A report in DS News quotes a study that claims 38% of all homes bought in 2011 were financed by cash, not mortgages. Tight lending criteria is likely one of the causes, but investors are also looking for ways to make their money yield better returns, too. This trend is expected to continue for the near future. And right now we’re seeing true record low mortgage rates (sub 4%)!
My own experience is that there are a lot of cash buyers who want to be owner-occupants. It’s not unusual for me to see cash offers on homes up to the $140,000 price point, so there’s a lot of competition for homes in ‘move-in’ condition.
A recently released Realtor Confidence Index for November 2011 also indicated that 28% of home purchases were cash financed. This report was based upon results obtained from just over 3,000 Realtors nationwide and is conducted monthly by the National Association of Realtors Research Division.
Please remember one very important thing. A cash offer does not guarantee that you will be the successful bidder in multiple offer situations. While it takes some uncertainty out of the equation for the seller, many sellers are still looking at the bottom line. Depending on the margin between a cash and financed offer, they may take a ‘cleaner’ and lower priced cash offer or they may take the higher priced mortgage offer knowing that it will take up to 45 days to close.
Everybody wants a deal but if you’re seriously underbidding on homes that have been on the market less than a month, you’re not going to be in the game.
Showing posts with label mortgages. Show all posts
Showing posts with label mortgages. Show all posts
Friday, December 30, 2011
Saturday, August 20, 2011
To Refinance or Not?
This is easily the most frequent recent topic of conversation when I bump in to past clients, fellow Chamber of Commerce members and almost anyone that knows I’m in Real Estate. The desire to take advantage of the great (record setting) lows in mortgage interest rates is overwhelming. Of course the sticking point is the ‘lack of equity’ caused by depreciation in our local housing market.
There are good reasons to refinance, and there are bad reasons to refinance. Good reasons include changing from a dreaded Adjustable Rate Mortgage (ARM) to a fixed rate mortgage – especially now with the low, low rates. Or perhaps you want to reduce your monthly payment. Who doesn’t?
If you owe 20 years on your current, higher interest mortgage and are told that you can refi for 15 years and still have lower monthly payments, why wouldn’t you want to do it? Make sure that if your loan ‘clock’ is starting back at a 30 year term, you’ll be in for the long haul, or at least that you’ll be making payments for another 30 years.
Remember that there are costs involved with a refi. You have to build those in to your analysis to make a good decision. There are also some costs (typically a percentage of your points) that are partially offset by tax deductions. Ask your accountant or tax preparer about those. Will there be appraisal, application, and credit check fees? Will you need all new title insurance? Can you get a credit from your existing title insurance? All of those factors need to be considered to find out your upfront costs.
Even if you ‘roll them in’ to the new mortgage and your monthly payment is reduced, you should understand how many months it will take you to ‘break even’ on the costs of the new loan. It may be 8 or 9 months, or it could be 24 to 27 months. In the first case, if you have to sell in a year, the refi choice was a good one. In the second case, not so good. And things happen.
Perhaps you or your spouse will get a job offer that you can’t refuse and forces you to sell. Maybe a family situation arises that requires you to move. Life can be like that. Here are a couple of references to get you thinking and to help you if a refinance is something that you’ve been considering.
First, a recent (August 2011) article from Forbes. It is pretty short, covers a lot of ground and has a downloadable refinance calculcator in MS Excel format.
Here’s an online article from Bills.com that covers some other thoughts, and a lot of other links – in case you feel like doing a lot more research. If you’d like to just plug in some numbers, try using the calculator I mentioned above in the Forbes article, or try these. One is from bankrate.com and one is from Realtor.com. Both are slightly different, but will help you understand the thoughts on refinancing.
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Not everyone has that problem, of course, but many do. So here are a few thoughts on refinancing. Disclaimer: I am a Realtor®, not a mortgage broker. I don’t originate loans, and this will be fairly simple.
There are good reasons to refinance, and there are bad reasons to refinance. Good reasons include changing from a dreaded Adjustable Rate Mortgage (ARM) to a fixed rate mortgage – especially now with the low, low rates. Or perhaps you want to reduce your monthly payment. Who doesn’t?
If you owe 20 years on your current, higher interest mortgage and are told that you can refi for 15 years and still have lower monthly payments, why wouldn’t you want to do it? Make sure that if your loan ‘clock’ is starting back at a 30 year term, you’ll be in for the long haul, or at least that you’ll be making payments for another 30 years.
Remember that there are costs involved with a refi. You have to build those in to your analysis to make a good decision. There are also some costs (typically a percentage of your points) that are partially offset by tax deductions. Ask your accountant or tax preparer about those. Will there be appraisal, application, and credit check fees? Will you need all new title insurance? Can you get a credit from your existing title insurance? All of those factors need to be considered to find out your upfront costs.
Even if you ‘roll them in’ to the new mortgage and your monthly payment is reduced, you should understand how many months it will take you to ‘break even’ on the costs of the new loan. It may be 8 or 9 months, or it could be 24 to 27 months. In the first case, if you have to sell in a year, the refi choice was a good one. In the second case, not so good. And things happen.
Perhaps you or your spouse will get a job offer that you can’t refuse and forces you to sell. Maybe a family situation arises that requires you to move. Life can be like that. Here are a couple of references to get you thinking and to help you if a refinance is something that you’ve been considering.
First, a recent (August 2011) article from Forbes. It is pretty short, covers a lot of ground and has a downloadable refinance calculcator in MS Excel format.
Here’s an online article from Bills.com that covers some other thoughts, and a lot of other links – in case you feel like doing a lot more research. If you’d like to just plug in some numbers, try using the calculator I mentioned above in the Forbes article, or try these. One is from bankrate.com and one is from Realtor.com. Both are slightly different, but will help you understand the thoughts on refinancing.
Wednesday, August 17, 2011
July 2011 Market Data
The July data has just been published by our MultiList System (MLS), RealComp II, Ltd. We’re seeing a continuation of trends from earlier in the year, namely, fewer listings, slightly increased sales numbers and a shorter time on the market.
First, listings. Year To Date (YTD) for 2011, we’re 11% below 2010 levels, with 3041 this year compared to 3404 last year. Short sales listings are down a significant 28% comparing July 2011 to July 2010(252 in 2011 vs. 352 in 2010).
Sales of residential units (detached homes and condominiums) are up 7%, or 237 in 2011 vs. 221 in 2010. Pending sales are also up 23% from last year. July 2011 showed the highest average ($173,608) and median ($153,750) sales prices of the year, and both of those indicators are nominally above 2010’s performance.
The time on market (time it takes a listing to sell) is at average of 114 days for 2011 compared to 121 days for 2010. It may not seem like much, but selling your home a week faster can be important to some people. It also means that buyers need to be motivated and move on their choices quicker.
The ‘hot spots’ for sales in Livingston County continue to be Genoa Township, Hamburg Township, Brighton Township, and Green Oak Township, in that order.
Cash sales are way down so far this year, with only 95 being reported. At the end of July 2010, that figure was 415 – a 77% decrease. Land contracts are a little more popular this year, but at 25 sales with those terms, they are still a very small part of the overall financing picture. Conventional mortgages are still the most popular financing method, followed by FHA loans.
First, listings. Year To Date (YTD) for 2011, we’re 11% below 2010 levels, with 3041 this year compared to 3404 last year. Short sales listings are down a significant 28% comparing July 2011 to July 2010(252 in 2011 vs. 352 in 2010).
Sales of residential units (detached homes and condominiums) are up 7%, or 237 in 2011 vs. 221 in 2010. Pending sales are also up 23% from last year. July 2011 showed the highest average ($173,608) and median ($153,750) sales prices of the year, and both of those indicators are nominally above 2010’s performance.
The time on market (time it takes a listing to sell) is at average of 114 days for 2011 compared to 121 days for 2010. It may not seem like much, but selling your home a week faster can be important to some people. It also means that buyers need to be motivated and move on their choices quicker.
The ‘hot spots’ for sales in Livingston County continue to be Genoa Township, Hamburg Township, Brighton Township, and Green Oak Township, in that order.
Cash sales are way down so far this year, with only 95 being reported. At the end of July 2010, that figure was 415 – a 77% decrease. Land contracts are a little more popular this year, but at 25 sales with those terms, they are still a very small part of the overall financing picture. Conventional mortgages are still the most popular financing method, followed by FHA loans.
Wednesday, November 24, 2010
Shadow Inventory Going Up
A November 22, 2010 report from CoreLogic states that pending supply (shadow inventory) of homes is up more than 10% (2.1 million vs. 1.9 million units) from a year ago. So what, exactly, is ‘shadow inventory’ and what does it mean to us?
Shadow inventory has a couple of parts. The first part is lender foreclosed upon properties that are not yet on the market. We know that the rate of foreclosures is unfortunately ‘robust’, but we’re not seeing those properties hit the market. Hence the term ‘pending supply’. The other part is an estimate based on seriously delinquent home loans. In this case that means homes that haven’t been foreclosed upon, but are 90 days or more in arrears. The likelihood of many of them reaching foreclosure is high.
The bad news for Michigan is that we have one of the highest levels of ‘distressed months supply’, or a high ratio of properties that are 90 days or more delinquent to the supply of total housing inventory, homes that are listed and available to consumers.
If lenders let these ‘pending supply’ properties onto the market in a short time frame, the fear is that housing prices will plummet even further and faster than what we are currently experiencing. That is not good for them or for the economy in general.
It is possible that some of the seriously delinquent homes will be sold as ‘short sales’, and it’s also possible that some home owners will find other ways to avoid foreclosure, but the trend is disturbing. For buyers, this reinforces that it is a good time to buy, especially with the record or near-record low interest rates. Sellers that do not have a strong reason for selling may want to hunker down and try to ride this out, but all industry expectations are that we’re in for a long, bumpy ride to get back appreciating home values.
CoreLogic is a leading provider of consumer, financial and property information, analytics and services to business and government.
The full report can be found at:
http://www.corelogic.com/uploadedFiles/Pages/About_Us/News/CoreLogic%20Shadow%20Inventory%2011-22%20FINAL.pdf
Shadow inventory has a couple of parts. The first part is lender foreclosed upon properties that are not yet on the market. We know that the rate of foreclosures is unfortunately ‘robust’, but we’re not seeing those properties hit the market. Hence the term ‘pending supply’. The other part is an estimate based on seriously delinquent home loans. In this case that means homes that haven’t been foreclosed upon, but are 90 days or more in arrears. The likelihood of many of them reaching foreclosure is high.
The bad news for Michigan is that we have one of the highest levels of ‘distressed months supply’, or a high ratio of properties that are 90 days or more delinquent to the supply of total housing inventory, homes that are listed and available to consumers.
If lenders let these ‘pending supply’ properties onto the market in a short time frame, the fear is that housing prices will plummet even further and faster than what we are currently experiencing. That is not good for them or for the economy in general.
It is possible that some of the seriously delinquent homes will be sold as ‘short sales’, and it’s also possible that some home owners will find other ways to avoid foreclosure, but the trend is disturbing. For buyers, this reinforces that it is a good time to buy, especially with the record or near-record low interest rates. Sellers that do not have a strong reason for selling may want to hunker down and try to ride this out, but all industry expectations are that we’re in for a long, bumpy ride to get back appreciating home values.
CoreLogic is a leading provider of consumer, financial and property information, analytics and services to business and government.
The full report can be found at:
http://www.corelogic.com/uploadedFiles/Pages/About_Us/News/CoreLogic%20Shadow%20Inventory%2011-22%20FINAL.pdf
Monday, December 17, 2007
November 2007 Market Report-Livingston County
Last month's data from our MLS, RealComp, is now available.
Comparing 2007 to 2006 YTD as of November 30th, there are currently 3081 residential listings (homes and condominiums) compared to 2983 last year, or 3.2% more homes on the market.
The number of sales has dropped 11.7%, 1607 for this year as compared to 1819 last year, but the sales volume (total price of the cumulative sales) has dropped by a larger 20.2 %. Days On Market (a measure of how long it takes to sell a home) has risen by 12 days (or 8.8%) from 137.9 days last year to 150.1 days on market this year.
Individual price ranges are seeing different levels of activity. The price ranges that have seen the most sales YTD (with at least $40 million in volume) are the $200,000-$249,999 range (340 sales) and the $150,000-$174,999 range (246 sales). I believe that the former represents move-up opportunities for young families, and the latter is representative of first-time buyers getting into their own home. Three (3) homes have sold for 1 million dollars or more in the County so far this year.
Geographically, Hamburg, Green Oak and Genoa Townships have the most YTD sales and sales volumes with the reporting year almost over. Hamburg Township has been the fastest growing Township in the County for many years running. Livingston County remains Michigan's fastest growing County.
Most borrowers are financing via conventional mortgages, with some cash sales reported, too. FHA, land contracts and VA financing are far behind in numbers.
Comparing 2007 to 2006 YTD as of November 30th, there are currently 3081 residential listings (homes and condominiums) compared to 2983 last year, or 3.2% more homes on the market.
The number of sales has dropped 11.7%, 1607 for this year as compared to 1819 last year, but the sales volume (total price of the cumulative sales) has dropped by a larger 20.2 %. Days On Market (a measure of how long it takes to sell a home) has risen by 12 days (or 8.8%) from 137.9 days last year to 150.1 days on market this year.
Individual price ranges are seeing different levels of activity. The price ranges that have seen the most sales YTD (with at least $40 million in volume) are the $200,000-$249,999 range (340 sales) and the $150,000-$174,999 range (246 sales). I believe that the former represents move-up opportunities for young families, and the latter is representative of first-time buyers getting into their own home. Three (3) homes have sold for 1 million dollars or more in the County so far this year.
Geographically, Hamburg, Green Oak and Genoa Townships have the most YTD sales and sales volumes with the reporting year almost over. Hamburg Township has been the fastest growing Township in the County for many years running. Livingston County remains Michigan's fastest growing County.
Most borrowers are financing via conventional mortgages, with some cash sales reported, too. FHA, land contracts and VA financing are far behind in numbers.
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