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This Month's Real Estate Aug 2010
This Month in Real Estate
August 2010
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Market Update
Housing activity continues to remain above year-ago levels despite some setbacks resulting from the now-expired tax credit. Improved stability in home prices with similar levels of distressed properties seen last year offers a hopeful sign the market is holding its ground. However, the economy still has a considerable way to go to achieve its full recovery.
Consumers are saving more and being picky about how they spend their money. While a higher savings rate means less spending in the near term, this is a positive sign that households are taking control of their finances to build some cushion that can be used to pay down debt and/or support future spending.
Existing home sales marked the twelfth consecutive month of year-over-year increase in June. On a monthly basis, sales activity eased 5.1% from May. The moderation in home sales reflects “understandable swings as buyers responded to the tax credits,” according to Lawrence Yun, NAR chief economist. He anticipates such impact to show up in the next two months.
June’s median home price increased for the fourth consecutive month. Distressed homes, accounting for 32% of sales last month, continued holding home prices at highly affordable levels for the time being. While distressed sales hovered around the same level as a year ago, the gain in home prices is pointing to a sustained stability in the making.
Interest Rates
Mortgage rates set a new record low in July as consumer confidence softened and unemployment remained elevated. This presents a great opportunity for buyers and investors. Coupled with lowered home prices and a robust rental market, investors are finding their way to cash-flow opportunities. As recovery gains deeper roots, rates will need to rise to keep inflation in check.
Rates as of August 6.
This Month's Video
Consumers Beware: New Credit Card Tricks
On May 22, 2009, President Obama signed into law the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, marking a turning point for American consumers and ending the days of unfair rate hikes and hidden fees. While the new law offers significant safeguards, consumers still need to be vigilant against new practices designed to outflank the new rules.
Stay as informed as possible, read your statement , report any irregularities immediately, and watch for these tricks.
•Shortened Billing Cycle: The CARD Act requires companies to allow a window of at least 21 days from when a statement is mailed and when payment is due. Cardholders are reporting being shortchanged on billing cycle time and then being assessed late-payment fees.
Advice: Watch out for shortened payment dates.
•Sunday Due Dates: The CARD Act stipulates if a creditor does not receive or accept payments on weekends or holidays, then the date is extended and late-payment fees shouldn’t be triggered. However, some banks say they’re open for business even when there’s no mail delivery.
Advice: Don’t assume you are safe.
•Low-Limit Cards: The CARD Act says a card’s total annual fees can’t exceed 25% of a borrower’s credit line. However, some issuers may be evading the fee restrictions by charging an up-front processing fee that doesn’t fall under the 25% cap.
Advice: Watch out for processing and other fees.
•False Inactive Fees: Issuers will no longer be able to charge inactivity fees or extra charges for people who don’t spend a certain amount each year, effective August 22. However, some issuers are charging an annual fee that’s waived if cardholders reach a certain spending threshold.
Advice: Watch out for conditional annual fees.
•Rebate Offers: Some credit cards offer refunds on finance charges when customers pay on time. However, rebate offers aren’t governed by the CARD Act, and such offers can be revoked suddenly and for any reason, leaving cardholders stuck with higher charges.
Advice: Rebates may translate to real savings in finance charges.
Source: The Wall Street Journal
Contact The Brenkus Team,
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for information about what's going on in our area.
The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve some degree of risk. Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.
Trends
Small steps to economic recovery continued last month. Among the positive readings was the report of a third quarter GDP growth rate of 2.8 percent, which followed four consecutive quarterly declines. This advance comes in well ahead of that of our Canadian neighbors, whose economy was once anticipated to be the first country out of recession, and by significant margin. Canada posted marginal 0.4 percent growth. Unemployment fell in November for the first time since April 2008. A strong rebound in home sales activity from year ago levels also points to a firmer stabilization.
With the extension of the $8,000 federal housing tax credit into spring 2010, first-time buyers will now have an additional few months to purchase their dream homes. Expansion of the income restrictions now gives possibilities for higher earners to participate too. And the $6,500 tax credit now available to established homeowners with five consecutive years or more in their homes broadens the opportunity landscape. This in turn will allow the housing market more time to find a more solid footing on a sustainable recovery.
Although economists continue to debate the overall shape of the recovery, it is widely agreed that the U.S. economy will take a long time to rebound. Unemployment is expected to remain high for several quarters and the number of underemployed is expected by some economists to remain a drag on growth prospects. On the brighter side, according to some economists, a slow and steady growth will likely fair better for the long-term well-being of the economy. Slower, sustained growth can help prevent dangerous asset bubbles, like the recent housing and technology bubbles, from growing and bursting.
Banks Fast-Tracking Short Sales in Southern Nevada
As banks become more willing to participate in short selling property, they are also offering exciting incentives, which could include up to $5,000 in relocation assistance for home sellers who complete a successful short sale. With more properties on the market, banks have become more flexible and agreeable with short-sales. Recently, Bank of America implemented a state-of-the-art portal system that keeps track of all short sale paperwork electronically.
Before the new communications portal, realtors and sellers were forced to fax their paperwork and documents, which would sometimes get lost or misplaced. Now, all of the information is housed in one location thus allowing the process to become increasingly more efficient.
To fast track the once sluggish short-sale process, some banks are now utilizing independent home inspectors. Representatives will meet with home owners on-site at the property and determine on behalf of the bank if a house is qualified to be listed as a short-sale. The revamped and streamlined process will take as little as 10 days for approval, compared to the tedious process that could take up to two years for approval. Once a property is listed as a short-sale, sellers could close on a property within 45 days.
Banks lose, on average, 20 percent more if a property is foreclosed on versus completing a successful short-sale. They now understand that short-sales are one of the most important ways to help distressed homeowners and neighborhoods.