U.S. home prices continued to rise in the third quarter, but not at the same pace as the previous two quarters, according to recent home price data from the National Association of Realtors (NAR).

The average price for an existing single-family home in the third quarter was $229,000, up 5.5% from $217,100 in the third quarter of 2014.

Home prices increased on a year-over-year basis in 154 of 178 (87%) markets that NAR tracks. This was a decrease compared with the second quarter, when price gains were recorded in 93% of markets tracked.

Meanwhile, 24 markets (13%) saw their median home prices decrease from a year earlier.

There were slightly fewer rising markets in the third quarter. Twenty-one metro areas (12%) experienced double-digit increases, a decrease from the 34 metro areas in the second quarter.

Lawrence Yun, chief economist for NAR, says increased demand for housing as the economy improves combined with tight inventory are boosting home prices in a majority of markets.

"There's no question the housing market had its best quarter in nearly a decade," Yun says in a statement. "The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies. While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales."

Total existing-home sales, including single-family homes and condos, increased 3.4% in the third quarter to reach a seasonally adjusted annual rate of 5.48 million. That's up from 5.30 million in the second quarter and up from 5.06 million in the third quarter of 2014.

Yun says sales had the potential to be even higher last quarter given the decline in mortgage rates and favorable economic conditions.

"Unfortunately, the lack of any meaningful gains in housing supply pushed prices in some areas above what some potential buyers - especially first–time buyers - are able to afford," he says.

The five most expensive housing markets in the third quarter were the San Jose, Calif., metro area, where the median existing single-family home price was $965,000; San Francisco ($809,400); Anaheim-Santa Ana, Calif., ($715,300); Honolulu ($714,000); and San Diego, Calif. ($554,400).

The five lowest-cost metro areas in the third quarter were Cumberland, Md., where the median single-family home price was $82,400; Youngstown-Warren-Boardman, Ohio, ($90,700); Decatur, Ill. ($101,400); Rockford, Ill. ($102,800); and Elmira, N.Y., ($108,800).

"Many of the metro areas with the fastest price appreciation over the past year were in the South - particularly in Florida," says Yun. "A combination of solid job gains, above average shares of vacation and foreign buyers and little new construction being added was behind these areas' faster price growth."

At the end of the third quarter, there were 2.21 million existing homes available for sale, a decreased compared with the 2.28 million homes for sale at the end of the third quarter in 2014. The average supply during the third quarter was 4.9 months - down from 5.5 months a year earlier.


Why homebuyers should get prequalified with multiple lenders

Amount client will actually get may be significantly less than what was quoted online




It seems like the buyers who call me every day understand more and more that they need to get prequalified for a mortgage prior to getting started with the homebuying process. Most also understand that shopping for the most competitive rates and fees among different lenders is essential — but there is at least one other reason a good buyer’s agent should encourage clients to get prequalified with at least one additional lender (if not two).

Last month, I spent some time working with a first-time homebuyer who went online to a major national bank’s website to get prequalified for a mortgage. Within minutes, the online system spat out a prequalification letter saying he was preapproved for a $130,000 loan for a home purchase. Ready to go jump in the car and look at houses, right?


I talked to him further about what he does for a living and asked questions about how he is paid and whether his income is salaried (versus commission or overtime earnings). My buyer then went to another lender and spoke to an actual person this time. He called me with news that the prequalification letter “might get chopped down to the $110,000 range.”

After he officially heard back from the lender, he left me a voice mail that they had thrown out his overtime compensation and could not count his commission pay, and he was therefore maxed out at $90,000 for his new loan prequalification.

I have seen this story many times before, so I finally got him to call a trusted lender of mine. She emailed me to say, “He is maxed out at $80,000 due to student loans that are keeping his ratios too high.”

So in between the online prequalification by an important and well-known bank and two additional lenders, our showing schedule took a dramatic turn. I had to cancel everything we had lined up to see and change gears quickly, and what a difference 24 hours can make! We are talking about a 40 percent reduction in the maximum home loan he was initially (and incorrectly) prequalified for online to the amount that he know he is really qualified to receive!

Encourage buyers to take the time to shop around more when it comes to a mortgage — this isn’t just about rates and fees; your buyers need to know what loans they qualify for prior to house hunting. You can keep your buyer from experiencing massive disappointment and wasting a lot of time and money down the road by making sure you are helping them understand what homes they’re qualified to purchase!

Hank Bailey is an associate broker with Re/Max Legends and a Realtor for more than a decade who provides buyer’s agent representation and seller listing services related to residential real estate.

Healthy Demand Expected for First-Time and Move-Up Buyer

Fifteen years into the new millennium, we are finally seeing real potential that the market can support full buyer momentum, according to the recently released Home Data Index™ (HDI) Market Report from Clear Capital, with data through January 2015.

According to the data, 2015 has the promise of a transitional year where full buyer momentum in the low and mid tiers reinforces a strong housing recovery. Sustained national price growth in the low-tier segment, once driven by investor activity, is good news for first-time homebuyers. Also encouraging, the number of potential move-up buyers, once locked into underwater mortgages, has been steadily decreasing. The recent rise in home prices continues to bring more homeowners out of negative equity. With more equity to play with, mid-tier homeowners could move-up, creating more opportunity and driving healthy demand in the low and mid tiers of the market.

"We continue to observe the growing price performance gap between the top and bottom segments of the market," says Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. "The rate of appreciation for top tier homes is stalling, which is a more direct reflection of waning fair market demand. While this is a concerning development, there is a silver lining. The moderating upper tier may give traditional buyers a moment to catch their breath, and entice move-up buyers to enter this segment of the market. The ripple effect of opening up inventory all the way down the price spectrum could provide opportunity and motivation across all segments, including first-time buyers, to enter the marketplace. The hope is that strength in the low and mid tiers help restore confidence in a stable housing market, and traditional homebuyers re-engage. The next phase of the housing recovery is dependent on healthy demand from this segment."

The top tier gives way, extending more opportunity to traditional buyers. While we are expecting price growth to moderate across all tiers in 2015, the top tier’s quarterly growth rate fell to 0.3 percent in the fourth quarter, where it had been holding steady at around 1 percent through the first three quarters of 2014. Year-over-year, this tier experienced the lowest price growth rate of 3.6 percent among the three national tiers.

At its current pace, continued moderation in the top tier could push quarterly price growth into negative territory in 2015. January data also reveals the low tier holding on to double digit gains year-over-year at 10.2 percent and healthy quarter-over-quarter gains of 1.5 percent. This divide between a healthy low tier and stalling top tier could kick-off a domino effect. Stalling prices in the top-tier of the market could create the perception of a good deal. This instills confidence in mid-tier homeowners, motivating them to move-up to the top tier.

In turn, this opens up more opportunity for low tier homeowners to move-up to the mid-tier. Creating new opportunity in the low tier could entice potential first-time homebuyers to enter the market. This domino effect could be the catalyst for balanced demand across all sectors of the market.

Regionally, the Midwest continues to lead the pack. Year-over-year the Midwest held on to double digit gains in the low tier segment at 13.6 percent, while the top tier fell to 3.3 percent. We also observe this gap between growth in the low and top tiers on a quarterly basis, with the low tier growing at 1.7 percent and relatively flat growth in the top tier at 0.5 percent. The Midwest led the nation in the all tier segment, with quarter-over-quarter growth at 0.9 percent, narrowly edging the West at 0.7 percent. The Midwest is the only region currently seeing price appreciation in the low and mid tiers, growing concurrently above 1 percent. A moderating top tier could incentivize mid-tier homeowners in2015 to move-up, setting up the Midwest to be the first region to realize full buyer momentum across all segments.

How to: Choose a Real Estate Agency

Posted: Wednesday, April 2, 2014 12:39 pm

A reputable Realtor and real estate agency can make a big difference when you buy or sell a home.

There are thousands of dollars at stake.

You could get the asking price or maybe you will have to settle for the best offer on the table.

A real estate agency will act in your best interests. That’s why it’s essential to find a high-quality real estate agency.

Reputation says a lot about a company. What do people say about their services.

Ask your family, friends and neighbors for recommendations. Their experiences will guide you toward a reputable agency.

Once you have a list of possibilities, do some research. Find out how long the agency has been in business. Ideally, you want people who know your community.

If the real estate agency is merely a side business, it might not give you the best results. Buying and selling homes is a full time job.

Look on the Internet and read customer service reviews. They should also have an impact on your overall impression of an agency.

Once you have narrowed your list, contact some businesses and ask them questions. You should know about their listings, fees and commissions. If an agency is focusing on their own best interests rather than marketing your home, you should drop them from you list. You need someone who will help you.

Choose an agency that has connections with the community, a sharp understanding of neighborhoods that interest you and solid contacts with other realty companies.

This assumes major importance when you’re selling your current house, because the agency usually handles the sale while the Realtor helps you find your new one.

The marketing strategy and advertising is what makes each agency unique. It will greatly influence the sale of your home.

Although most companies might look the same, real estate agencies have a preference for the kind of properties they show or sell. These concentrations might include commercial properties or high-end homes. Try to find a business with a focus that concentrates on selling homes similar to yours.

Look at an agency’s listings to see if your home would fit in nicely with their existing clients. If you were purchasing a home, would you find their listings easy to read and informative?

The size of the agency will have an impact on your experience. Small agencies can provide more personalized service, but they may not have the networking advantages of a large company. Big agencies have more opportunities to network and sell your home, but they may have to divide their time among many clients.

Be prepared to ask an agency the following questions if you are selling your home:

-- How will you advertise my home? Will you use the Internet and newspapers?

-- How many pictures of my house will appear online?

-- On which sites will my home be featured?

-- Do you have other homes that have recently been sold in this price range?

-- How long has the agency been selling homes in my neighborhood?

-- What makes your agency unique?

The two biggest financial decisions you will make in your lifetime is buying and selling a home. Protect your investment and peace of mind by choosing the best and most trustworthy real estate agency you can find.

U.S. Negative Equity Rate Dips Below 20 Percent in Q4


Today, Zillow released the fourth quarter Negative Equity Report. Nationally, the share of homeowners with a mortgage that are underwater, owing more on their home than their home is worth, has dropped below 20 percent for the first time in years.

As home values have continued to rise over the past year, millions of underwater homeowners have come up for air and are finally able to put their home on the market. This increase in inventory should, in turn, help create a more balanced home shopping season than we’ve seen in the past few years, with buyers having more choice and perhaps less competition.

According to the most recent numbers, nearly 10 million people were underwater on their mortgage in the fourth quarter 2013, collectively owing $657 billion more than their homes are worth. But the number of underwater homeowners is slowly but surely receding. Almost 3.9 million U.S. homeowners were freed in 2013, and the negative equity rate fell to 19.4 percent at the end of the fourth quarter, from 27.5 percent at the same time in 2012.

Nationwide, the negative equity rate is expected to fall to 17.2 percent by the end of 2014, signaling further stabilization of the market and likely freeing up even more inventory.


Stein: Fed intervention aided housing                         



Fixed Rates Skyrocket in Response to Fed Remarks

Mortgage rates shot up in the last week following remarks from the Federal Reserve that it may be tapering its bond purchases later this year.

According to Freddie Mac’s Primary Mortgage Market Survey, the average 30-year fixed-rate mortgage (FRM) rose to 4.46 percent (0.8 point) for the week ending June 27, an increase from only 3.93 percent last week and the highest figure since the week of July 28, 2011. The weekly increase is the largest since April 1987.

Last year at this time, the 30-year fixed averaged 3.66 percent.

The 15-year FRM this week averaged 3.50 percent (0.8 point), up from 3.04 percent the previous week.

Adjustable rates also saw sizable increases, though they weren’t as dramatic. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent (0.7 point), up from 2.79 percent. The 1-year ARM averaged 2.66 percent (0.5 point) compared to last week’s 2.57 percent.

“Following Fed chief Bernanke’s remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014,” said Frank Nothaft, VP and chief economist at Freddie Mac.

While the massive rate hike will certainly dampen some housing activity, Nothaft noted the effect “will be muted by the high level of buyer affordability, and home sales should remain strong.”

Meanwhile, Bankrate.com’s weekly national survey showed the 30-year fixed rate rising to an average 4.61 percent. The 15-year fixed soared to 3.73 percent.

The 5/1 ARM climbed up to 3.45 percent, the highest in more than two years.

“Mortgage rates posted the biggest one week increase since the 2008 failure of Lehman Brothers that pushed the global financial system to the brink. This week, the catalyst was something far more benign,” Bankrate said, referring to Bernanke’s announcement.


Experts See Risk of a Housing Bubble Resulting from Fed Policies

A majority of real estate experts responding to a recent Zillow survey expressed some concern that the Federal Reserve’s current policies could lead to another housing bubble.

Only 4 percent of respondents are not at all worried about a bubble resulting from the Fed’s monetary policy that is keeping mortgage rates down. However, 48 percent see the Fed’s policies as “a little risky,” and the remaining 48 percent categorized the risk as “moderate to high risk.”

“How the Federal Reserve handles the eventual winding down of its policy of quantitative easing will be critical in determining if the current period of rapid appreciation is a benign bounce off the bottom or a more dangerous bubble being re-inflated,” said Stan Humphries, chief economist at Zillow.

The more than 100 survey respondents expect home prices to continue their upward trajectory this year and over the next few years. However, the general consensus is that price increases will slow after the next year or so.

Experts expect prices to end this year 5.4 percent higher than their level at the start of the year. After ending 2012 at $156,800, the median price would end this year at $165,280, according to this forecast.

From 2015 through 2017, experts suggest a more modest rise per year of 3.5 to 3.7 percent.

A cumulative rise of 22.3 percent is forecasted through 2017, according to Zillow’s survey.

The accelerated appreciation over the next year is “consistent with a market struggling to satisfy strong demand from buyers attracted by rock-bottom interest rates and improving economic conditions,” Humphries said.

However, as interest rates eventually move up from their current lows, price appreciation must slow or homes will “look very expensive relative to people’s incomes as it gets more costly to finance a home,” Humphries said.

The Zillow survey, conducted by Pulsenomics, also inquired about whether the definition of a qualified residential mortgage (QRM) should include a minimum down payment.

“Contrary to concerns expressed by certain policymakers, only a small minority of our expert panelists believe that including a minimum down payment requirement in QRM would pose a threat to the housing recovery,” said Terry Loebs, founder of Pulsenomics.

About 81 percent support the idea of a minimum down payment requirement, although a minority—about one-third—support a down payment requirement of 20 percent or more.


Forgive and forget: Short sales saved from fiscal cliff


Pending home sales reach highest level in 2.5 years