Rising Home Prices; who suffers the most?

housing affordabilityThe percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California dropped to 36 percent in the second quarter of 2013, down from 44 percent in first-quarter 2013 and from 51 percent in second-quarter 2012, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  The second quarter 2013 figure fell below 40 percent for the first time since the third quarter of 2008.

Nearly all regions of the state experienced sharp quarter-over-quarter declines in housing affordability, with Bay Area and coastal regions recording the greatest decreases in the index due to significantly higher home prices.

At an index of 71 percent, Madera County was the most affordable county of the state, while San Francisco and San Mateo counties tied for the least affordable at 17 percent.
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How much longer will the low housing inventory Last?

out of stockHome shoppers advised to stay patient amid overheated housing market
Source: The LA Times

It’s a seller’s market, so experts are advising home buyers that patience will pay off at a time when the inventory of available homes for sale is low. Experts contend that in six months to a year from now, the inventory of unsold homes should improve markedly, and it should be easier to qualify for financing.
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How do I compete with the All-Cash buyer?

cash buyerHomebuyers are facing competition from all-cash buyers on top of rising home prices and low inventory. Such cash buyers include foreign investors and baby boomers with sufficient equity. Tips to compete with these buyers include getting pre-approved, making a competitive bid, considering properties that might be overpriced, and freeing up additional cash.
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Do’s and Don’ts of Homebuyer Incentives

expensive giftsDos and Don’ts of Homebuyer Incentives

Original post By: G. M. Filisko

Homebuyer incentives can be smart marketing or a waste of money. Find out when and how to use them.

When you’re selling your home, the idea of adding a sweetener to the transaction—whether it’s a decorating allowance, a home warranty, or a big-screen TV—can be a smart use of marketing funds. To ensure it’s not a big waste, follow these dos and don’ts:

Do use homebuyer incentives to set your home apart from close competition. If all the sale properties in your neighborhood have the same patio, furnishing yours with a luxury patio set and stainless steel BBQ that stay with the buyers will make your home stand out.

Do compensate for flaws with a homebuyer incentive. If your kitchen sports outdated floral wallpaper, a $3,000 decorating allowance may help buyers cope. If your furnace is aging, a home warranty may remove the buyers’ concern that they’ll have to pay thousands of dollars to replace it right after the closing.

Don’t assume homebuyer incentives are legal. Your state may ban homebuyer incentives, or its laws may be maddeningly confusing about when the practice is legal and not. Check with your real estate agent and attorney before you offer a homebuyer incentive.

Don’t think buyers won’t see the motivation behind a homebuyer incentive.Offering a homebuyer incentive may make you seem desperate. That may lead suspicious buyers to wonder what hidden flaws exist in your home that would force you to throw a freebie at them to get it sold. It could also lead buyers to factor in your apparent anxiety and make a lowball offer.

Don’t use a homebuyer incentive to mask a too-high price. A buyer may think your expensive homebuyer incentive—like a high-end TV or a luxury car—is a gimmick to avoid lowering your sale price. Many top real estate agents will tell you to list your home at a more competitive price instead of offering a homebuyer incentive. A property that’s priced a hair below its true value will attract not only buyers but also buyers’ agents, who’ll  be giddy to show their clients a home that’s a good value and will sell quickly.

If you’re convinced a homebuyer incentive will do the trick, choose one that adds value or neutralizes a flaw in your home. Addressing buyers’ concerns about your home will always be more effective than offering buyers an expensive toy.

More from HouseLogic

Setting the right home price

Using an appraisal to set your home price

Choosing the right offer on your home

How Aggressive Home Buyers are winning the Multiple Offer War.

angry buyerThis week, Trulia released the results of its Summer 2013 American Dream Survey. The latest findings reveal the impact today’s competitive real estate market has had on consumer sentiment toward homeownership and the desperate measures people are willing to use to buy a home.

According to the survey, prospective home buyers are feeling the pain of a booming real estate market. The top worry among Americans who plan to buy a home someday, if they were to buy a home in 2013, is that mortgage rates would rise further before they buy (41 percent), followed by rising home prices (37 percent). For consumers in the hottest markets – where asking home prices rose more than 15 percent year-over-year, such as Las Vegas and Oakland – buyers’ worries are even more intense for most of the concerns listed below.

Among Americans who would buy a home someday, 67 percent would use aggressive tactics to buy a home, including bidding above asking, paying the seller’s closing costs, writing personal letters, or removing contingencies, to name a few. The survey found that households earning more than $100,000 a year are more likely to offer to pay the seller’s closing costs or bid above asking, whereas lower-income households making less than $50,000 a year are more likely to borrow money from family or friends to put down 20 percent or make an all-cash offer. Young adults – many of whom are likely to be first-time home buyers – are especially aggressive in their house hunt, with 78 percent likely to do at least one of these tactics.
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The Ugly truth behind Loan Modifications

loan modNearly half (46 percent) of homeowners who received assistance with their mortgage in 2009 through the government’s Home Affordable Modification Program (HAMP) redefaulted on their mortgages, while 38 percent who received loan modifications in 2010 have done so, according to a report by the Office of the Special Inspector General for the Troubled Asset Relief Program.

According to Christy Romero, the special inspector general for the Troubled Asset Relief Program, the Treasury failed to analyze its own data to determine which borrowers were most at risk of losing their homes to foreclosure after receiving government support.

Homeowners in default on loans held by banks or investors can apply to their mortgage servicer to reduce their monthly payments. Under HAMP, investors, servicers and homeowners are all eligible to receive incentive payments to make the loan more affordable.

In all, just 865,100 homeowners were active in the HAMP program as of April. Of those, 10 percent have missed one or two payments but have not yet redefaulted. The overall redefault rate is 26 percent.  More info

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Are we Experiencing a Second Housing Bubble?

housing bubbleReport: U.S. is not experiencing a housing bubble

CoreLogic this week released its July MarketPulse report in which CoreLogic Chief Economist Mark Fleming, Ph.D., and Deputy Chief Economist Sam Khater share their optimism about the ongoing recovery in the U.S. housing market.

Key findings in the July MarketPulse report include:

  • According to CoreLogic the market is not experiencing a housing bubble, and the rise in mortgage rates will help to prevent one in the future.
  • Housing affordability is near its height due to historically low interest rates and home prices.
  • According to the housing affordability index, all but two states are affordable today, and most states are near their recent affordability high points.
  • Cash sales peaked above 40 percent two years ago and are slowly receding.
  • Cash sales are one of the drivers behind the rapid house price recovery.

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