Higher Home Prices Indicate Housing Recovery

Experts have been saying for some time now that the housing market is on the road to recovery. However, they are still holding their breath and looking for new indicators that they are right. Since the recovery seems to be slow, not everyone is convinced that it is actually happening. The latest numbers on home prices strengthen the belief that we truly are in recovery mode.

Housing Prices Increase

Housing prices jumped in July, up 3.8 percent for the previous 12 months; the biggest gain in 6 years. The prices also increased from June to July by 1.3 percent, the fifth month on month increase in a row.

The S&P index also posted positive numbers with the first annual increase in two years. The fact that multiple indicators are saying the same thing is a good sign. Housing prices have risen 9.6 percent since February, the month when they were at their lowest since the recession.

What This Means

Prices only rise when demand is up, so this is a good indicator that more people are buying homes now than in the past few years. This adds to the information provided by other recent reports which show that sales of new and previously owned homes are up. Mortgage rates are also at their lowest in nearly six decades.

And while housing prices rise in the spring and summer, a time when more people are interested in buying a home, and drop in the fall, the usual drop is nowhere near the 9.6 percent increase that was seen this year.

Don’t Get Too Excited

While states like Utah, Idaho, Colorado, Arizona, and South Dakota have seen the biggest gains, not all states have enjoyed positive numbers. For instance, Delaware prices have dropped by 4.8 percent in the last 12 months. Alabama also saw a drop of 4.6 percent for the same period. While the overall numbers are improving, some areas are still struggling and may not have hit the bottom yet.

Prices are still 27 percent below where they were in April 2006 when we were at the peak of the housing market. However, the good news is that out of the 100 large cities that were tracked, only 23 had declines in July. 27 cities had declines in June; a small improvement, but headed in the right direction.

What’s next?

While the numbers in the last few months have looked really positive overall and some dramatic increases have been seen, experts don’t expect those numbers to be as impressive in the coming months. The economy and people’s salaries are not growing fast enough for these types of numbers to continue.

The fact that we’re entering the low season for housing means that we can expect these numbers to decline in the next few months. When they do start moving upward again, experts predict a slower pace.

How to Determine the Real Value of Your Home

When it comes to estimating the true value of your home, you have to think and see like an appraiser. Here are some pointers…

Avoid These Mistakes
Here are Six of the most common areas where you can let your judgment slip.

  1. Outside – Curb appeal is one of the best ways you can boost the value of your home. If you have an unkempt yard with overgrown shrubbery, dry patches, and damage to exterior paint, you could lose up to 3 percent on the value of your home.
  2. Basic Systems – Adding on new structural features is probably not going to increase the value of your home. That said, a roof with leaks, discoloration, or in disrepair, should be replaced. A roof in full functioning order is more likely to help during a sale than a roof in disrepair.
  3. Basement – A recently finished basement with a bathroom can add about 2 percent to the value of your home. While basement space doesn’t count as much as first and second-floor space, a finished basement is a great addition to a home.
  4. Market – If some nearby homes are in escrow with a higher than normal asking price, it may be tempting to bump up your home’s value under the pretense that the local market is “hot.” Homes in escrow, however, are not considered during the appraisal process, as appraisers can only use sales of sold properties to determine value. It might be possible that these homes in escrow have agreed on a lower price not yet disclosed to the public. It may be worthwhile to wait until escrow closes, before you have your own home appraised.
  5. Remodel – You may have spent thousands on remodeling your built-in entertainment center, but that doesn’t necessarily add any value to your home. In the appraiser’s eye, remodeling that is not in keeping with house’s age—particularly renovations that are too trendy—can negatively affect your home’s value. Improvements that are timeless, like adding wooden cabinets or updating bathrooms, to name just a few, can add value to your home.
  6. Real Estate Websites – While using websites like Realtor.com, Zillow.com and Trulia.com are helpful tools in finding information about your property and the values in your area, they aren’t always accurate. Most of them collect data from other sources such as tax records and Multiple Listing Services from your local Realtors’ Association. They don’t take into consideration the upgrades (or possible damage on the other hand) the property has, or the location it’s in, and more importantly, the pride of ownership, that only a human can sense. These websites are a good for reference, but an appraiser or real estate agent will be more accurate.

Comparable Sales Method
Comparable Sales is the most reliably accurate method for determining the value of a home. Comparable Sales are recent sales of nearby and similar homes. While it’s not an exact science, the Comparable Sales method is more of an educated guess. To determine the market value of a house, look around your neighborhood, or in similar neighborhoods, for homes that are similar in age and size. The sales records of those homes are the ones most likely to reflect on the possible sale of your own home.

Contact your Realtor
Before jumping head first into an appraisal, contact your Realtor. Realtors show properties to potential buyers on a consistant basis. They’ve most likely seen all your comparable properties. In some cases, more than an appraiser has. A Realtor will have a fairly accurate estimate on your property’s value.

Put on your buyer’s hat
It’s always a challenge to observe your home with a disinterested eye. Especially if you’ve lived in your home for quite some time. Try to remember what it was like to purchase your home. You wanted the best deal. Value can be described as the most a buyer is willing to pay.

“Thank you Linda and The M & M Team!”

Linda was in constant communication with us throughout the selling process, emailing late into the night and even while she was away on vacation. Linda was easily accessible and was on top of things. Thank you Linda and The M & M Team!

Aristotle B.

Homebuilders Betting on Long-Term Housing Surge

With rising home prices, shrinking inventory, and record low mortgage rates, the homebuilding industry is finally picking up some steam. Investors are buying in to homebuilding stocks in unheard of numbers; stock shares in the homebuilding sector have surged nearly 50 percent, on average, in 2012.

The past five years have not been pretty for our nation’s homebuilders. But momentum has been growing in the housing sector, and the homebuilder’s confidence has reached pre-crash levels, according to the latest survey from the National Association of Homebuilders.

Homebuilding Stock Rebounds

The homebuilding rebound can be attributed to a couple of factors:

  • housing prices bottomed out and are now on the rise
  • orders for new homes have risen every quarter since the third quarter of 2011
  • pent-up demand
  • shrinking inventory
  • mortgage rates hitting consecutive record lows

Foreclosures have acted as a bottle neck for housing prices and inventory for the past five years. But now, investors have started scooping up foreclosed properties, so they can cash in on rental rates, or flip properties and sell them for a great profit. In cities where the housing crash devastated the local real estate market, investors have been purchasing foreclosed properties in volume.

Places that used to be flooded with foreclosures now have nothing available on the market. If a property happens to become available in these neighborhoods, it usually gets picked up right away with multiple offers.

From Neutral to Attractive

Many potential homebuyers who sat on the fence for the past few years are now jumping into the market. With growing demand and shrinking availability of previously owned homes, these homebuyers are hiring more homebuilding contractors. The pace of new starts has climbed to a seasonally adjusted annual rate of 760,000. The current pace is up 6.9 percent from housing starts in May and 24 percent up from June of last year.

Real estate analysts are predicting home building starts to increase to 1 million in 2013 and 1.4 million in 2015, wrote the Goldman Sachs Group Inc. in a report to their clients. In fact, Goldman Sachs raised their rating on the homebuilding industry from neutral to attractive.

“Over the last year a number of risks to the housing market have abated, giving us confidence that rising home prices will drive a 3-7 year up-cycle in the U.S. market,” wrote Goldman Sachs analysts.

Homebuilders who have weathered the recession having accrued little to no debt have the most potential to see huge earnings. Since new home supply will remain scarce throughout 2012 and 2013, contractors who are confident about growing business will be less likely to negotiate prices down; like they’ve had to do for the past couple years.

Pro Tips for Laundry Room Organization

Is your laundry room a dungeon of disorganized clutter? We’ve rounded up the best of experts’ advice on keeping your laundry room neat as a pin.

The SPACE Method
Julie Morgenstern lays out the SPACE method in her book Organizing from the Inside Out: Sort, Purge, Assign, Containerize and Equalize. Sort clutter based on frequency of use, necessity, summer essentials, and winter essentials. Next, purge anything that’s not essential, broken, or has a missing pair – like a single glove or a purse with a broken zipper. Using labels and baskets you can keep your essential laundry room items organized and beautifully stored. To equalize the space, make sure you tidy everything up each time you go into the laundry room. You may need to go through the SPACE method periodically to make sure clutter doesn’t creep back in.

Cleaning Supply Control
One of the biggest sources of frustration in the laundry room is having a place to keep all the cleaning supplies, like detergents, bleach, softeners, spot removers, and sprays. Rather than stowing them willy-nilly on top of the dryer or on the floor, get a caddy or rolling cart to keep your cleaning supplies organized and within reach.

Lost and Found Station
It’s inevitable that you’ll find hairpins, coins, and other miscellaneous items when you wash clothes. Set up a lost and found station using either a basket or a cup near your washer, so that you can easily toss loose items without throwing them or letting them accumulate on the floor. It’s nearly impossible to go through the SPACE method every day, but by setting up a designated lost and found station for loose items, you can make those SPACE method days a lot more efficient, besides keeping your room tidier.

Use Vertical Space
A common complaint in the laundry room is that there just isn’t enough space. When you need to air dry delicate garments or cotton shirts (which tend to shrink in a dryer), consider installing a hanging bar or a retractable clothesline as way to inexpensively give you more space to hang clothes. If you have space under a laundry room shelf, you can mount a bath-towel holder underneath and create ample space for hanging clothes. You can also hang a tension rod in between two walls to create extra hanging space.

Stain Chart
You may not remember all of your mother’s home remedies for removing stains, so making a stain chart that details the best methods for removing different types of stains can be a great way to expedite the stain removal process. Start with a comprehensive list of stains, laminate it, and post it in your laundry room where you can read it easily.

Stacked Washing Machine and Dryer
If you’re building your home or considering renovating your laundry room, it may be worthwhile to consider a stacked washer and dryer combination. The European-style set optimizes space, and is great for tight quarters or small apartments. Just because your laundry is small doesn’t mean that is has to be messy. Opening up floor space with a stacked washer-dryer allows for more organization with baskets, containers, and hanging racks, depending on how you design the space.

“Ryan is the best!”

Ryan is the best! We chose a very complicated sale…which is par for the course for me and Ryan did an excellent job of keeping me up to date with each step of the process and reminding me of the light at the end of the tunnel. He was/is always very responsive to my questions and concerns and made buying my first home a great experience! When the time comes to “upgrade” I will certainly be calling on Ryan again for his expertise!!

Thanks Ryan for all your help and recommendations!!

Stephanie J.

Nationwide Home Prices Officially on the Rise

Now that home prices have bottomed out, they have finally started rising, much to the relief of current home sellers. Across the nation, home value averages increased 0.2 percent from last year to a median price just under $150,000. The increase marks the first annual rise since 2007 when the housing market tanked, reported real estate listing site Zillow. (Zillow’s Home Value Index enables potential or current homeowners to look up the median home price for a home in their neighborhood or city.)

Even in the short term, market watchers have noted an increase in home values. Since the first quarter, home prices have risen 2.1 percent on average. June’s numbers showed four consecutive months of rising home values. Despite the increase, home values remain well below their estimated values in the early 2000s, which is good news for home buyers and property investors looking for a bargain.

Signs of Recovery Building Steam
The once tenuous housing recovery seems to be building steam even amid poor job reports and an unemployment rate of around 8.2 percent. Zillow’s chief economist Stan Humphries believes there is light at the end of the tunnel. “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own,” Humphries said.

Moreover, home price indexes from the Case-Shiller organization and the Federal Housing Finance Agency recorded gains in the first quarter of the year. Although these indexes use a different set of data from the Zillow index, they reported a similar level of increase. In April, home prices rose 1.3 percent across 20 major markets. The largest market gains were in Phoenix, one of the hardest hit cities in the housing crash. Leading the nation, home values in Phoenix jumped up 12 percent from last year’s home price index to a new median price of $136,200.

Time to Go Shopping for a New Home
While the housing recovery may have gotten off to a sluggish start, now is the time for potential home buyers to start shopping. For the past two years, the housing market would sputter along, gaining value in one quarter, only to slip in the next quarter. However this year, a markedly different pattern is emerging with consecutive gains in both home values and home sales. As price indices record further growth, any lingering doubt that the housing market hadn’t bottomed out will diminish, Humphries said.

Foreclosures Present Greatest Threat to Housing Recovery
Perhaps the biggest risk to the budding recovery is foreclosures. The pace of foreclosures will presumably speed up as the federal mortgage settlement agreement starts to take effect. Under the new agreement, banks are incentivized to expedite the foreclosure process, which translates into more homes on the market at lower than average values, Humphries said. The good news is that demand is expected to rise as foreclosed properties enter the market in greater numbers.

Beyond rising home values, other signs contribute to an overall positive outlook on the housing market. The homebuilding industry is becoming more attractive to investors as demand for homes from first-time buyers and property developers couples with a shortage of new housing. Also, supportive government initiatives like the new Consumer Financial Protection Bureau are helping overhaul the mortgage market that was partly responsible for the crash in 2008.

Newest Evidence of Recovery: New Construction Surges

Construction spending rose in May, the latest sign of the housing sector pulling itself up by its bootstraps. The amount spent on construction work and supplies increased from April to May by 0.9 percent, the highest since December 2009.

According to new data released by the U.S. Census Bureau, at an annual rate of $830 billion, U.S. construction in May grew 7 percent from the previous year. Many view the upsurge in construction spending as a sign of the growing health of the housing market, because it implies that lending is more readily available.

Home Permits Rise Again
As cash begins to flow within the construction industry, builders will apply for permits in growing numbers. In May, the number of permits applied for by contractors reached its highest since September 2007. A jump in home-building permits contributed to an economic growth of 0.3 percent, reported Bloomberg. The increase surpassed estimates in April that the economic outlook would grow just 0.1 percent.

This news corroborates statements made by Pat Newport, a housing market analyst for HIS Global Insight. “Permits are a key number. It tells us that housing construction numbers will get better and that means more jobs,” Newport said.

Building permits represent future construction activity, and the recent highs, combined with low home prices and record-low mortgage rates, encourage the housing market to leap full throttle into recovery.

Private vs. Public Construction
Construction work, a barometer for the overall U.S. economy, happens on various levels: private, public, residential, and nonresidential. At a seasonally adjusted annual rate of $560.4 billion, a 1.6 percent increase, private construction spending in May surged further than April estimates. For public construction, the annual rate fell 0.4 percent, as educational and infrastructure construction projects dropped 3 percent and 0.5 percent, respectively.

Growing demand for new homes contributed to the 3 percent increase in residential construction spending in May. Multifamily projects, like apartment complexes and condominiums, jumped a surprising 6.3 percent during the month, while single-family homes rose 1.8 percent. As renters and boomerang kids enter the next phase of their lives, demand for new homes and condos is expected to rise.

Other Indexes Point to a Slow Recovery
While the construction sector enjoys resurgence, economists are still wary of a slow recovery. Chief economist for the NAHB, David Crowe, said, “Right now, we’re half of where starts and permits would normally be and less if you consider this a recovery period.” Despite the harsh reality of a long, slow recovery, Crowe admits, “things are improving.”

When the economy crashed in 2008, the real estate industry was its hardest hit victim. Now, construction spending is rising along with demand for new homes. Until hiring and the jobs market propel the economy into a full U.S. recovery, the housing market promises better economic times.

5 Ways to Create a Fabulous Backyard Space

Do you ever watch those home and garden shows and wish your back yard could look like that? Or maybe you flip through magazines and dream of creating something picture-worthy. Creating a fabulous outdoor space is not as difficult as you might think. You just have to know what you want, and start with a basic idea. Here are some suggestions to help you create an oasis in your own back yard.

Make an Outdoor Living Room

Make your outdoor area an extension of your home. Look for comfort and durability to create an area where you will want to spend time. Instead of just having a table and chairs, design a living area with comfortable chairs and a sofa. Group them into an arrangement that invites conversation. You can find soft cushions in all-weather material that will be comfortable for spending hours outdoors.

Add items like indoor/outdoor rugs and décor, along with a coffee table or end tables. You can even find televisions for the patio. You can create a second living room as elaborate as your budget will allow.

Change the Fabrics

If you already have an outdoor living space, but want to spruce it up without spending a lot, change out the fabrics or add more. You can cover your old fabrics or add cushions to wicker or metal furniture. Make or buy pillows just like you would use on a sofa, to add a pop of color.

You can also add draperies to your patio if you have a roof. Attach them with hooks and gather them together when you want the area to feel open. Let them hang loose when you want a cozier atmosphere.

Add a Storage Bench

If you have unsightly but necessary items in your outdoor area, buy a storage bench to store them. You can hide your watering hose or gardening tools and add seating at the same time.

Create an Outdoor Kitchen

Another area in your home that is used often is your kitchen. Why not take that outside and enjoy cooking your meals in the open air? From refrigerators to dishwashers, you can find every indoor kitchen appliance in an outdoor format. If you don’t want to be that elaborate, you can buy a nice grill with warmers or burners to cook a complete meal.

Add Lights

Something as simple as string lights can transform a patio into an outdoor party area. You can also buy sconces or candles to create mood lighting. This is a simple but effective way to add warmth to your outdoor area. If you have a closed area, you can add electrical lights with a chandelier or a unique lighting fixture.

Creating an outdoor oasis can be as elaborate and expensive or as simple and cost-effective as you want it to be. Design your outdoor space to be an area where you want to spend time. No matter how nice an area looks, it will be unused if it does not fit your personality and lifestyle.

How to Prepare Your Home for Any Emergency

Emergencies can happen at any time in your home, but you can be prepared by following some basic tips. You will lessen the impact and prevent many issues by planning ahead of time to keep your family safe.

Prep Your House

Prepare yourself with some inexpensive equipment set up around your house and you can prevent many issues. Here are a few items that are worth spending your money on.

Fire extinguishers

Keep one in the kitchen and one on any other level of your home. Most residential fires start in the kitchen, so having one handy can keep it from getting out of control. If you live in a two-story home or have a basement, put another extinguisher on that floor. Check it every year and replace as needed. Buy one that has all three ratings: A, B, and C. Ratings tell you what types of fires the extinguisher will put out, such as electrical, combustibles, and flammable liquids.

Smoke Detectors

Keep one of these on each level of your home. Buy at least one battery-powered detector if you use hard-wired ones. If the electricity is off, you can still be alerted to a fire before it gets out of control.

Carbon Monoxide Detectors

You can buy these in combination with smoke detectors, but most experts recommend buying a separate device. These also need to be placed on every level of the home, ideally near bedrooms, to wake up someone should it go off during the night.

Water Alarms

Buy wireless water alarms that can be placed near water heaters and other places where water would pool if there is a leak. They will sound if there is any moisture present before there is severe water damage.

Create an Emergency Tool Kit

Keep certain items on hand that can help prevent an issue from becoming a bigger disaster. Create a tool kit that is kept in a handy, easy-to-remember location. Here are some items you should provide in the kit.

-Duct tape. This will stop water leaks temporarily, until you can get the water shut off and the leak repaired. There are many other uses for it, too.
-A multi-tool. Choose one that includes pliers.
-Work gloves.
-Nylon rope.
-Lantern. Buy a battery-operated one rather than using candles. Do not keep the batteries inside the lantern, but have fresh ones in the kit.
-Fishing line. This will work when you need something thinner than rope.
-Baby wipes. These will clean your hands or other work surfaces.
-Vinyl tablecloth. When you need a clean work area, this is the ideal solution.

You cannot predict emergencies that can happen in your home, but you can be prepared by keeping a few gadgets on hand and assembling an emergency tool kit. Take the time to protect your home from disasters with these suggestions, and let everyone in your home know about them and when and how to use them. What other tips or suggestions do you have to protect your home? Let us know in the comments.