014. For the past five months, the HMI has stayed north of the 50-point mark. Economists with the NAHB expect builder confidence to continue to climb in the new year.

How Low Can They Go?
At the beginning of December, mortgage rates dropped to the lowest levels of the year. The 30-year fixed-rate mortgage fell to 3.89 percent, the lowest rate posted since May 2013. At the same time last year, mortgage rates were 4.46 percent. Economists have long maintained that mortgage rates will increase, and they predict that rates will climb to five percent by the end of 2015.

Good News for Most
For the second straight month, existing-home sales rose in October. According to the National Association of Realtors, existing-home sales climbed 1.5 percent to a seasonally adjusted annual rate of 5.26 million. For the first time in a year, sales are above year-over-year levels. Most areas of the country experienced gains in sales. In the Northeast, existing-home sales rose 2.9 percent month-over-month and 4.4 percent year-over-year. Sales climbed 5.1 percent in October in the Midwest, a 2.5 percent increase over October 2013 sales. The gains continued in the South, where sales jumped 2.8 percent from a month earlier and 5.3 percent from a year earlier. Only the West posted a drop in existing-home sales. Month-over-month, sales declined 5.0 percent; when compared with October 2013, sales are down 3.4 percent. NAR economists believe existing-home sales will continue to improve. Low interest rates, stabilizing price growth, and an improving housing supply should convince buyers that now is the right time to purchase a new home.

5 Financial Fitness Habits to Begin in the New Year

by Joanne Hiller

While many people focus on personal health goals in the new year, the beginning of the year is also a great time to check your financial fitness. So how can you whip your finances into shape?

South University College of Business, Virginia Beach faculty member Dr. Alan Harper says everyone should adopt these five financial habits in 2015:

Establish a budget
Harper says the first step in taking control of your finances is to establish a budget. "It is extremely important to know how much money is coming in, where it's going, and allocating it appropriately," he says. "Having a budget allows you to gain a broader understanding of your spending habits."

Make sure your budget includes allowances for food, clothing, gas, and even entertainment, Harper advises.

Start saving
Your budget should also include money set aside for emergencies. Harper says the old rule-of-thumb that three month's salary is enough to have in your bank account no longer applies in our current economy.

"We found in the last recession that people who lost their jobs tended to stay out of work much longer than three months," he says. "You should have six months to a year's worth of income in savings, just in case."

Harper says you should also try to put away 15 percent of your take-home income toward your retirement. Many retirement savings options are available, including 401(k)s, Roth IRAs and individual retirement accounts. It is important to do your homework before deciding on a long-term investment strategy so that you are aware of terms, conditions and any fees associated with your options.

Manage your credit
The beginning of the year is a perfect time to check your credit history, and to look for any mistakes on your credit report, Harper advises. Mistakes on your credit report can cost you large sums of money in interest rates, or even keep you from being approved for a loan.

"The law requires the three major credit reporting agencies to provide you with one free credit report a year," Harper says. "Pull those reports and look for discrepancies. If you find one, file a dispute with the credit reporting agency and they will remove the item if it is incorrect."

Harper also says to check your FICO score on the report, make sure you have an understanding of what the score means, and how to improve it if the score is low.

Shop smart
Make it a priority to save money while you shop, Harper says. He encourages clipping coupons, and says purchasing membership cards to discount stores like Sam's Club and Costco can help you save money over time.

"Those stores will save you money in the long run on purchases like food, gas, and even personal care items."

Check your insurance
Setting aside time at the beginning of the year to check your insurance policies can also save you money. Harper advises that you should review your auto, home and life insurance to make sure you have the proper coverage.

"You want to make sure you aren't paying for coverage that you may no longer need, but you also want to make sure you have adequate coverage in case there is an accident or you need to make a claim," he says.

Many companies also offer discounted rates if you hold multiple policies with them. So, if your auto, home and life insurance policies are with different companies, you may want to explore the benefits of choosing just one company.

"It's also important to make sure your life insurance policies are sufficient to protect your family from a financial crisis in the event that something happens to you," Harper notes.

"Establishing a budget, saving, staying on top of credit and insurance, and shopping smart all take some work," Harper points out. "But the rewards to your personal and household bottom line are well worth the effort.

A Homeowner's Net Worth is 36x Greater than a Renter!

by Joanne Hiller

Homeowner's Net Worth is 36x Greater Than a Renter | Keeping Current Matters

Over the last six years, homeownership has lost some of its allure as a financial investment. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth.

The Federal Reserve conducts a Survey of Consumer Finances, every three years, and just released their latest edition this past week.

Some of the findings revealed in their report:

  • The average American family has a net worth of $81,200
  • Of that net worth, 61.4% ($49,856) of it is in home equity
  • A homeowner’s net worth is over 36 times greater than that of a renter
  • The average homeowner has a net worth of $194,500 while the average net worth of a renter is $5,400

Bottom Line

The Fed study found that homeownership is still a great way for a family to build wealth in America.

Thinking of Buying a Vacation/Retirement Home? Why Wait?

by Joanne Hiller

The sales of vacation homes skyrocketed last year. A recent study also revealed that 25% of those surveyed said they’d likely buy a second home, such as a vacation or beach house, to use during retirement. For many Baby Boomers, the idea of finally purchasing that vacation home (that they may eventually use in retirement) makes more and more sense as the economy improves and the housing market recovers.

If your family is thinking about purchasing that second home, now may be the perfect time. Prices are still great. If you decide to lease the property until you’re ready to occupy it full time, the rental market in most areas is very strong. And you can still get a great mortgage interest rate.

But current mortgage rates won't last forever.

According to FreddieMac, the interest rate for a 30 year fixed rate mortgage at the beginning of April was 4.4%. However, FreddieMac predicts that mortgage rates will steadily climb over the next six quarters.

Let’s assume you want to purchase a home for $500,000 with a 20% down payment ($100,000). That would leave you with a $400,000 mortgage. What happens if you wait to buy this dream house?

Prices are projected to increase over the next year and a half. However, for this example, let’s assume prices remain the same. Your mortgage payment will still increase as mortgage rates climb to more historically normal levels.

This table shows how a principal and interest payment is impacted by a rise in interest rates:

Cost of Waiting $400K

7 Mistakes to Avoid when Investing in Real Estate

by Joanne Hiller

There is money to be made in real estate, but you need to think about real estate investing as the business it is. Here are some common mistakes that beginning investors should avoid.

1. Getting emotionally involved.
This is the biggest and most common mistake beginning investors make. Emotions and business do not mix well. In this case, falling in love with a property will almost always ensure that you pay too much to make it profitable.

2. Paying too much.
To make money investing, you have to find a good deal. Look for properties that need a little fixing up. Your goal is to find a distressed property that you can purchase for around 70 percent of comparable listings.

3. Ignoring schools.
Good schools attract good renters. Conversely, only the most desperate renters are willing to subject their children to failing schools. And renters in desperate financial situations are not renters you want occupying your property.

4. Buying a low-priced home in a bad neighborhood.
Property that is situated among vacant or foreclosed homes will not be enticing to future renters. Property in neighborhoods that experience vandalism and other crime is not worth the investment. Before you buy, make sure that this is a neighborhood that renters will want to live in.

5. Putting too much of your own money down.
This is not your home; it is your investment. As such, you should choose a property that will bring enough rent to cover the mortgage even if you put little money down. When you keep your funds liquid, they are available for emergency repairs and upgrades.

6. Forgetting to calculate taxes.
Sometimes high property taxes mean that your rental property is in an area with great schools and other quality infrastructure. However, sometimes it simply means the area is overtaxed or has poorly managed local government. If your proposed rental property includes high property taxes, make sure that the area’s desirability compensates for the extra cost.

7. Disregarding local trends.
Check out the area’s employment opportunities. Are they growing or shrinking? Find out about any scheduled future development. Is the area adding parks, shopping, or even a public transportation hub? Proposed new condominiums and apartment complexes could indicate a growing community, which is good news. However, new condos and apartments also mean competition for the best renters. Weigh the pros and cons of local trends before you invest.

Why ask for an FHA Loan?

by Joanne Hiller

The real estate market is beginning to make a comeback, interest rates are low, and you want to buy a house. If your credit score is mediocre or you simply haven't been able to save for a down payment, don't assume you will miss this buyer's market. An FHA (Federal Housing Administration) mortgage may make it possible for you to pursue the American dream of home ownership.

FHA loans are financed through conventional lenders. FHA insures the loans, minimizing the lender's risk. A variety of loan programs are available, ranging from standard home loans to property rehab and refinancing, as well as loans for delinquent mortgage holders.

Although the "upfront" FHA mortgage insurance premium recently rose to 2.25 percent, it can still be financed over the term of the loan. It does not need to be paid out of pocket at closing. For most buyers with household incomes of less than $100,000, the upfront portion of mortgage insurance is tax deductible in the year it is paid, on homes purchased between 2007 and Dec. 31, 2010. An annual (non-deductible) mortgage insurance premium will also be assessed.

The required down payment on an FHA mortgage is currently only 3.5%―much lower than most conventional mortgages. Even many buyers with credit scores below 580 can qualify with a 10% minimum down payment, and a previous bankruptcy won't automatically disqualify you. Down payment requirements decrease and better rates are available to buyers with higher credit scores. FHA interest rates are significantly lower than those for conventional mortgages when a small down payment is made.

One of the most attractive features of an FHA mortgage, especially with interest rates at their current historic lows, is assumability. An FHA mortgage locked in at today's low interest rate can be assumed at the same rate by a qualified buyer in the future. This makes FHA loans an excellent choice for buyers who may want or need to sell the home before it is paid off. If you have plans to convert the property into a rental after living in it for a while, you may be able to qualify for another FHA loan on your next home while still holding the first one as a rental.

About one in every three mortgage loans made today is an FHA loan. While FHA is part of HUD, buyers aren't limited to purchasing HUD homes with FHA loans. Most homes on the market today will qualify for FHA loans. Additionally, many "fixer-upper" homes qualify for FHA 203(k) loans, which are based on the projected value of the property after it is repaired.

Gov. Rick Scott and politicians from the Tampa Bay area to the Washington beltway rang the warning bell last year. So did real estate agents struggling to sell homes in flood-prone areas of Florida.

Soaring flood insurance rates, they warned, threatened to wreak havoc on property values throughout the state. In the cross-hairs, in particular, was Pinellas County, which had more older, low-lying homes facing a sharp flood insurance increase than any other county nationwide.

Now there's evidence that a congressional fix early this year to stall the harshest of the rate hikes coming under the National Flood Insurance Program has stabilized property values. At least in ground zero of Pinellas County.

In fact, the market rebound from the flood insurance scare has been strong enough that Pinellas property owners receiving their tax bills in the fall may be surprised to discover home values are rising by double digits nearly across the board, even in flood-prone neighborhoods like Shore Acres in St. Petersburg.

On average, property values are expected to be up 11 percent countywide, said Pinellas County Property Appraiser Pam Dubov, who is prepping notices of proposed taxes to send out in August in advance of the November tax bills. In at least one beachfront neighborhood, in the East Lake area, and in one Midtown neighborhood, property values jumped more than 30 percent. Only in a couple of neighborhoods are values down, and then by less than 3 percent.

One reason for the higher values: Even though home sales plummeted in some areas during the flood insurance crisis at the end of the year, there was never a corresponding drop in asking prices before the market rebounded.

Shore Acres is typical of what happened. It started out 2013 strong. But sales came to a virtual standstill late last year amid worries that older homes would lose their decades-long lower flood insurance rates when they changed hands. Anecdotal reports surfaced of buyers of such homes seeing flood rates explode tenfold. Out of 46 sales in Shore Acres last year, only two occurred in the fourth quarter.

Hit by a groundswell of complaints, Congress intervened in March, passing a measure that repealed the biggest of the rate hikes being rolled out under the Biggert-Waters Flood Insurance Reform Act of 2012. At the same time, Lloyd's of London and other private insurers pushed into the market, driving flood insurance rates lower.

The housing market responded with gusto. In the first half of this year, Shore Acres already has had 26 sales with an uptick in prices.

The result: Home market values in Shore Acres for tax purposes are running 16 percent higher than the previous year.

"Their sales certainly dropped off, but then they bounced right back up," Dubov said.

Home values are based in large part on sales prices. In Pinellas, the median sales price in 2013 was $153,000, up from $134,900 in 2012; in Shore Acres, the median sales price was $283,500, up from $236,725 a year earlier.

Other area counties saw a similar price jump: Median sales prices in Hillsborough County were $175,000 last year (up from $148,000 in 2012) while Pasco sales prices were $133,000 (up from $115,000).

So, what will Dubov tell perplexed homeowners who saw their neighbors laboring to sell their homes last year?

"I do expect to hear from some people, knowing you can't please everyone," she said. "I also expect some people will be very relieved that their property values didn't go the other direction, putting them back underwater (owing more than their home is worth)."

Under the Save Our Homes cap, no matter how large of an increase in market value, the tax bill for a homesteaded resident will not go up more than 3 percent a year. The cap is even lower if there is a smaller rise in the Consumer Price Index.

Dubov's office is supposed to calculate the market value of homes as of the end of 2013, based on sales volume and sales prices, taking out sales costs and Realtor fees. However, Dubov took into account a broad pickup in early 2014 as assurance that a late drop in 2013 in the number of sales was "a temporary blip" and not part of a trend. "I'm not going to gut the market on prices that never fell," she said.

The story could easily have been radically different if Biggert-Waters had not been partially repealed.

"It had great potential to do harm. It stopped the market for a while," Dubov said. "And now, it appears to not really be having a big effect.

Jake Holehouse, a local insurance agent and activist fighting the rate increases under Biggert-Waters, said the marketplace has not only returned to stability but is heating up toward 2006 levels in some places — like high-end condos in downtown St. Petersburg.

The "biggest thing that never happened," Holehouse said, was Congress' decision to keep a flood map "grandfathering" provision in place for older homes. That means as long as a house remains in compliance and has a construction date of 1971 or newer, its flood map will remain unchanged for the lifetime of the property.

"That's the biggest driver of confidence" among buyers, he said, who would otherwise have to worry about such a home getting rezoned under a new map, triggering much higher rates.

The emergence of private flood insurance options — from Lloyd's of London to Florida insurers like Homeowners Choice and Security First — has greatly helped to stabilize the market, Holehouse said.

Over time, flood rates are expected to continue rising and some insurance agents fear Lloyd's and others will dramatically raise rates after establishing a presence in the flood market.

Gordon Chernecky of Shield Insurance of Tampa Bay, a longtime agent for homeowners and flood policies, is worried any euphoria over surviving the flood insurance mess will be short-lived.

Too many of the sales in flood zones are from cash buyers who don't buy flood insurance, Chernecky said. Moreover, he said, the delay in sharper flood rates is only temporary. His bet: Congress will let FEMA hike rates dramatically over time and private insurers, like Lloyd's of London, will drop the lure of relatively cheaper insurance.

"Lloyd's has been this angel from heaven, but they've come and gone before," he said. "This is a big problem coming down the road. People are still really oblivious to what's going on."

For now, though, Dubov gives kudos to Capitol Hill for stepping up.

"We'll never know what the impact would have been if Congress had decided not to act," she said.

Displaying blog entries 1-8 of 8

Contact Information

Joanne Hiller
Coldwell Banker Residential Real Estate
110 Island Way
Clearwater FL 33767
(727)460-5721
Fax: (727)446-2691