It’s the end of the world as we know it (and the weekend open discussion)

Posted on May 21, 2011 by grim

Flash!

Armageddonbow spotted in Northern NJ at 6pm this evening! The end of the world is surely upon us (or G-d just has a sense of humor)

This is the time and place to post observations about your local areas, comments on news stories or the New Jersey housing market, open house reports, etc. If you have any questions you wanted to ask earlier in the week but never posted them up, let’s have them. Also a good place to post suggestions, requests for information, criticism, and praise.

For readers that have never commented, there is a link at the top of each message that is typically labeled “[#] Comments“. Go ahead and give that a click, you might be missing out on a world of information you didn’t know about. While you are there, introduce yourselves to everyone.

For new readers that have only read the messages displayed on the main page, take a look through the archives, a substantial amount of information has been put online in the past year. The archives can be accessed by using the links found in the menus on the right hand side of the page.

Posted in General | 111 Comments

So much for April

Posted on May 20, 2011 by grim

From the Washington Post:

Existing-home sales fall in April

Sales of previously owned homes dropped in April, falling short of many analysts’ expectations for this key month of the spring selling season.

But the number of households that fell seriously behind on mortgages in the first quarter is down, suggesting a smoother path ahead, if only the housing market could shed the foreclosures that continue to drag down home prices.

The findings come from two industry reports released Thursday, both of which signaled a slow housing recovery. Even though mortgage defaults are shrinking, the homes in foreclosure remain at an alarmingly high level, and a meaningful pickup in sales is needed to purge them.

Existing sales dropped 0.8 percent to a seasonally adjusted rate of 5.05 million in April from March, the National Association of Realtors reported. They were down 13 percent from a year earlier, when a federal home-buyer tax credit ignited a buying frenzy.

The Realtors group blamed the sluggish activity on unnecessarily tight lending standards. Low home appraisals also botched many potential sales, the group said.

Some economists expected sales to rise in part because the Federal Housing Administration, which backs low down-payment loans, raised its fees in mid-April. They thought buyers would rush to close on homes ahead of the increase, said Patrick Newport, an economist at IHS Global Insight. Going forward, the higher fees will hurt demand, he said.

From CNBC:

Home sales fall, despite uptick in 1st-time buyers

Fewer Americans purchased previously occupied homes in April, a troubling sign that the weak housing market remains a drag on the economy.

Sales fell 0.8 percent in April to a seasonally adjusted annual rate of 5.05 million units, the National Association of Realtors said Thursday. That’s far below the 6 million homes a year that economists say represents a healthy market.

Purchases made by first-time homebuyers did increase but not nearly enough to signal a housing recovery is on the way. First-time buyers are critical because they typically improve their properties and invest in their communities, a combination that helps home values rise.

Foreclosures, on the other hand, force prices down. They represented more than a third of all sales in April and more are expected in the months ahead.

Since the housing boom went bust, sales have fallen in four of the past five years and hit a 13-year low last year. Declining home prices and low mortgage rates haven’t been enough to boost sales this year.

Some who want to buy can’t, mostly because banks have tightened lending requirements and are insisting on larger down payments. Many buyers who can qualify for loans are holding off. They are worried that home prices have yet to bottom out.

Economists say it could be years before the housing market fully recovers.

Posted in Economics, National Real Estate | 153 Comments

April Existing Home Sales

Posted on May 19, 2011 by grim

From Bloomberg:

Existing-Home Sales in U.S. Probably Rose for a Second Month

Sales of previously owned U.S. homes probably rose for a second month in April as investors used cash to buy distressed properties, a reminder real-estate is struggling to gain traction almost two years into the recovery, economists said before a report today.

Purchases of existing houses rose 2 percent to a 5.2 million annual pace, according to the median forecast of 75 economists surveyed by Bloomberg News. Other reports may show fewer Americans applied for unemployment benefits last week and manufacturing expanded in the Philadelphia region.

The increase in home demand is helping clear the market of inventory even as renewed foreclosures will probably continue weighing on prices. Manufacturing has so far carried the economy, validating the Federal Reserve’s decision to maintain record stimulus until the recovery becomes self-sustaining.

“We are seeing a pickup in all-cash transactions,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York. “All-cash bargaining power and investment activity is helping absorb the supply. We will continue to see a gradual pickup in demand.”

The National Association of Realtors will release the figures at 10 a.m. in Washington. Estimates for home sales in the Bloomberg survey ranged from 5.09 million to 5.40 million. Purchases reached a record 7.08 million in 2005, and slumped to a 13-year low of 4.91 million last year.

Posted in Economics, National Real Estate | 127 Comments

Congrats to Hunterdon!

Posted on May 18, 2011 by grim

From Bloomberg:

Hunterdon County, N.J., Has Highest Taxes

Residents of New Jersey’s Hunterdon County pay the highest property taxes in the U.S., according to the Tax Foundation.

The annual median property tax in Hunterdon, about 60 miles (97 kilometers) southwest of Manhattan near the Delaware River, was $8,216, a report issued today by the Washington-based organization shows. Suburban Westchester and Nassau counties, both bordering New York City, ranked second and third, respectively, at $8,206 and $8,160.

“The only source of revenue to pay for a broad spectrum of services in New Jersey is the property tax,” said William Dressel, executive director of the New Jersey League of Municipalities. “The property tax in many states is not the dominant source of revenue for local services.”
…
New Jersey Governor Chris Christie has made a 2 percent cap the centerpiece of his plan to control growth in New Jersey’s property taxes, which averaged $7,576 last year. Real estate levies, the main source of funding for schools and towns, have climbed 70 percent in the past decade.

Posted in New Jersey Real Estate, Property Taxes | 155 Comments

Strategic defaults on the decline

Posted on May 17, 2011 by grim

From HousingWire:

Signs show strategic default on the decline

The trend of borrowers choosing to default on their mortgage when they otherwise might have been able to afford payments is on the decline, JPMorgan Chase (JPM: 42.88 0.00%) analysts said Monday.

Definitions for what qualifies as a strategic default varies. But analysts took a deeper look in the report. One widely held requirement for strategic default is that the borrower stops making payments when the property loses equity, meaning the mortgage is worth more than the underlying home.

JPMorgan analysts used Standard & Poor’s/Case-Shiller indices and tracked prices against original loan amounts on a metro level. Then, analysts collected counts for all defaulted loans since 2007 and tracked those that started missing payments once the loan went underwater.

They found 60% of all defaults were strategic by the middle of 2009, more than double the percentage in January 2008. But analysts wanted to get more specific.

Using data from Equifax, the JPMorgan analysts looked at which borrowers did not experience a monthly payment increase before defaulting. Then, they added in which borrowers were still making payments on other debts after missing their first mortgage payment.

The final definition of strategic default used was the “percentage of defaults from underwater borrowers who started missing payments once underwater, continued paying their other debt, and had no payment increase on their mortgage.”

While the analysts admit they might still be overestimating the amount of strategic defaults when accounting even for all these variables, they noted the trend is going down.
…
“Overall, strategic defaults have stabilized as home prices flattened, and initial jobless claims declined,” analysts said. “A trend worth watching, no doubt, but we can comfortably say that strategic defaults are less than 30% of all defaults, and the pipeline of borrowers [delinquent more than 90 days] has even lesser strategic delinquencies.”

Posted in Housing Bubble, National Real Estate, Risky Lending | 145 Comments

“Not in this decade”

Posted on May 16, 2011 by grim

From the APP:

Real estate rebound will require jobs, time

New Jersey real estate pros are reading tea leaves, searching for positive signs — anything remotely positive, really — that point to a rebound in the state’s tortured housing market.

They want to tell home buyers and sellers there is hope, so they point to trends ticking slightly upward: low mortgage rates that indicate it’s time to buy, employment rates showing signs of life, even Jersey Shore summer rentals that are ahead of last year’s pace.

But the cold, hard data of sales, inventory and foreclosures remain in free fall, leading analysts to predict that the rock bottom of the real estate crash — once widely expected to arrive late this year or the start of 2012 — now may not arrive until 2013.

“Broad-based, all indications are that prices will probably finally bottom out in 2012 or 2013,” said James W. Hughes, dean of the Bloustein School of Planning and Public Policy at Rutgers University. “But then, we’re looking at a long period back.”

How long?

“Not in this decade,” Hughes said.

Much of the past week’s real estate market pessimism was spawned by a nationwide analysis by the Zillow website, which reported that home prices swooned at a rate not seen since 2008.
…
In New Jersey, the Zillow report showed, first-quarter median home prices fell 3.3 percent. During the past year, Garden State home prices have fallen a full 9 percent. That’s further and faster than our neighbors in New York (1.4 percent, 3.4 percent) and Pennsylvania (3 percent, 7.3 percent.)

Elsewhere, an Otteau Valuation Group report showed New Jersey median home prices falling twice as fast, 6.6 percent, in the first quarter of 2011.

Hughes said the first three months of 2011 represented a “double-dip,” with falling prices made to seem more steep by the artificial sales bump created by government tax incentives at the start of 2010.

Posted in Economics, General, Housing Bubble, New Jersey Real Estate | 202 Comments

Buying a house is big news these days

Posted on May 13, 2011 by grim

Required reading, from the NY Times:

Perhaps Not So ‘Grim’ Anymore

BIG news in the virtual neighborhood: “Grim” bought a house.

For the last six years, James A. Bednar — or “Grim,” as he is known in the blogosphere — has served as a passionate advocate of cool wariness about New Jersey real estate. Through his posts on njrereport.com, Mr. Bednar convened a community of skeptics, scoffers and scavengers for “true value” during times of spiraling prices — first up, then down.

Most regulars on the blog appear to have remained renters through at least one full housing market cycle, depending on how one measures the cycling. As did Mr. Bednar.

But on the morning of April 29, as Grim, he abruptly posted the announcement that he and his wife, Jayne, were closing on a three-bedroom ranch in Wayne. “Has J. B. lost his mind?” asked Grim about himself.

Posted in New Jersey Real Estate | 266 Comments

Foreclosures continue decline in April

Posted on May 12, 2011 by grim

From CNN/Money:

Foreclosures down for 7th straight month

The number of foreclosure filings issued in April plunged 34% from a year ago — the seventh straight month of declines.

And there were just 69,532 homes repossessed last month, a 32% fall from the peak last September just before the eruption of the “robo-signing” scandal, in which banks were found to be mishandling the foreclosure process.

Will the seeming good news continue? No way, said Rick Sharga of RealtyTrac, which issued the latest monthly figures on Thursday.

Even with the drop, there were nearly 220,000 foreclosure filings during the month, including notices of default, scheduled auctions and bank repossessions.

And there are 3.7 million borrowers at least 90 days late on payments. Normally a large percentage of them would already be in foreclosure. They are not — for two reasons.

One is that ongoing regulatory issues. Banks want to make sure their procedures are all in place.

Second, the banks have already saturated many markets with repossessions they’ve put back on the market.

“Banks can’t move inventory fast enough, at prices high enough, that they’re excited about foreclosing on any more homes,” said Sharga.

From MarketWatch:

Foreclosures hit 40-month low in April: RealtyTrac

The number of properties in the U.S. that received foreclosure filings dropped 34% in April from a year ago, bringing foreclosure activity to a 40-month low, according to market researcher RealtyTrac.

RealtyTrac said 219,258 properties got a filing in April, meaning one in every 593 housing units received a foreclosure filing during the month. The activity was down 9% from March, and on an annual basis notched its seventh straight monthly decline.

The declines continued to be attributed to major delays in processing foreclosures rather than a housing recovery, according to RealtyTrac.

Chief Executive James J. Saccacio said the delays occur in two stages. The first occurs between delinquency and foreclosure, when lenders and services are no longer automatically pushing loans that are more than 90 days delinquent. Saccacio said that delay was to allow for loan modifications, short sales and other alternatives. The second delay, according to Saccacio, is occurring after the foreclosure has started, as lenders are taking longer to complete the process.

Posted in Foreclosures, National Real Estate | 220 Comments

North Jersey “Dancing along the bottom”, Central still dropping?

Posted on May 11, 2011 by grim

From the Record:

Home prices stable in region

Condo and co-op prices dropped more than 10 percent in the New York metropolitan area, including North Jersey, in the first quarter, but home values overall were flat from the same period a year ago, the National Association of Realtors reported Tuesday.

The median price of a home in the area, which includes Bergen, Passaic and Hudson counties, as well as Westchester and New York City, rose 0.5 percent to $439,300, the NAR said.

Nationally, home prices were down 4.6 percent, to a median $158,700.

With values significantly below the levels of 2006 and 2007, sellers and buyers are still adjusting to the new price realities, real estate agents say.

Some buyers “just keep missing great deals because they want to keep low-balling their prices,” said Sheldon Neal, a Re/Max agent in Oradell. “On the sellers’ side, one of the toughest challenges is to make them realize the truth about their current market value of their home. Many are still wanting to push the list price higher.”

In a sign that the real estate market may be stabilizing, the number of sales in New Jersey was running at an annual rate of 109,500. While that’s down dramatically from the 180,000-plus sales pace of 2004 and 2005, it’s close to the rate of 2010, when 110,000 homes were sold in the Garden State. Sales were boosted in the first half of the year by an $8,000 tax credit for first-time buyers. The fact that sales have remained near the 2010 level, even without the tax credit, suggests that “the state’s housing market is building a solid foundation without a government incentive,” said Jarrod C. Grasso, CEO of the New Jersey Association of Realtors.

From the APP:

Local home prices fall 6.9 percent

The median price of a home in central New Jersey fell 6.9 percent during the first quarter, a trade group reported Tuesday, in a sign that the supply of homes on the market continues to outweigh the demand from buyers.

The figures gave credence to what real estate observers have suspected: Those who had hoped the housing market had bottomed out will have to wait longer.

“This is probably less of a spring market than we had hoped,” said Russell Tucker, senior vice president of Millburn-based ISB Mortgage Co., a subsidiary of Investors Savings Bank. “That’s the bottom line. We should be in full swing right now, but that’s not the case.”

The National Association of Realtors reported that the median price of a home in the region that includes Monmouth, Ocean, Middlesex and Somerset counties was $303,200, down from $325,800 the same quarter a year ago. The median means half of the homes sold for more and half sold for less.
…
Central New Jersey prices fell more than the national average. The median U.S. home price was $158,700, down 4.6 percent from $166,400 the same quarter last year, according to the Realtors’ group.
…
And first-quarter figures released by Jeffrey Otteau, president of the Otteau Valuation Group Inc., a research firm in East Brunswick, showed only one of 21 New Jersey counties saw prices appreciate during the past year. Somerset County was up 2.6 percent from last year.

Morris County fell 4.9 percent; Monmouth County fell 7.8 percent; Middlesex County fell 8.4 percent; and Ocean County fell 10.2 percent.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 137 Comments

As the market changes, so do the scams

Posted on May 10, 2011 by grim

From the Philly Inquirer:

‘Flopping’ – a new type of scam in the housing market

Although reports of mortgage fraud nationally fell 41 percent in 2010 from 2009, the continuing downturn in the housing market has fostered new ways of perpetrating it, experts say.

Consider “flopping” – the intentional misrepresentation of housing value for purposes of illegal flipping.

Here’s how it works: A real estate agent or broker identifies properties with severely depressed values. These could be properties with mortgages that exceed the present values or they could be short sales or foreclosures.

A property is valued using a “broker price opinion.” The broker’s “opinion” is a low-ball price, because his intention is to profit from a quick resale for a higher price.

A lender, believing the broker’s assessment is legitimate and unaware of any scheming, agrees to the lower sales price.

The broker buys it at the greatly reduced price, arranges for a “straw buyer” to purchase it, then flips it for a higher price than negotiated with the lender. The broker pockets the profits.

The broker pays off any of the participants that enabled the scheme, and then moves to the next target property.

“This is a misrepresentation of value,” said Denise James, coauthor of an annual report on the topic by the LexisNexis Mortgage Asset Research Institute during a teleconference Monday.

She said such schemes could add to problems faced by regions with an abundance of distressed housing, since “lenders will grow concerned with false depreciation of values,” thus making the buying and selling of homes even more difficult in depressed housing markets.

“Flopping increases as desperation to get rid of rising inventory grows,” she said.
…
One of the fastest-growing ways homeowners are being bilked is by people posing as the new servicers of their mortgages, she said.

“They [the homeowners] get letters saying, ‘I’m your new servicer, send your payments to me,’ ” James said. “Homeowners who are not aware that there is a formal procedure involved in changing servicers” fall victim to this scam.

Posted in National Real Estate, Risky Lending | 107 Comments

What evidence of stabilization?

Posted on May 9, 2011 by grim

From the Asbury Park Press:

NJ’s economy improves, but housing market still faces price declines

Kristen Forma checks out real estate websites several times a day as she searches for a home for her family in Middletown.

She does research, finding out what other houses have sold for in various neighborhoods, to evaluate prices. One day, she visited seven houses.

But so far, she has not found what she’s looking for. “Either I am seeing gigantic houses or I am seeing things that are overpriced,” said Forma, who has a buyer for the family’s home in Montgomery in Somerset County, where she lives with her husband and two sons.

The housing market is in the midst of the spring selling season, one of the prime times when prospective home buyers walk up steps, check closets, inspect bathrooms and bedrooms.

But even with modest improvements to the state’s economy, the housing market in the Garden State remains in the weeds. “Sales are running less than last year,’’ said Jeffrey G. Otteau, president of Otteau Valuation Group in East Brunswick. “We have more houses on the market and prices are once again declining.” Still, there is a hint of some good news.
…
The median home price in New Jersey declined 6.6 percent in the first quarter as compared to the first quarter of 2010, according to the Otteau Valuation Group. In Monmouth County, the median home price fell 8 percent in the first quarter while Ocean County’s median home price saw a 10 percent decline, both over the same period last year, the firm said.
…
The pace of sales statewide during the quarter declined 18 percent statewide, compared with last year’s first quarter, which was boosted by the federal home buyers’ tax credit that expired last spring. But when compared with the first quarter of 2009, before the home buyers’ tax credit, there was a modest 2 percent increase, Otteau said in a market report.
…
“Although the sales are occurring at a slower pace than last year, it is clear evidence that the housing market has stabilized, that the pace of sales has stabilized,” Otteau said last week.
…
“While those things are starting to look better, from an economic perspective, given that we lost the tax credits we’re likely to see price declines in 2011,” Otteau said. His firm is projecting a 3 percent decline in New Jersey in 2011.

Rutgers economist Joseph Seneca said uncertainty in the job market plays a key role in the sale of homes, as does rising food and energy costs.

“These are not conditions that sort of align to generate great confidence to make a major purchase,” Seneca said.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 163 Comments

Realism in style at the shore this year?

Posted on May 8, 2011 by grim

From the NY Times:

In Jersey Shore Subset, Top-Heavy With Pricey Homes

WHEN a newly built house beside the beach in Sea Girt went into contract for $3.6 million last month, it was sort of a good news-bad news occurrence, in the eyes of real estate brokers and agents.

The good news — obviously — was the handsome price, fetched in a market overflowing with expensive homes in this part of Monmouth County. The not-so-good news was that the sale had taken three years. And the really bad news was that the sale price amounted to only 68 percent of the original asking price of $5.288 million for the house, at 9 the Terrace.
…
In the first four months of this year 138 houses were put on the market in the three towns Mr. Wight mentioned, which are considered a submarket by the county’s multiple listing service. There were 28 closed sales during those months, with an average sale price of $1.2 million, according to listing data. The year before, 29 homes were sold, for an average of $1.36 million.

In the first quarter of this year the median sale price was also down, to $774,550 from $975,000 in early 2010. (The median represents a midpoint, with half the sales for more and half for less; statisticians prefer it to the average, because it tends to be less affected by one or two very high-priced or low-priced sales.)

And as prices sank, the time that a typical house spent on the market increased, to 144 days, from 119 last year.

“On the positive side,” said Keith Kernan, an agent in Ward Wight’s office in Sea Girt, “most sellers have become more realistic about prices, and the average home is now selling for 92 percent of its list price.”
…
“There are buyers out there for these exceptional homes, with some percentage of them being second-home buyers, since this is a resort area,” said Mr. Kernan, estimating that about 30 percent of buyers in the area pay cash, and do not take out a mortgage.

“This type of buyer is acutely aware of market conditions,” he said. “If a house is priced right, it will move right away, no matter what price range you are talking about.”

But the price range does make a difference.

Recently a house in Wall Township, just inland of Spring Lake, was sold in a single day; it had not found a buyer when priced in the mid-$500,000s, but as soon as the price fell below $500,000, it was snapped up — with multiple offers still pending should that deal fall through, according to Mr. Wight.
…
Manasquan, the most southerly of the three towns, typically has a somewhat larger sale inventory than Spring Lake. At the beginning of April, according to the Otteau Valuation Group, a New Brunswick company that compiles monthly real estate reports, 118 properties in Manasquan had not sold after at least a month on the market.

Spring Lake had 96 houses sitting on the market. Sea Girt had 37. Most of the highest-price houses for sale are in these two towns.

Posted in Economics, Shore Real Estate | 24 Comments

Squatter Rent???

Posted on May 6, 2011 by grim

From Bloomberg:

‘Squatter Rent’ May Boost Spending as U.S. Mortgage Holders Bail

Melissa White and her husband stopped paying their mortgage in May 2008 after it reset to $3,200 a month, more than double the original rate. That gave them extra cash to pay off debts and spend on staples until their Las Vegas home sold two years later for less than they owed.

“We didn’t pay it for about 24 months,” said White, who quit her job as a beautician during that period after becoming pregnant with her first child and experiencing medical complications. “What we had, we could put towards food and the truck payments and insurance and health things I was dealing with.”

Millions of Americans have more money to spend since they fell delinquent on their mortgages amid the worst housing collapse since the Great Depression. They are staying in their homes for free about a year and a half on average, buying time to restructure their finances and providing an unexpected support for consumer spending, which makes up about 70 percent of the economy.

So-called “squatter’s rent,” or the increase to income from withheld mortgage payments, will be an estimated $50 billion this year, according to Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. The extra cash could represent a boost to spending that’s equal to about half the estimated savings generated by cuts to payroll withholding in December’s bipartisan tax plan.

“We’ve had a lot of government transfers to the household sector; this is a transfer from the business sector to households,” Feroli said. “It’s a shock absorber that has helped the consumer ride out the storm.”
…
Van Perrault, a home appraiser who defaulted on his Saint Mary’s, Maryland, investment property in 2007 after his tenants stopped paying the rent, used the extra money to take care of late payments on his delinquent credit-card debt.

The additional $1,500 a month “made a difference in my life,” said Perrault, 60, adding that paying down his card balances helped him and his wife limit the damage to their credit scores.
…
Failing to pay a mortgage bill is “a big moral issue,” said Karl Case, co-founder of a housing-price index that bears his name. “On the other hand, it’s exactly what you would expect given the way we treat and reward behavior in an economic system built for private gain.”

More than a third of mortgage defaults were strategic, according to a June 2010 survey by finance professors Paola Sapienza of the Kellogg School of Management at Northwestern University and Luigi Zingales of the University of Chicago’s Booth School of Business. That was up from 29 percent in a March 2009 survey.

Posted in Employment, Foreclosures, National Real Estate, Risky Lending | 115 Comments

DIY buyers shun agents

Posted on May 5, 2011 by grim

From SmartMoney:

Home Buyers Go Hunting Alone

After years of trepidation, home buyers are finally beginning to wade back into the housing market. But as they do, many are making the surprising choice to hunt alone, rejecting the assistance of what’s known in real estate as a buyer’s agent.

For years, house-hunters have had the option to work with a real estate agent who shows them properties and may ultimately negotiate the price – a counterbalance to the agent who almost invariably represents the seller. But now fewer buyers are taking it. Of the buyers who purchased a property through a real estate agent, just 57% had buyer representation, according to a 2010 report by the National Association of Realtors. That’s down from 62% in 2009 and 64% in 2006, before the housing bust. Also, fewer buyers are first learning about the home they purchase from real estate agents: just 37% are reporting real estate agents as their first source of information on the home they purchased, down from 50% a decade ago, according to NAR.

Many experts think this is a bad move – worse, for example, than trying to sell a house without an agent. For one thing, in most cases, a buyer doesn’t pay an agent; the buyer’s agent splits the commission with the seller’s agent, so the services are essentially free to the buyer. Also, a buyer’s agent can usually access historical price data for home sales in the area, which means he can recommend a bidding strategy that targets comparable properties that sold for less, rather than the mid-range. John Vogel, adjunct professor of real estate at the Tuck School of Business at Dartmouth College, calls going through this process alone “a mistake.”

There are lots of reasons buyers may choose to represent themselves. The real estate listings and detailed information that was once only available to real estate agents — like median sales prices in a neighborhood, the amount of days a home has been on the market, and how many price cuts it has endured – are now online. And because most buyers’ agents don’t get paid until a home is purchased, they have a strong incentive to see you buy something quickly, Vogel says: They may not tell a client to wait for prices to fall further.

On the other hand, some house-hunters may think they are working with a buyer’s agent, when in reality, they’re actually dealing with a seller’s agent. Many buyers contact the agent listed with the property or walk into an open house thinking the agent is working in their favor, says Paul Howard, a buyer’s-only broker licensed in New Jersey and Pennsylvania. Or some buyers may start working with an agent who has their interest at hand, but the house they want to buy is listed with the real estate company the agent works for; at that point, buyers should have the option to find an agent not tied to the property. Some seller’s agents may also discourage prospective buyers at the beginning of their search from seeking out a buyer’s agent. Commissions are already lower due to declining home values, and some would prefer not to split it, says Ginger Wilcox, head of training for buyers’ and sellers’ agents at Trulia.com. “Agents are fighting for their commissions.”

Still, in many cases buyers may be at an advantage when they work with a buyer’s agent – at least compared to relying on a seller’s agent for advice or guidance. A seller’s agent is contractually obligated to help make the sale happen in the seller’s favor, often as close to the asking price as possible. Buyers’ agents can also suggest home inspectors and financing companies they’ve worked with before, says David Kent, president of the National Buyer’s Agent Association; they’re not supposed to make money off the referrals.

Posted in National Real Estate | 143 Comments

Will the pace of recovery be driven by shadow inventory?

Posted on May 4, 2011 by grim

From HousingWire:

Shadow inventory will keep housing recovery at bay for three to four years

A full housing recovery is three to four years off as the nation grapples with a shadow housing inventory of 4.5 million distressed properties, according to Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association.

Fratantoni said a phenomenon is now surfacing in housing that is essentially a “tale of two cities” where home prices are beginning to stabilize in economically viable parts of the country, while other areas are paralyzed by high unemployment and large shadow inventories.

“We are going to see different housing market recoveries,” Fratantoni said during the state of the industry address at the MBA’s secondary mortgage market conference in New York.

“You will find new homebuilding stronger in markets in Texas and around Washington D.C.,” he said.

Meanwhile, the shadow inventory that is driving down prices in parts of the U.S. is stalling an overall national recovery even though most of the distressed inventory is concentrated in Florida, California, Illinois, New York and New Jersey, according to Fratantoni’s research.

“This year, you will see some markets show gains in housing prices, while other markets will continue to have elevated levels of inventory,” he said.

Posted in Economics, Housing Bubble, National Real Estate | 126 Comments