Wednesday, February 24, 2016

Mortgage Rates Again at Historic Lows




Fannie Mae, Freddie Mac, the Mortgage Bankers’ Association and the National Association of Realtors each predicted that interest rates would begin to rise slowly and steadily throughout 2016. However, shaky economic news and a volatile stock market have actually caused rates to drop six out of the last seven weeks, and have remained at 3.65% for the past two weeks.

Bottom Line

If you are thinking of buying your first home or moving up to your ultimate dream home, now is a great time to get a sensational rate on your mortgage.

National award-winners and seasoned Realtors with over many years of experience in Northern & Central New Jersey, Rahul & Smitha and their team have become New Jersey’s “Go To” agents and consistent leaders with a reputation for tenaciously protecting their clients’ interests. They specialize in Morris, Somerset, Essex, Union and Passaic counties.

www.SRRealEstateGroup.com | www.Morris-Homes.com | www.TheTownhouseExpert.com

Thursday, February 18, 2016

Are the Kids Finally Moving Out?

millenials signing paperworkDuring the recession, many young adults graduating from college were forced to move back in with their parents. This caused new household formations to drop dramatically from the long term average of 1.2 million formations annually to half that number. However, this may be the year this turns back around. According to the Urban Land Institute’s report, Emerging Trends in Real Estate, household formations will increase dramatically. They project that 3.68 million additional households will be formed in the next three years. This brings household formations back to pre-recession numbers of 1.2 million a year.

What will happen in 2016?

One of the key indicators to an improving housing market is household formation: How many people are moving out and forming an independent living unit? Many of the people “moving out on their own” will be those Millennials who can finally move from their parents’ basements to their first home. Not every person moving out will decide on an apartment. A certain percentage of consumers will decide that homeownership is a better option for themselves and their families. Jonathan Smoke, Chief Economist at realtor.com, believes:

“Demand for for-sale housing will grow and will continue to be dominated by older millennials, aged 25 to 34. This demographic has the potential to claim a third of home sales in 2016 and represent 2 million home purchases.”

What about household formations moving forward?

And Louis Keely, the President of The Demand Institute, predicts strong household growth will continue over the next ten years:

“We expect new household formation to be robust over the next decade as the large millennial generation ages and forms new households of their own.”

Bottom Line


Here come the Millennials!! They will finally be entering the housing market in 2016 and will dominate real estate sales over the next decade.

National award-winners and seasoned Realtors with over many years of experience in Northern & Central New Jersey, Rahul & Smitha and their team have become New Jersey’s “Go To” agents and consistent leaders with a reputation for tenaciously protecting their clients’ interests. They specialize in Morris, Somerset, Essex, Union and Passaic counties.

www.SRRealEstateGroup.com | www.Morris-Homes.com | www.TheTownhouseExpert.com

Wednesday, February 17, 2016

Investors With Cash Edging Out First-Time Home Buyers




Easy pickings from foreclosures may be gone, but investors continue to swarm over housing markets

Article originally posted on WSJ.com. Written by Joe Light.
During the housing bust, investors pounced on foreclosures and short sales—houses that sell for less than the amount owed on the mortgage—to use for cheap homes they could rent out or flip for a quick profit. Now, those easy pickings are gone, but the investors are still swarming over local housing markets, offering all-cash deals and creating headaches for the first-time home buyers who compete with them.

Regan Austin, 25 years old, and her husband lost out on an Orlando, Fla., area home earlier this year to an all-cash buyer. “It was very disappointing. We had our heart set on that home,” said Ms. Austin. She and her husband, who are first-time home buyers, are still looking. “We never thought of the concept of having a cash buyer come in and take that out from under you.” During the housing bubble, investors, lured by easy mortgages, helped send home prices to record levels. In the crash that followed, investors appeared again, this time offering all-cash deals on thousands of bank-owned properties to sell or rent out.

Some economists and real-estate agents say the market is going through an uneasy transition. While the foreclosure starts rate is back down to where it was before the crisis, cash and investor buying in some cities remains far above historical levels. That creates difficulty for buyers of low-price homes because more buyers are competing for fewer properties. In October, 25% of home sales nationwide were to investors, down from a 32% peak in 2012, according to real-estate data firm CoreLogic, CLGX -1.66 % but still 8 percentage points greater than in 2000, before the housing boom and bust.

Meanwhile, the supply of homes for sale dwindled to 1.79 million in December, according to the National Association of Realtors, enough to last 3.9 months at the current sales pace and well below the six months considered a normal market. The problem has become acute for buyers focused on low-price properties. According to the NAR, between December 2014 and 2015 the number of homes for sale priced below $100,000 fell 11.1%, in part because of a decline in foreclosure sales.

“Home supply is diminishing but investor demand is not going away,” said NAR chief economist Lawrence Yun.

Many economists expect housing prices to cool over the coming year, and rather than try to flip homes for a profit, some investors say they are making a long-term bet on demand for rentals, which has boomed in many parts of the country. The U.S. Census Bureau last month said 7% of rental units were vacant in the fourth quarter, near the low for the last decade and down from the peak of 11.1% in 2009. The median asking rent was $850, up 11% in the past year.

Some housing advocates say they have mixed feelings about the strong investor demand.

“Low inventory is a problem and making sure first-time home buyers have a shot should be a priority. But on the other hand, we have a rental affordability crisis,” said Sarah Edelman, director of housing policy for the left-leaning Center for American Progress.

Investor Ken Weiner, a former financial-services executive who lives in Wantagh, N.Y., didn’t buy his first single-family rental property until November, but since then has closed with an investment partner on six homes and on another three on his own, including ones in South Carolina, Illinois and Georgia. He said he plans to close on at least another seven properties by mid-year. Mr. Weiner, who is buying homes sight unseen through investor startup Home Union, said he thinks demand for rentals among millennials and others delaying homeownership will make investing in single-family homes a fixture of the market. “I’m not counting on appreciation,” he said. “If that comes, that’s great. I’m looking for income.”

saving for houseSome real-estate agents in cities that have seen their foreclosure crisis ease said investors have moved up from bank-owned properties and now are competing for traditional, low-price homes that normally would be fodder for first-time buyers. Lisa C. Ford, secretary for the Orlando Regional Realtor Association, said buyers there can expect to compete against at least one cash offer for any home priced below $300,000. In Orlando, 39% of sales in October were all-cash, according to the latest data available from CoreLogic, down 5.6 percentage points from a year earlier but 23 percentage points greater than in 2006. Miami and West Palm Beach, Fla., also have seen declines but about half of homes there still sell for cash.

Don Ganguly, CEO of investor startup Home Union, has recently expanded the company’s business to facilitate investor purchases in markets such as Columbia, S.C., and Huntsville, Ala., which some investors think could have strong rental demand despite little price appreciation recently. Some investors through the site are buying newly constructed homes directly from home builders, he said.

In some cities still suffering from foreclosures, such as Newark, N.J., and New Orleans, cash purchases climbed in the past year through October, according to CoreLogic. Of the 100 largest metro areas, nearly all in the year through October saw the all-cash share of purchases fall, but only 10 have fewer all-cash sales than in 2006.

Daniel Brown, an investor who lives outside Los Angeles, met with real-estate agents in Kansas City, Chicago, Cleveland, Detroit, Pittsburgh and other cities looking for investment opportunities. He bought his first U.S. home in January 2015, and said he now owns about 60 homes with 75 units. “An average normal city goes through its ups and downs, but most people there need somewhere to live, and next year, they’ll still need somewhere to live,” said Mr. Brown.

National award-winners and seasoned Realtors with over many years of experience in Northern & Central New Jersey, Rahul & Smitha and their team have become New Jersey’s “Go To” agents and consistent leaders with a reputation for tenaciously protecting their clients’ interests. They specialize in Morris, Somerset, Essex, Union and Passaic counties.

www.SRRealEstateGroup.com | www.Morris-Homes.com | www.TheTownhouseExpert.com

Thursday, February 4, 2016

The Renovation Revolution: 203K And HomeStyle Mortgage Loans




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You can get a mortgage to buy a house and fix it up at the same time using the same loan. (Photographer: Jim R. Bounds/Bloomberg)
Written by Mark Greene for Forbes
Many of the existing homes that are listed for sale in today’s markets, are functionally obsolete because they are older and don’t have the amenities today’s buyers are looking for in a home.

And according to the National Association of Realtors, there is a limited inventory of existing housing stock. If we add in foreclosures and short sale candidates, then maybe the reason Existing Home Sales are down is because there are so few houses on the market and many of those need lots of TLC. Properties that have languished in default and foreclosure or are short sale candidates tend to develop can’t miss evidence that pride of ownership moved out a long time ago. Location, location, location may not always be powerful enough to overcome neglected and dated homes long overdue for modernization.

A 2014 NAR survey of homebuyers revealed that 53% of those polled said finding the right home is the biggest problem even when they find the right neighborhood.

For many buyers, especially first time homebuyers, renovating a home post-closing may seem out of reach because they do not have the liquid assets to do desired renovations. This can obviously have a big influence on a buying decision when the needy property is in the right location for a particular buyer. So just how can a prospective homebuyer make improvements to a property without cash and with little equity?

The answer is this; you can get a mortgage to buy a house and fix it up at the same time using the same loan. Renovation financing otherwise known as FHA 203K and Fannie Mae HomeStyle loans; provide solutions for this stalled market segment. The renovation financing revolution is in full bloom as home buyers are taking properties in need of attention and turning them into dream homes with help from the FHA and Fannie Mae.

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My colleague and long-time mortgage guru; Matt Gratalo says “a lot of first time homebuyers are bargain hunting but thin inventory does not give them much opportunity. Renovation financing lets them buy the ugly duckling house at a discount and turn into the neighborhood swan.”

To understand how renovation financing works, a basic tutorial about the valuation mechanics for these loans will be helpful. A traditional, straightforward purchase or refinance mortgage loan relies on the current market value of a property based on an appraisal. Renovation financing considers the purchase or acquisition price supported by an appraisal, then adds in the proposed improvements (using architectural plans and specs and builder costs estimates), and allows the appraiser to make a determination of what the “after improved value” would be. Essentially determining and relying on what the value of the property will be once the improvements are done. The financing is then based on that after improved value.

For example; if the purchase price of a house is $300,000 with improvements estimated to be $100,000 and the appraiser determines the after improved value to be $400,000, then the down payment and mortgage financing will be based on the $400,000 after improved value. For an FHA 203K loan, the down payment can be as little as 3.5% of that $400,000 AIV, for a Fannie Mae HomeStyle loan, the minimum down payment would be 5%.
Renovation financing can also be used to refinance current mortgage obligations and make improvements to the home you currently own!

Short sales and foreclosures are often “as is” sales, and lenders want any defects fixed before closing. This is not an issue with 203K and HomeStyle financing as correcting the defects are included in the improvements, allowing closings to proceed without having to address any “as is” issues.

These are not exotic loans, they are actually pretty straightforward but they have more moving parts than a traditional mortgage loan. And more people are involved in the process (contractors, architects, and renovation lending staff to name just a few!), so experience and expertise are important, taking the time to vet prospective lenders will pay efficiency and cost dividends throughout the process.

So head on out to Open Houses this Sunday and take your creative vision with you, because that neglected, diamond-in-the-rough-needs-work-so-nobody-wants-it-house, might just be the dream home where you will raise your family.

National award-winners and seasoned Realtors with over many years of experience in Northern & Central New Jersey, Rahul & Smitha and their team have become New Jersey’s “Go To” agents and consistent leaders with a reputation for tenaciously protecting their clients’ interests. They specialize in Morris, Somerset, Essex, Union and Passaic counties.

www.SRRealEstateGroup.com | www.Morris-Homes.com | www.TheTownhouseExpert.com