arclays Capital

“In the absence of a government homebuyer incentives, prices for non-distressed home sales have stabilized for almost a year,” Kim said. “This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices.”

Barclays said recent economic data — including higher job creation in November, housing starts and improved homebuyer traffic — point to some improvement potential in the sector.

In mid-2010, the federal homebuyer tax credit expired, leaving the housing market without training wheels for the first time since the 2008 economic meltdown. Yet, prices in some housing markets remained stable on the back end.

With its new outlook in the market, Barclays upgraded D.R. Horton‘s (DHI: 12.32 -2.92%) stock to buy and raised price targets for D.R. Horton, Lennar (LEN: 19.14 -2.35%), Toll Brothers (TOL: 20.36 -2.72%) and Meritage Homes(MTH: 22.55 -2.51%).

At the same time, the investment bank raised its 2012 earnings-per-share estimates for D.R. Horton, Lennar, Meritage Homes, Pulte (PHM: 6.16 -4.50%) and Toll Brothers, while lowering its estimates for KB Home (KBH: 7.97 -2.45%).

“Thus, the key to timing housing’s recovery depends primarily on when these first-time buyers decide it is safe to buy a house,” Kim concluded.

“The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” said Terry Edwards, Executive Vice President of Credit Portfolio Management, Fannie Mae. “No family should have to give up their home during this holiday season.  Fannie Mae is committed to helping borrowers avoid foreclosure whenever possible and we encourage any homeowner who is having difficulty making their payment to reach out for help.”

Homeowners with Fannie Mae-backed loans can call 1-800-7FANNIE or visit www.knowyouroptions.com for information and resources on foreclosure prevention options, including contact information for the Fannie Mae Mortgage Help Center or a HUD-approved counseling agency in their area.

The trade group recorded a 1.4 percent month-over-month increase in existing-home sales in October, pushing the annual rate of sales to 4.97 million. NAR’s latest reading is 13.5 percent above the 4.38 million-unit sales pace in October 2010.

Housing inventory fell 2.2 percent to 3.33 million existing homes available for sale as of the end of October, which represents an 8.0-month supply.

That’s down from an 8.3-month supply in September. NAR says the housing supply has been trending gradually down since setting a record of 4.58 million in July 2008.

Distressed homes – foreclosed REOs and short sales – slipped to 28 percent of October’s transactions, down from 30 percent in September. They were 34 percent in October 2010.

NAR says 17 percent of last month’s existing-home sales were foreclosures and 11 percent were short sales.

Market analysts were expecting up to a 3 percent drop in overall existing-home sales between September and October. Forecasts ranged between an annual rate of 4.76 million and 4.80 million.
According to NAR, October home sales should have risen higher than the 1.4 percent the trade group recorded.

According to Lawrence Yun, NAR’s chief economist, contract failures reported by Realtors jumped to 33 percent in October from 18 percent in September. Only 8 percent of contracts fell through in October of last year.

“A higher rate of contract failures has held back a sales recovery,” Yun said. “Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents, and high affordability conditions. Many people who are attempting to buy homes are thwarted in the process.”

NAR’s report shows the national median existing-home price was $162,500 in October, which is 4.7 percent below October 2010.

“In some areas we’re hearing about shortages of foreclosure inventory in the lower price ranges with multiple bidding on the more desirable properties,” Yun said. “Realtors in such areas are calling for a faster process of getting foreclosure inventory into the market because they have ready buyers.”

Yun adds that extending credit to responsible investors would help to absorb distressed inventory at an even faster pace, which he says “would go a long way toward restoring market balance.”
NAR’s data indicates investors purchased 18 percent of homes in October, while first-time buyers accounted for 34 percent of transactions. All-cash sales made up 29 percent of last month’s purchases.

But I would vote for the inclusion of a handful of other phenomena — all obsessions of the real estate variety.

Here are six issues, questions and conundrums that have had real estate consumers (i.e., anyone who pays for the place they live) nearly as fixated this year as they were on the Arnold Schwarzenegger-Maria Shriver split:

1. Interest rates — how low will they go? American homebuyers and homeowners alike are completely fixated on interest rates, which have fallen to the low- to mid-3 percent range, and stayed in that neighborhood much of the year.

Homeowners who are stuck in upside-down mortgages (owing more than their homes are worth) have practically salivated after super-low rates all year, while buyers and refinancers have suffered through days, even weeks, of breathless anxiety about the possibility of locking their rates too soon.

2. Tricks to fix missed mortgage payments. If I had a dollar for every time someone called or emailed me to ask what special tricks I have up my sleeve to help them resolve the issue that they’ve fallen behind on their mortgage(s). I tend to offer up the loan mod rollercoaster in some cases, short-selling or applying for a deed-in-lieu of foreclosure in others, and bankruptcy as a last resort in still others.

And generally, I get push back — that won’t work for thus and so reason, the other won’t work because of X, Y and Z. So, it recently occurred to me that many of these folks are looking for a trick — a workaround to keep their houses without having to go any of these routes.

Unfortunately, the only surefire way I know of to “fix” a delinquent mortgage and keep the home with minimal credit damage is to take a second (or third) job, cut back on expenses, and catch up on the payments.

3. Real estate remorse. Buyers fear they’ve paid too much. Sellers fear the buyers have paid too little. The relatively few homeowners who have gotten their home loans modified wondered if they could have negotiated harder and gotten their mortgage principal reduced or a lower payment.

Those who’ve lost homes involuntarily wonder if they might have been able to do something to save their places; those who’ve walked away wonder if they made the right move. And any and everyone who has locked in an interest rate on a home loan, then noticed that rates kept dropping, has spent the time since wallowing in or at least occasionally visiting the land of real estate remorse.

4. Walk away or stay? The second-most frequently asked question that hits my inbox is whether or not the writer should stay put in their deeply upside-down home, or should walk away from it, strategically defaulting on their mortgage.

There is no one-size-fits-all answer to this question, as many of the people who think they are facing the issue of strategically defaulting cannot, in fact, afford to stay in their homes and so are actually debating what seems like a decision but is actually an inevitable road to foreclosure (at worst) or short sale (at best).

5. Rent or buy? While you’d think low, low prices and matching interest rates would send prospective homebuyers into the market, searching for deals, the fact that home prices have hit double and even triple dips in some areas has actually caused more homebuyer fence-sitting.

On top of that, the whole nation is experiencing real estate PTSD (post-traumatic stress disorder) — feeling the trauma of knowing people who have lost their homes, which makes everyone much more conscious and intentional about avoiding that same trauma.

Oh yeah, and the job market has continued to lag most of the year, making even employed people hesitant to lock in large, long-term financial and geographic commitments. Accordingly, the issue of whether to rent or buy has gone from being a normal life progression to an obsessive worry and subject for months, even years of vacillation for some homebuyers.

6. Bizarrely high- and low-priced homes. Stories about celebrity real estate and uber-luxe home sales, like Petra Ecclestone’s $80 million cash purchase of Candy Spelling’s Hollywood home, have been some of the hottest housing market stories to hit the “interwebs” this year.

But Americans are similarly fascinated with properties at the other end of the price and square-footage spectrum — the story about the New York architect who lives in a 60-square-foot apartment and the multiple headlines about Detroit homes going for $5,000 or less (even free!) have also held the interest of real estate readers this year.

For additional questions contact us at www.azcproperties.com

BY TARA-NICHOLLE NELSON,
Inman News™

Q: We have a small 1924 cottage in the flatlands east of San Francisco Bay. Our lot has a minor slope and we have a high water table. Our house continues to shift and settle, resulting in cracks in the walls, etc.

We have talked to both foundation and drainage contractors. The foundation guy says drainage won’t help but a new foundation will solve all. The drainage guy says a French drain and associated drainage will solve all and no foundation work is needed.

How can we determine which (approach) is correct? What’s the best way to get the best advice?

If we were to do only one to get, say, 80 percent of the benefit, which one would be more likely to provide us the 80 percent (benefit) for the cost?

A: The drainage guy is all wet. The movement of your cottage is likely caused by your proximity to the bay. Groundwater rises and falls with the tidal ebb and flood, causing the house to, as you say, shift and settle. There’s no way a French drain system is going to hold back the tide.

A French drain is useful for diverting groundwater around a house foundation either farther down the hill or into a dry sump. In this case, there is no water flowing downhill. Rather, the water pressure is pushing up from below, causing the house to shift and the walls to crack.

Solving the problem by replacing the foundation is also questionable. To get a definitive answer, we suggest you consult with a soil engineer to determine if foundation repair is a feasible fix.

Be prepared for a recommendation involving drilling concrete pilings far enough into the ground to reach stable soil, which will stabilize the new concrete foundation. You’re looking at the cost of a soils engineer, a civil engineer and draftsman to draw the plans. Then you’ll need a contractor to do the job. As you might imagine, this fix won’t come cheap.

If a new foundation is cost-prohibitive, you might consider another option. Because the endgame is to minimize the cracks, consider redoing the walls. Without a doubt, your 1924 home has lath-and-plaster walls.

The lath is horizontal 3/8-inch wood strips with a space between them to allow the plasterer to force plaster through the gaps and form keys. These keys hold the wall in place. Unfortunately, this system has little, if any, diagonal support, so does not resist cracking.

Replacing the plaster with drywall could well solve your problem. The 4-by-8-foot sheets will provide much-needed lateral support, more likely than not eliminating the cracking. Best of all, if you do it yourself, your only cost will be the materials.

This is a big project, so we suggest you attack it one room at a time. Seal that room off with plastic to keep the grit localized as much as possible.

Only remove the plaster from the walls — leave the lath in place and use 3/8-inch drywall. This will mimic the 3/4-inch thickness of the plaster wall and allow the new surface to fit flush to door and window casing, baseboards and existing electrical boxes.

To remove the plaster, punch a hole in the middle of the wall with a large screwdriver or the claw end of a rip hammer. Enlarge this hole until you can see the lath. Then use your hammer and a flat pry bar to gradually pull the plaster away from the lath.

Many of the plaster keys will remain. If they don’t pop out easily, use your pry bar to push them back into the wall cavity. It’s a dusty job, so don’t forget to wear a mask.

You’ll want to add insulation bats to all exterior walls, so remove the lath there and insulate. Before you rock, fur out these walls by tacking pieces of lath along the length of each stud. As a bonus, this is a great time to install additional electrical outlets and wall sconces.

Install the new drywall with drywall screws placed every 7 inches and screwed into the wall studs. Then it’s time to tape, texture and paint.

There is some good news. You can rock right over your plaster ceilings. Use 3/8-inch drywall and 2-inch drywall screws in the ceiling joists.

Make no mistake, this is lot of work. But, especially in this economy, it’s worth the time it will take to avoid the cost of a new foundation.

Finally, unless you have a couple of strong, experienced buddies working with you, rent a drywall lift. It will be money well spent.

Some buyers are turned down for illogical reasons. For instance, if you have investments — even if they’re performing well — an underwriter might deny the mortgage because your portfolio doesn’t fall into the underwriter’s risk assessment model.

One couple was turned down because the husband had worked at his current job for less than a year — even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Article continues below Generally, it’s more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you’re self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won’t lend to buyers who have more than three or four residential properties.

If you’re buying a new home before selling your current home, you’ll need to have 30 percent equity in your current home. This needs to be verified by the lender’s appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month’s rent to verify rental income if needed to qualify.

HOUSE HUNTING TIP: As soon as you’re serious about buying a home, find the best mortgage broker or loan agent you can to assist you. Don’t make your selection based on interest rates alone. A good track record counts for a lot.

Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you’re not turned down at the last minute, it’s worth it.

Be candid with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you’ll need to do to satisfy the underwriter.

Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won’t be included as livable square feet.

If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.

As of Oct. 1, the conforming jumbo mortgage limit for expensive housing markets like New York City and San Francisco dropped from $729,750 to $625,500. In some cases, conforming jumbo lenders have moved into the market to pick up some slack. You can expect to pay about 0.25 percent more for a 30-year fixed-rate conventional jumbo loan, in some cases. However, today’s lower interest rates will help boost affordability.

There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25 percent less than a 30-year fixed jumbo. A five-year fixed starts about 0.5 percent to 0.75 percent lower, but is riskier.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”

A monthly index that tracks pending sales of U.S. resale homes rose in September compared to a year ago, while falling on a month-to-month basis, the National Association of REALTORS® reported today.

Also today, NAR released its latest forecast report for 2011 and 2012, revising up an earlier prediction for U.S. real gross domestic product growth in the wake of third-quarter GDP data released today.

Third-quarter data showed a 2.5 percent rise in GDP, compared with 1.3 percent in the second quarter. NAR expects U.S. GDP growth of 1.8 percent for the full year in 2011, with 2.3 percent GDP growth in 2012. A previous NAR forecast, released last month, anticipated U.S. GDP growth of 1 percent this year and 1.3 percent in 2012. Actual U.S. GDP rose 3 percent in 2010 and declined 3.5 percent in 2009.

NAR’s Pending Home Sales Index, which measures real estate sales contracts signed but not yet closed, increased 6.4 percent year over year, to 84.5, in September. On a monthly basis, the index declined 4.6 percent. The index typically represents about 20 percent of all existing-home transactions. An index score of 100 is equal to the average level of sales contract activity in 2001, which was the first year examined by the trade group.

The index rose on an annual basis in all four U.S. regions. The Midwest saw the greatest increase, up 12.3 percent to 71.5. The region also saw the greatest month-to-month index decline, down 6.2 percent.

In the West, the index jumped 5.6 percent on a year-over-year basis in September, to 105.8 — the highest index value of any region. The region also saw the smallest monthly index drop, down 2.1 percent.

In the South, the index rose 5 percent year over year, to 91.6. On a month-to-month basis, the index slipped 5.5 percent in the region.

The Northeast saw a 4 percent index increase compared to a year ago, to 60.6, and a monthly decline of 4.7 percent.

In its latest economic forecast, NAR projects 4.955 million sales of resale homes this year (up 1 percent compared to 2010), and 5.169 million existing-home sales in 2012 (up another 4.3 percent), with the existing-home median price falling 4 percent this year, to $165,900, and rising 2.6 percent in 2012.

Sales of new, single-family homes, meanwhile, are forecast to fall 4.7 percent this year, to 307,000, and to rise 21.3 percent next year, to 372,000. The median price of a new home is projected to rise 1.8 percent this year, to $225,000, and jump 3.5 percent in 2012.

The interest rate for a 30-year fixed-rate mortgage is not expected to change much. The rate was 4.7 percent in 2010, and NAR forecasts a rate of 4.5 percent for the full year in 2011, and 4.7 percent in 2012.

NAR forecasts the unemployment rate to average 9 percent in 2011, and to improve to 8.7 percent in 2012; last year’s unemployment rate was 9.6 percent.

visit www.AZCProperties.com