Home Prices Could Jump in 2013, J.P. Morgan Says

Home-price forecasts for 2013 are on the rise.
J.P. Morgan Chase & Co. expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth. Standard & Poor’s, which rates private-issue mortgage bonds, on Friday said it expects a 5% rise in 2013.

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The J.P. Morgan analysts boosted their base-case estimate from 1.5% after a convincing rise in the “net demand” for housing this year has surpassed 2 million homes for the first time since 2006, said John Sim, a strategist at the investment bank. Net demand is the pace of existing home sales minus the inventory of homes available for sale.
“Net demand has picked up a lot in 2012,” said Mr. Sim. “Once you get north of the 2 million territory, you are in the positive growth area unless you get a lot of distressed inventory, which this year hit a low point” since at least 2008, he added. J.P. Morgan predicts that net demand to rise from 2.7 million next year from 2.3 million this year.
An expected increase in home prices in 2012 triggered a run into some of the riskiest real estate assets, such as subprime mortgage-backed securities from the real estate boom, and analysts including Mr. Sim expect that trend to continue. Rising home prices and the quest for yield has also given a tailwind to new mortgage bond issuance that has been mired in the fallout of the housing crisis and regulatory uncertainty for the past four years.
U.S. home prices nationwide increased on a year-over-year basis by 6.3% in October, the biggest increase since June 2006, according to CoreLogic. Investors zoning in on the increases bought subprime mortgage bonds, which have posted returns of more than 40% since December.
Home price increases could exceed J.P. Morgan’s base forecast if investors seeking yield push deeper into real estate, according to Mr. Sim’s home price report.
That may already be happening, considering recent comments by Luke Scolastico, a vice president at Credit Suisse, one of two issuers of mortgage bonds without government backing since the financial crisis. Credit Suisse is increasing its purchases of jumbo loans to meet demand for securities it sees from investors, he said on an American Securitization Forum panel this week.
“We’re buying loans, every day…and (on the month,) more than the month before,” Mr. Scolastico said. Part of the reason is because of home price appreciation, but also because of the “technical demand” for relatively higher yielding assets as Federal Reserve policies depress interest rates, he said.
New mortgage bond sales from other issuers, including investment banks, could boost issuance of private label bonds this year as high as $30 billion, Mr. Sim said. That’s up from almost $5 billion this year but paltry compared with annual volume above $1 trillion generated as the housing bubble neared its breaking point in 2006.
Mortgage bonds issued by Fannie Mae, Freddie Mac and Ginnie Mae still fund more than 90% of new home loans. Bank portfolios and other private lending make up the rest.
Considering risks, J.P. Morgan analysts conceded that the economy is “gloomy” and tight lending standards can stop a bullish homebuyer from proceeding with a purchase. On the supply side, the “shadow inventory” of more than four million homes near or stuck in foreclosure still looms, though that is dropping, the analysts said.
What’s more, just the uncertainty over whether politicians will be able to steer clear of the “fiscal cliff,” the scheduled tax increases and spending cuts next month, may hurt investor confidence, the J.P. Morgan analysts said.
If taxes rise, reduced income for the potential homebuyers will damp housing demand, they added.
But the expectations for higher home prices are still widespread. Nearly three-quarters of investors polled by J.P. Morgan expect home prices to rise 5% in 2013.

What to Know Before You FSBO

Before you FSBO, consider the TOP 10 Challenges For Sale By Owners face:

1. Pricing the home to sell

The most important step to success is establishing the right price.  The price is determined, not by what you think it is worth, but by what the market determines it is worth.  Like anything, the value of your home is driven by current economic conditions but emotions often try to justify a higher value.  If you price too high interest will be limited, price reductions will be needed and it will take longer to make the sale.  Also remember that cost does not equal value.  If you’ve made improvements, such as a new roof, the cost of the roof cannot be tacked onto the price.  The roof does add to the salability and peace of mind for a buyer, but all buyers expect a roof that doesn’t leak.

2. Finding/Qualifying the Buyer

When you list your home for sale by owner a majority of active buyers won’t know about it. According the The National Association of Realtors, 9 out of 10 buyers buy with the help of a real estate agent.  A FSBO listing generally does not hit an agent’s radar, and even if it does, the Multiple Listing Service (MLS) provides a significant list of more accessible homes to market to buyers. When you get buyers to call you and preview your home, you will need to have a means to qualify them. Buyers today must have job security, at least 3.5% down and a good credit score with credit history, a challenge within itself for some buyers.

3. Attracting the Wrong Buyers

Just as you are seeking to save the brokerage, many buyers are interested in FSBOs for the same reason. They too are looking for a deal. Some buyers simply do not have the means to buy a home, yet they will contact you out of ignorance (they don’t know they aren’t qualified) or curiosity. You will only want to spend your time showing your home to ready, willing and able buyers or agents representing them, in which case you will need to be willing to pay a buyer’s agent brokerage. At times real estate investors will shop By Owners ads because they think you may not know the value of your home. Some savvy buyers may attempt to take advantage of an unrepresented seller.

4. Follow-Up Failure

When you’re selling your home by owner, you have to think follow-up. First, you should know that you’re going to get a ton of phone calls once you add a yard sign or other type of Internet marketing. The calls are going to come from agents that want to represent you. At the same time, you will get calls from investors, bargain seekers, hopeful buyers, and a few serious buyers. What many By Owners do is let their calls go to voice mail, which is a BIG mistake. The act of screening your calls may cost you the serious buyer. Buyers purchase at the height of their excitement, and time is never on your side. If a caller is unable to obtain the information they need they may see another appealing property within a few hours and lose interest in your home by the time you call back. Also, if you make changes to your listing, you’re far less likely to call the buyers, agents, or investors back who first inquired about your home to tell them about your lower price or updates.

5. The Trust Factor

Some buyers may not know how to approach you, and fear the process of dealing directly with you, especially when it comes time to negotiate the price. Many buyers want agent representation to help in taking care of the details. Begin establishing trust with your potential buyers by providing a complete property disclosure and material facts form.  You may want to have your home inspected by a professional Home Inspector so that you can show your buyers that issues have been addressed.  However, don’t be offended if a buyer still takes what you say about the home/price with a grain of salt.  Try to work together so that everyone is doing some give and take in a mutually beneficial fashion.

6. Being Objective

A Broker can show your home more objectively than a seller who may be emotionally attached to the home, and who may become unnerved by prospective buyers' critical comments.  Buyers will likely prefer to look through the home without feeling like they are being followed so secure valuables so that you can feel comfortable giving them some space.  Be available to answer questions and don’t take offense to any questions. Remember that everyone is different and while you may perceive your half acre lot as a peaceful and private retreat a buyer may see it as hours of upkeep. 

7. Legalese

When you and your buyer arrive at a meeting of the minds you will need to have a written agreement. Have your forms available and be familiar with them so that you are ready when the buyer is hot.  Time is never on your side and a delay could cause your buyer to have second thoughts. Use a standard “fill in the blank” real estate contract and avoid drafting anything separate without the assistance of an attorney. Get referrals and talk to a few real estate attorneys, as their fees can vary considerably. Non-standard terms of the contract may result in higher legal fees so make sure you understand all the costs that may apply.

8. Time is Money

More than likely you have a full time position doing something else other than trying to sell your home. Buyers have many needs and in some case, might need to see the home multiple times. They’ll have it inspected and an appraisal done on the property if they intend to finance the purchase. Sometimes a pest inspection is required by the lender or they may want to come back to measure for new flooring etc. If your schedule lacks flexibility you’ll have a hard time coordinating these appointments, not to mention all the showing appointments leading up to the sale. 

9. Insufficient Marketing Exposure

Real Estate Agents like me have a marketing budget. It takes money to make the phone ring with interested buyers. Agents use a variety of methods to market properties including traditional ones like signs, classified ads and MLS, but many firms also use cutting edge methods such as phone apps that reach today's tech savvy buyers. Set a marketing budget and employ as many different methods as you can, keeping in mind that many home searches begin on the internet.  A marketing budget will insure that you don’t spend more on marketing than you wish to lose should you not be able to secure a buyer or decide later to hire a Realtor.

10. Understanding the value of a Realtor

Realtors are the glue that seals a difficult deal. When you sell by owner, you will face challenges getting to the closing table even if you secure a buyer. You are emotionally attached to your home making it more difficult to understand a buyers many requests. This is when an impartial agent can help navigate the bumpy road. If and when you are ready to list, talk with a professional who will educate you on current market conditions and customize a marketing plan to help you reach your goal.  Choose someone you like and feel you can trust.  Foremost, remember that home values in today’s market can surprise and sometime disappoint, but your Realtor should show you hard facts that will point you in the right direction.  For a free consultation call:

Mary Plybon, Realtor, Century 21 Triad, 336-712-5351, msplybon@gmail.com

 

Predictions for the 2013 housing market

LOS ANGELES, Nov. 26, 2012 /PRNewswire-iReach/ -- Odds are you didn't sit around your Thanksgiving table last year and predict that we'd end 2012 with mortgage rates hovering around 3.3%, or with much of the housing market talk surrounding a "fiscal cliff" (bonus points to you if you had ever used the term "fiscal cliff" back then!). The point is, it's tough to make predictions about something as fluid as the housing market. However, we're going to try! Here are our best guesses as to what's going to happen to the nation's housing market in 2013:

1. We will benefit from years of "underbuilding"
For years, the U.S. has had a glut of vacant houses. In fact, shortly after the recession began, 3% of the nation's existing homes were vacant – an all-time high (normally, only about 1.5% of American homes are vacant). As of mid-November, the vacancy rate was down to 2.1%. Since our vacancy rate has been so high for so long, builders haven't been building anything new. As a result, all of those existing homeowners won't have anything "new and shiny" to compete with as they try to sell their homes in 2013, which will undoubtedly make it easier on them. That could give existing home sales a slight boost.
New home sales hit a two year high
2. Rent prices will hit a plateau
In many cities, rent prices are at an all-time high (just look at Boston, where the average rent is $1,800 per month!). Landlords have been taking advantage of the fact that many people are leery of buying. However, they won't be able to keep raising their prices forever. With rent prices so high – and home values so low – it's actually significantly cheaper to buy a home than it is to rent one in many places. But if rent prices get too much higher, renters may just forget their buying fears and dive right into home ownership, simply to save some money! As a result, landlords will have to cool it with the price increases – or risk alienating a lot of would-be tenants.
3. Quantitative Easing will backfire
OK, maybe "backfire" is too strong of a word. The goal of the Federal Reserve's Quantitative Easing plan is to keep interest rates low, and so far, that part of the plan is working. However, the Fed admits that Quantitative Easing is going to be around for the foreseeable future, and that's where the problem could arise. Fed Chairman Ben Bernanke says he wants to keep interest rates low until 2015. If he does, what incentive do people have to buy anytime in the immediate future? If they know they can take advantage of low rates in a year or two, why buy now? And, if people don't rush to buy now, will the housing market really be able to spring into action?
How does the government affect your mortgage?
4. No major changes will take place until the "fiscal cliff" is resolved
OK, this is an easy prediction to make, since the Bush tax cuts are set to expire on December 31st! However, everyone is waiting to see what – if any – cuts are going to replace them. If Americans wind up paying more taxes, they may not be so willing to run out and buy new homes or take on any kind of additional debt. And, until we know just how bad the "fiscal cliff" is, we don't know how real the threat of another recession is. As a result, many Americans may decide to hold off on making any major purchases – like buying a home – until they see what's going to happen with the nation's economy.
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Media Contact: Daniel Torelli RealtyPin.com, 514-836-1432, daniel@realtypin.com
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SOURCE RealtyPin

Staging Homes for the Cold Winter Holidays

Should homes for sale be staged in a special way for the holidays?
Yes.
It’s absolutely essential that we stage according to the season we are in. Here are some suggestions to consider:
Keep your buyers warm
The key to staging for the holidays is to keep homes warm and inviting. Prospective home buyers will not take their time to explore the home if they are cold. This is especially important to keep in mind if a property is vacant. I recommend making the investment to keep the home heated during the cold months.
Keep it light
This time a year our homes become darker. Therefore, use ample lighting throughout the home. Make the investment to make sure timers are on in every room.
Keep it basic
As you may have heard me share before, how we live in our home is and should be different from how we sell a home. That certainly applies when it comes to holiday decorations. Remember, you want home buyers to see the home, not allow decorations to grab their attention away from envisioning what it would be like to live there.  Choose to display a Christmas tree, a nice wreath on the door, and a centerpiece on the table and allow this to create warm emotions for potential buyers.
Keep it clean
In one way, staging a home during the holidays is no different from any other time a year. It is always important and essential to keep a home clean and free from clutter. Keeping it clean can be more difficult during the holiday season. Snow and rain may cause your home to quickly look untidy during a showing.
Keep it neat outside
“If you can’t see it, you can’t sell it.” Truth is, we start selling a home before the home buyer enters the home. It is important to look at what greets the visitors from the curb and once they arrive at the door. This time a year, there are snow, branches and leaves that can turn the focus away from even the most beautiful home. Is the home easily visible from the street? Is it well-lit? Is the driveway clear of snow? Once you have cleared the area in front of the home, you may want to add colors by putting a pot of colorful flowers outside and maybe invest in lights.



By Barb Schwarz