This Month in Real Estate Feb 2011


Published on

Detailed National and North Central Ohio Market snapshot newsletter. National news brought to you by Keller Williams Realty and local news by Paul W. Drury

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

This Month in Real Estate Feb 2011

  1. 1. Commentary 2 Released: The Numbers That Drive Real Estate 3 February 8, 2011 Recent Government Action 10 Topics for Home Buyers, Sellers, and Owners 13Brought to you by:KW Research
  2. 2. CommentaryGradual improvement in the housing market continues at a steady pace withoutgovernment support. Six months after two consecutive years of tax incentives forbuyers; starting in July 2008 with a $7,500 repayable first-time buyer tax credit,extending to a $8,000 nonrepayable first-time buyer tax credit in January 2009, andending in June 2010 with the expanded credit to repeat buyers; the market has shownremarkable improvement from the initial drop this past July. With mortgage ratesremaining near historic lows and home prices having generally stabilized, economists areexpecting further strength in 2011.Consumers are showing some signs that they’re feeling better: a significant boost in thefood and services industry implies they are eating out more, vacations are back on therise as spending on travel and tourism increased 8% in the third quarter, and householdnet worth has risen notably thanks to a strong stock market even as they continue toshrink their debt.As the economy improves, current stimulus efforts by the government and the FederalReserve Board are expected to gradually wind down, which typically means risinginterest rates. Meanwhile, buyers continue to benefit from historically favorable buyingconditions and sellers enjoy increased stability in the market. KW Research 2
  3. 3. Home Sales 4 The Numbers That Home Price 5 Drive Real Estate Inventory 6 Mortgage Rates 8 Affordability 9Brought to you by:KW Research
  4. 4. Home Sales In Millions The uptrend in existing home sales activity continued through December, increasing by a substantial 12.3% from a month ago. This marks the fifth monthly increase in the past six months and indicates a recovery that’s gaining a firmer footing. While home sales remained 2.9% below the level seen last year, the market’s upward momentum, despite the absence of the tax credit, is a welcoming sign. Extended and Expanded Home Buyer Tax Credit Second Gradual Recovery Without Renewed November 7, 2009 Tax Tax Credit Must have contract signed by April 30, 2010 Credit Must close by June 30, 2010 Expired December ’09-’10 December ’08-’09Latest Data Release: January 20, 2011Source: National Association of Realtors KW Research 4
  5. 5. Home Price In Thousands Home prices softened in December: median home prices edged down slightly to $168,800, 1% below the year-ago level. Contributing to this is a larger share of distressed homes sales which accounted for 36% of sales in December. This is compared to 33% in November 2010 and 32% in December 2009. Prices continue to hold steady and mortgage rates remain historically low, offering favorable buying opportunities. December ’08-’09 December ’09-’10Latest Data Release: January 20, 2011Source: National Association of Realtors KW Research 5
  6. 6. Inventory - Number of homes available for sale In Millions The number of homes on the market continued to shrink. There are now 3.56 million homes on the market, down 4.2% from 3.72 million in November. More and more buyers are taking advantage of today’s exceptional affordability conditions. Expected improvements in lending standards and job growth will present consumers with great opportunities to buy their first home, move up, or invest.December ’08-’09December ’09-’10Latest Data Release: January 20, 2011Source: National Association of Realtors KW Research 6
  7. 7. Supply of Inventory In Months The surge in home sales and a shrinking inventory pared down the month’s supply to 8.1 months. This is down 1.4 months from November but remains 0.9 months above last year at this time. While still at a relatively high level historically, months of inventory has declined steadily from its peak of 12.5 months in July and is now back to pre-tax credit expiration levels.December ’08-’09December ’09-’10Latest Data Release: January 20, 2011Source: National Association of Realtors KW Research 7
  8. 8. Mortgage Rates 30-Year Fixed Mortgage rates are inching up but remain historically low. This trend continues to support home buying, as it translates to significant savings for buyers. As overall economic recovery remains on track, rates are expected to rise to keep inflation in check.Source: Freddie Mac KW Research 8
  9. 9. Affordability - The percentage of a median family’s income required to make mortgage payments on a median-priced home Percentage of IncomeHousing affordability was near the record in December. The relationship between mortgage rates,home prices, and family income is the most favorable on record for buying. The home price-to-incomeratio continues to remain well below the historical standard. Stabilizing home prices and rising interestrates are expected to reverse the recent affordability trend.Affordability as of December every year. Calculations assume a 20% down payment. KW Research 9Source: National Association of Realtors
  10. 10. Recent ‘Anti-Flipping’ Waiver Extended 11Government ActionBrought to you by:KW Research
  11. 11. ‘Anti-Flipping’ Waiver ExtensionIn 2003 the Federal Housing Administration (FHA) feared that flipping homes was the cause of the skyrocketing homeprices throughout individual neighborhoods. Because of this, the FHA no longer approved property loans that wereresold within 90 days of the original purchase, with the exception of foreclosures owned by government sponsoredenterprises (GSEs) such as FHA, Fannie Mae, and Freddie Mac. The anti-flipping rule is designed to help protect theFHA’s mortgage insurance program and federally chartered financial institutions from losses.In February 2010, the FHA initiated a one-year suspension on the regulation that prevented “flippers” from purchasingsingle-family homes and releasing them into the market within 90 days. Since then, the FHA says it has insured 21,000loans that had exchanged hands within the previous 90 days. The loans are worth more than $3.6 billion and wouldnot have qualified for financing before suspension. An analysis of these loans suggest they do not present a greatercredit risk than other loans, which lent support to the suspension’s extension.The government sent a notice to banks in mid-January of 2011 in which it announced the extension of the waiverthrough the end of the year. According to FHA Commissioner David Stevens, the purpose of the extension was toaccelerate the resale of REO properties in neighborhoods where there is a high rate of foreclosure. This will facilitatethe purchase of homes that have recently been “flipped.” As a result, foreclosed properties will be moved off themarket faster, reducing the amount of vacant homes in neighborhoods throughout the United States.Sources: Inman News, KW Research 11
  12. 12. ‘Anti-Flipping’ Waiver ExtensionLimitations considered by the FHA consist of the following:1. 20% Rule If resale is higher than 20% of the original price, one must show proof of justified price. For example, if a $200,000 house is purchased and the resell price is $245,000, the house must undergo additional underwriting guidelines, which is considered a double appraisal.2. Title Hold No simultaneous closings are allowed when the seller holds a property. In other words, back-to-back, same- day closings to an FHA end-buyer is prohibited.3. Short-term Funding Investors must come up with short-term funding of the 30-to-60-day variety if their desire is to buy/fund and in order to sell to an FHA end-buyer.4. Previous Flips A property cannot show signs of prior flipping activity. If so, the FHA has the right to object.5. Transactions at Arm’s Length Transactions must show no identity of interest between the buyer and the seller or other parties that participate in the sale of a property.Overall, this will help lower holding costs for investors/flippers allowing them to continue flipping more properties.In return, this will help bring more desirable homes to the market for first-time home buyers. KW Research 12
  13. 13. Topics for Home Buyers, Distressed Properties 14 Sellers, and OwnersBrought to you by:KW Research
  14. 14. Distressed PropertiesBank-owned foreclosures (REOs) and short sales both present great value for buyers. Prices can be asmuch as 30%below market in some areas—and in other areas distressed properties are the market. Eitherway, experts agree there’s value for a buyer who wants to own 5 years or more. Rental rates areadvancing too—great news for investors who want to buy and rent. REO transactions move quickly, butshort sales are still slow. Profile of Who’s Buying Distressed Properties First Time Buyers Flippers Rentals Foreclosures 32% 4% 13% Short Sales 41% 2% 10% Motivations for Buying Distressed Properties Tax Deduction 60% Closer to Family/Friends/Desired Location 40% Equity 29% Space 24% Location 19%Source: KW Market Navigator: Vision and Opportunities 2011 KW Research 14
  15. 15. Understanding BuyersBuying distressed properties can open up great opportunities, but in order for an investment to besuccessful, understanding the buyers’ needs is essential. KW Research reveals the following factsamong buyers of distressed properties. Purchase Location Types of Homes Purchased• Suburban (69%) • Single-Family Detached (82%)• Within Same City (50%) • Condominium (9%)• Urban (18%) • Town House (7%)• Rural (13%) • Duplex (1%) Importance of House Condition What Buyers Want • 69% short sales & 55% foreclosures are in• Attractive Price (43%) good/excellent condition• Low Mortgage Rates (36%) • 50% of first-time buyers buy in good condition• Able to Afford (28%) • 78% of investors intending to flip the property• Tired of Paying Rent (21%) typically buy homes in fair, poor, or very poor condition • 50% of move-up buyers buy in excellent condition KW Research 15
  16. 16. Your Local MarketAlthough it is important to stay informed about what is going on in the nationaleconomy and housing market, many different factors impact the real estatemarket in your own area.Talk to Paul W. Drury for assistance interpreting the conditions in your localmarket. The following graphs are general and covers most of the broadmarket area he serves. For detailed information about your ownneighborhood, call him or send him an email today.KW associates are equipped with the knowledge and information to help younavigate the home-buying or selling process in this challenging market. KW Research 16
  17. 17. Local Market Absorption Rate KW Research 17
  18. 18. Number of Homes “in play” KW Research 18
  19. 19. Avg Price per sq ft KW Research 19
  20. 20. Sold to List Price Comparison KW Research 20
  21. 21. Avg Price For Sale VS Sold KW Research 21
  22. 22. About Keller Williams Realty Founded in 1983, Keller Williams Realty, Inc., is an international real estate company with more than 80,000 associates and 686 offices across the United States and Canada. The company began franchising in 1991 and, after years of phenomenal growth and success, became the third-largest U.S. residential real estate firm in 2009. The company has succeeded by treating its associates as partners and sharing its knowledge, policy control, and company profits on a systemwide basis. By focusing on helping associates realize their fullest potential, Keller Williams Realty is known as an industry leader for its family culture, unmatched education, profit-sharing business model, phenomenal coaching programs, and technology offerings. KW Research 22
  23. 23. About Paul W. Drury• Originally licensed as an agent in Ohio in 1986, Paul began with Lehman Johnson Real Estate in Elyria. He acquired his Real Estate Brokerage License in 1992 and became an Associate broker with West Shore Realty. In 1995 he moved his brokerage license to Continental Realty Investment where he began to focus on additional work with commercial and investment real estate. During these years he also performed professional appraisals with The Appraisal House.• In 2001 he began Drury Realty Consulting and worked as an independent Real Estate Consultant and worked on his own until 2009 when he joined Keller Williams Realty, Greater Cleveland West. “Being a part of the Keller family provides me with tools and serves unachievable strictly on my own, provides me with the tools and networking of a huge national network, while still enabling me to work, act, and function as the manager of my own business. It’s the best of both worlds.” – Paul• Pauls Home Page KW Research 23
  24. 24. What we have to offer sellers• Sellers now have access to tools unimaginable just a few years earlier. Keller Williams Realty doesn’t spend valuable resources promoting its own name. Instead it puts resources into the best tools and resources for education and training, providing the highest quality real estate professionals into local communities.• Properties put up for sale by Paul are also listed in KWLS, a national MLS, implemented by Keller Williams, now the 2nd largest company in the US; local MLS; NEOHREX (Northern Ohio Real Estate Exchange); and on national sites such as Trulia, Zillow, CyberHomes, and others.• Free Real Estate Informational Webinars available by logging onto this link… KW Research 24
  25. 25. What we have to offer sellers ( Cont’d)• Other tools brought to bear by Paul include branding using unique web addresses with a virtual tour that can be emailed or the link can posted anywhere, to include Craig’s List and Back Page. Recent listed homes sold. – 37101 Hunter’s Trail in Avon – – 2815 West River Road South in Elyria –• Not Planning to sell in the near future? – Would you still like to monitor what is happening in your neighborhood or area? – Contact Paul now for a free periodic market update. No cost. No obligation. KW Research 25
  26. 26. Properties currently for sale• Properties currently for sale: – 3307 Sandy Lane in Avon – – 19593 Whitehead Road in Wellington - – 13951 Diagonal Road in Lagrange – – 1 Grover Court in Grafton – – 416 Winckles Street in Elyria – – 149 Woodview Drive in Elyria –• Would you like to see one of these homes? Click on the link for a visual tour.• Check out Paul’s YouTube Channel at• Would you like your home or property promoted like these? – Contact Paul for a free, no obligation, consultation today at 440-385-5650. KW Research 26
  27. 27. What we have to offer buyers• Buyers of Real Estate also have access to tools unimaginable just a few years before. Since Keller Williams doesn’t spend its money promoting its own name, it puts its resources into providing the best tools and resources to its systems, education, and training, thus providing the most professional real estate team members back into the communities.• Free Real Estate Informational Webinars available by logging onto this link…• If you wish to conduct your own Multiple Listing Home Searches, you may do so using this link…. KW Research 27
  28. 28. What we have to offer buyers (Cont’d)• Buyers can access Paul’s website at and conduct their own searches as well as create their own search profiles for searching for properties anywhere in Ohio. If relocating out of Ohio, Keller Williams offers one of the finest relocation referral networks in the nation. Greater Cleveland West now sells more properties than any other office in the entire regional MLS.• Paul’s website is easy to manage and he can set up search profiles for you so you get notified at about 8:30 am of any new properties that come available. He also has profiles set up on national websites such as Trulia providing for greater access to search tools. KW Research 28
  29. 29. Investors & Shoppers – Foreclosure Watch• Are you shopping for the deal of a century for your new home?• Are you in the market to buy a home at a steep discount and try and fix it up and “flip it”?• Are you looking for a home for someone else?• Want to know what is happening in your marketplace?• Send Paul an email today and request free market updates at• Call Paul directly at 440-385-5650.• No cost. No commitments. No obligations. No fuss. No kidding. KW Research 29
  30. 30. Follow Paul’s Real Estate updates online…Home Web Page On Twitter• • - Zillow On FaceBook• • - Trulia On LinkedIn• • the Real Estate Global Free Real Estate Network Webinars• ry • YouTube Special Deal Links• • KW Research 30
  31. 31. Paul’s special vendor deals of the month… Now advertising his properties on • • Featuring outstanding deals from the following vendors• GoDaddy Domain Sale • Franklin Covey Supplies• ESET Internet Security • Intuit Quickbooks Software • Executive Book• NewEgg Electronics Summaries Superstore • RubberMaid Products• E-fax Electronic Fax • Build my Move Moving Service Services• TomTom GPS Poducts • eBatts discount battery• DocuSign Electronic services Document Service • Bulb America Light Bulb Supplier • Magazine Mall KW Research 31
  32. 32. The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local andnational media, local real estate agents, and other expert sources. You should not treat any opinion expressed in This Month inReal Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression ofopinion. 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 foreducational purposes only. Nothing herein should be construed as investment advice. You should always conduct your ownresearch and due diligence and obtain professional advice before making any investment decision. All investments involve somedegree of risk. Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on informationcontained in This Month in Real Estate. KW Research 32