Real Estate Update

May 12, 2008

Real Estate has been heating up, a little. Tax refunds, tax rebates, and the summer market is upon us. The next 8 weeks promise to be the busiest time for real estate in 2008. The majority of the last six months there’s been approximately 120 homes in Roselle for sale. Right now there’s a 145! Not only that but there’s 118 homes in pre-foreclosure. Of those 118 homes maybe 20-25 are on the MLS (part for 145).

What do these numbers mean? Basically it means that there’s way more sellers then buyer. Which means what class? Remember supply and demand from economics 101? Yeah lower home values.

Not to totally freak you out the 118 homes in pre-foreclosure doesn’t mean that all those people will be losing their homes. They may have bounced their mortgage check or not made one months payment. It is however a real life indicator that an increasing number of families struggling to keep their credit clean on their biggest debt/investment.

To put things into perspective Roselle is a very small town in the Chicagoland suburbs. A neighboring town Schaumburg (home to Woodfeild Mall) has 241 homes for sale and 267 in pre-foreclosure. Yikes. There’s a very good chance someone on your street is going into foreclosure. There is on my street :sad:

Looking for advice?
- Credit: Guard your credit. Future home purchases will be based more on your credit score/history then on how much you have for a down payment. Get debt free ASAP. If you’re not debt free do yourself a favor and use that tax rebate to pay off some debt.
- Maintenance: Keep your home in good shape. If for some reason (such as job loss) you need to sell your home in a hurry, condition is the only thing that will help you get a good return on your biggest investment.

It’s a fabulous time to capitalize on the market if you can purchase a home non-contingent upon selling your current home. Banks are selling homes for approximately 80% less people mortgage.

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Homeowner equity is lowest since 1945

March 6, 2008

The Federal Reserve says Americans’ percentage of equity in their homes has fallen below 50 percent for the first time since 1945.

The Fed’s U.S. Flow of Funds Accounts shows homeowners’ percentage of home equity slipped to a revised 49.6 percent in the second quarter of 2007 and declined further to 47.9 percent in the fourth quarter. It marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

Home equity is equal to the percentage of a home’s market value minus mortgage-related debt.

On average, housing is Americans’ single largest asset. Economists expect falling home prices to continue to eat into equity.

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Existing home sales hit 9-year low

March 1, 2008

The National Association of Realtors said Monday that sales of single-family homes and condominiums dropped by four-tenths of one percent last month to a seasonally adjusted annual rate of 4.89 million units. That was the slowest sales pace on record going back to 1999.

The median price of a home sold in January slid to $201,100, a drop of 4.6 percent from a year ago. It was the fifth straight monthly price decline and underscored the continued pressure facing housing, which is struggling to emerge from its worst slump in a quarter-century.

Great time to buy a home!

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Appraisals & Market Value - Q & A

October 27, 2007

Q: What is the difference between market value and appraised value?
A: Appraised value is a certified appraiser’s opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 and up.

Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker.

Q: How do you find out the value of a troubled property?
A: Buyers considering a foreclosure property should obtain as much information as possible from the lender about the range of bids being sought.

It also is important to examine the property. If you are unable to get into a foreclosure property, check with surrounding neighbors about the property’s condition.

It also is possible to do your own cost comparison through researching comparable properties recorded at local county recorder’s and assessor’s offices, or through Internet sites specializing in property records.

Q: What are the standard ways of finding out what a house is valued at?
A: A comparative market analysis and an appraisal are the standard ways consumers, lenders and realty agents determined what a home is worth.

Your real estate agent will be happy to provide a comparative market analysis, an informal estimate of value based on comparable sales in the neighborhood. You also can research “the comps” yourself by checking on recent sales in public records. Be sure that you are researching properties that are similar in size, construction and location.

This information is not only available at your local recorder’s or assessor’s office but also through private companies and on the Internet.

An appraisal, which generally costs $200 to $300 to perform, is a certified appraiser’s opinion of the value of a home at any given time. Appraisers review numerous factors including recent comparable sales, location, square footage and construction quality.

Q: What’s a house worth?
A: A home is worth what someone will pay for it. Everything else is an estimate of value. To determine a property’s value, most people turn to either an appraisal or a comparative market analysis.

An appraisal is a certified appraiser’s estimate of the value of the property at a given point in time. To make their determination, appraisers consider square footage, construction quality, design, floor plan, neighborhood, availability of transportation, shopping and schools amenities, energy efficiency. Appraisers also take lot size, topography, view and landscaping into account.

A comparative market analysis is an informal estimate of market value, based on comparable sales in the neighborhood, performed by a real estate agent or broker. You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder’s or assessor’s offices, through private companies or on the Internet.

Q: What standards do appraisers use to estimate value?
A: Appraisers use several factors when estimating value including historical records, property performance, condition of the home and indices that forecast future value. For detailed information on appraisal standards, contact the Appraisal Institute at 875 N. Michigan Ave., Suite 2400, Chicago, IL 60611-1980; (312) 335-4458.

Q: What is the return on new versus previously owned homes?
A: Buying into a new-home community may seem riskier than purchasing a house in an established neighborhood, but any increase in home value depends upon the same factors: quality of the neighborhood, growth in the local housing market and the state of the overall economy.

Q: What is the difference between list price, sales price and appraised value?
A: The list price is a seller’s advertised price, a figure that usually is only a rough estimate of what the seller wants to get. Sellers can price high, low or close to what they hope to get. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area.

The sales price is the amount of money you as a buyer would pay for a property.

The appraisal value is a certified appraiser’s estimate of the worth of a property, and is based on comparable sales, the condition of the property and numerous other factors.

Q: Can I find out the value of my home through the Internet?
A: You can get some idea of your home’s value by searching the Internet. A number of Web sites and services crunch the numbers from historic public records of home sales to produce the statistics. Some services offer an actual estimate of value based on acceptable software appraisal standards. They also depend on historic home sales records to calculate the estimate.

Neither of these services produce official appraisals. They also don’t factor in market nuances or other issues a certified appraiser or real estate professional might in assessing the value of your home.

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Property Taxes - Q & A

September 28, 2007

Q: How do property taxes work?
A: Property taxes are what most homeowners in the United States pay for the privilege of owning a piece of real estate, on average 1.75 percent of the property’s current market value. These annual local assessments by county or local authorities help pay for public services and are calculated using a variety of formulas.

Q: Are property taxes deductible?
A: Property taxes on all real estate, including those levied by state and local governments and school districts are usually fully deductible against current income taxes. Check with your tax professional.

Q: Where can I learn more about appealing my property taxes?
A: Contact your local tax assessor’s office to see what procedures to follow to appeal your property tax assessment. You may be able to appeal your assessment informally. Mostly likely, however, you will have to go through a formal tax-appeal process, which begins with an appeal filed with the appropriate assessment appeals board.

Q: How is a home’s value determined?
A: You have several ways to determine the value of a home.
An appraisal is a professional estimate of a property’s market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.

A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.

You also can get a comparable sales report for a fee from private companies that specialize in real estate data. You also can find comparable sales information available on various real estate Internet sites.

Q: Are taxes on second homes deductible?
A: Interest and property taxes may be deductible on a second home if you itemize. Check with your accountant or tax adviser for specifics.

Q: What is an impound account?
A: An impound account is a trust account established by the lender to hold money to pay for real estate taxes, and mortgage and homeowners insurance premiums as they are received each month.

Q: Do all loans require impound accounts?
A: If you are taking out a FHA or VA loan, the lender can require an impound account to pay real estate taxes and hazard insurance premiums, as with a standard loan. Most conventional loans do not require an impound account.

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