National Outlook

The Nation's Hottest ZIP Code Is in ... Watauga, TX?! |®

Every month, we take a look at the nation’s hottest housing markets. But once a year, we get a little more granular. After all, when people are house hunting, it’s all about the neighborhood, right? So which specific hoods are buzzing with real estate action right now? The® economic team sifted through our data to pinpoint the nation’s hottest ZIP codes.


Real estate market looks hot this summer

Good news in employment has kicked the real estate market into high gear this summer.  The numbers say it's a great time to sell a home and demand is high.  In the latest figures available, June sales of existing homes climbed 5.1 percent, the third month in a row that sales exceeded 5 million homes.

Home sellers are finding that prices are up nearly 8 percent in the last 12 months. In many markets this is because there just enough homes on the market to meet demand. So prices are being nudged up.  Rising prices brings some cheer to the market because it means that fewer people owe more on their homes than the home value. In fact, the number of people upside down in their mortgages has dropped 19 percent in the last year.  For some homeowners, this could mean it's time to go back in the market and sell.  Meanwhile for buyers, mortgages are still very low.  Most 30-year fixed rate loans have been just above 4 percent this summer.  But that was a slight increase from the dramatic lows of 3.59 percent -- those rates have been offered for more than four years.

Confidence and low interest rates put buyers in the market for their first homes. About 32 percent of homes sold in May were to first-time buyers. That is up from 27 percent a year ago, according to economists.

Low supply: Act fast..  With supply of homes for sale down, buyers have to focus on their goal, making sure to get pre-approved for a loan, and be prepared to make a deal. As interest rates make a slow climb up, people looking for a house to become their home should move quickly. Even a 1 percent rise in the interest rate could slash buying power. Interest rates moving up 1 percent means that a buyer once approved for $500,000 might only be able to spend $460,000. So if your heart is in a home, acting quickly is crucial.

Mortgages are available

New data by lenders shows that some consumers overestimate what they need to qualify for a home loan. Two-thirds think they need a credit score over 780, which is considered excellent, but a credit score of 660 or above is considered good. Some 36 percent think they need 20 percent down, but this is usually not the case.

Great News for Distressed Home Owners

I just heard from Ed McFerran at MBS Law that the Mortgage
Forgiveness Debt Relief Act of 2007 has been extended by Congress.  What this means is that if Congress had not extended the relief act homeowners would have to start paying income tax on the
portion of their mortgage that is forgiven in a foreclosure, short sale or a
principal reduction.  For example if a homeowner owes $400,000 on their home and it sells for $300,000 at foreclosure or a short sale they could owe income tax on the difference of $100,000, the “deficiency.”  At a 25% tax rate that could be a tax liability of $25,000. Considering that these
homeowners are already in distress and probably do not have the money to pay this tax anyway this is a "makes sense" provision of the tax code and is a benefit to distressed homeowners to help them get back on their feet.


If you have questions or concerns concerning how this may
affect you or anyone you know please feel free to contact me for detailed
discussion of the implications of the debt relief act.


Here is a copy of the e-mail from Ed McFerrin announcing
the tax relief provision.




This will probably be my shortest email to you this
year.  The fiscal cliff legislation is
157 pages long.  Section 202 that addresses
an issue important to those of us involved in assisting distressed homeowners:
income tax on debt forgiven.


At this juncture the legislation awaits the President’s
signature, but we are confident that the law that precludes certain income
taxes from those homeowners that sell their property “short” has been EXTENDED
ONE MORE YEAR until December 31, 2013. In short, most homeowners will not have
any tax to pay when they do a short sale. 


All of you can breathe a sigh of relief as this is really
important to those of your sellers involved in short sales who will experience
Debt Forgiveness.

Perfect Storm?

Some might call this a perfect storm: shrinking inventory, historically low interest rates and in some areas, rising prices. Consumer confidence is up across the board so it’s no surprise to feel genuinely  optimistic about our rebounding housing market.

August marked the third consecutive month where the number of closings topped figures unseen since September 2007. Pending sales jumped up from a year ago and there’s double-digit increases in the volume of mutually accepted offers. If there’s such a thing as a win-win opportunity, the time is now!

For sellers, it’s especially important to price and position your home correctly from the get go. Low inventory levels provide a front-stage opportunity for your home to get maximum attention when it goes on the market.

Prospective buyers are encouraged to seek pre-approval on a loan and become very familiar with conditions to get a home in today’s market. There's a lot of competition for homes now, so being ready to react when you find the right one for you is mission critical.

Times like this emphasize the importance of consulting your trusted real estate advisor. Unrealistic expectations for both buyers and sellers cause frustration, and can be avoided when you are properly informed about how the local market is adapting to the shift taking place. There are still fantastic values to be captured. Give me a call. I’d love to hear from you.

The State of America’s Housing Market a look at the big picture

With spring on the horizon, many people are beginning to think about selling their homes. Even those not currently considering a move are curious about the state of the American housing market.

The information we are sending this month is intended to give you an overview of what’s going on in the national housing market. The statistics offered on the first page provide a glimpse into current trends and predictions for the year, while page two delves into the financing choices of recent homebuyers.

Here is a quick review of today's More than 80% of Americans view housing as critical to the nation’s economic recovery, and nearly 70% feel that a presidential candidate’s position on housing will be an important consideration in the voting booth.1 Whether you’re thinking of buying, selling or are actively involved in the market, the statistics below will give you a clearer perspective of the state of the market.

Current National Trends in Housing

  • 70% of Americans view owning a home as part of the American dream.2
  • 62% of consumers feel that buying a home in the current market is a good investment over the next 10 years.3
  • $190,000: Median home price,4 up from $170,000 the previous year 5
  • $155,000: Median home price of first-time buyers 4
  • $219,500: Median home price of repeat buyers 4
  • Homeownership rate rose to 66.1% in Q3 2011, up from 66.0% in Q2 2011.
  • 6 95% of metro areas are expected to see home prices rise in the next year.7 75.1% of homeowners state that their home defines their identity.1 

Buyer Overview

  • Buyers searched for a median of 12 weeks and visited 12 homes before they found the one they purchased.4
  •  27% of homebuyers, including 60% of first-time homebuyers, said that the desire to own a home of their own was the biggest reason they bought.4
  • First-time homebuyers comprise 37% of the market.4
  •  64% of all buyers are married couples,18% are single women, 10% are single men and 7% are unmarried couples.4
  • $80,900: The median household income of homebuyers.4
  • 84% of buyers purchased a previously-owned home and 16% purchased a new home.4

 Seller Overview

  • 35% of homes were on the market less than 2 months before they sold.6 The average time a home was on the market was 9 weeks.4
  • 66% of sellers were first-time sellers.4
  • 39% of sellers did not reduce the asking price,
  • 26% of sellers reduced it once and 35% reduced the price two or more times.4

Sources: 1. Move, Inc. 2. Wall Street Journal, October 4, 2011 3. Bank of America: Mortgage Index Study, December 8, 2011 4. National Association of REALTORS® Profile of Home Buyers and Sellers 2011 5. National Association of REALTORS® Profile of Home Buyers and Sellers 2010 6. National Association of REALTORS® 7. CNN Money, November 4, 2011

Financing the Home Purchase Talk to Your Real Estate Professional Today! While these figures provide an overview of the national market, keep in mind that your local market may differ. Consult your trusted real estate professional for more information about your local market.

  • The average rent on vacant properties is 28% higher than the average mortgage payment.1
  • The estimated median monthly mortgage principal and interest payment of a first-time homebuyer was $794.2
  • The estimated median monthly mortgage principal and interest payment of a repeat buyer was $1,006.2
  • 94% of buyers financed their home purchase, including 96% of 25-44 year olds 82% of 45-64 year olds 66% of buyers 65 and older 2
  •  35% of buyers had a down payment of 20% or more.2
  • 74% of consumers who plan to buy a home in the next 12 months will use their personal savings for a down payment.3
  • The average buyer financed 89% of the home purchase.2
  • 94% of first-time homebuyers chose a fixed-rate mortgage.2
  • 54% of first-time homebuyers used a low down payment FHA mortgage.2
  • Mortgage rates are expected to rise and reach 4.5% by mid-2012.4

Sources: 1. Forbes, November 14, 2011 2. National Association of REALTORS® Profile of Home Buyers and Sellers 2011 3. Bank of America: Mortgage Index Study, December 8, 2011 4. National Association of REALTORS®

Houses are on Sale

Buyers throughout the U.S. are finding attractive home prices, and some are able to take advantage of significant markdowns on distressed properties. The extent of the discount varies widely by region, but according to the most recent data, foreclosures sold for 26% less than similar homes in the second quarter of 2010. Properties in default, many of which became short sales, had their prices reduced by an average of 13%.

Promising Signs

Even in the midst of crushing job losses and a severe recession, both new and existing home sales managed to stage comebacks in the middle of 2009. Although home sales lost some ground late in 2009 and early 2010, housing markets may have turned a corner.

The rebound in demand was aided by falling home prices, the federal tax credit for first-time homebuyers and Federal Reserve purchases of mortgage-backed securities to keep interest rates low. Depending on the measure used, the peak-to-trough drop in monthly home prices was anywhere from 13 percent to 32 percent. In many markets, prices fell by half or more—erasing the record run-ups earlier in the decade. Meanwhile, the federal tax credit for first-time buyers, initially set to expire in fall 2009, was renewed, expanded to include repeat homebuyers, and extended to contracts signed by the end of April 2010. Finally, interest rates on 30-year fixed mortgages averaged only 5.04 percent in 2009 and 5.00 percent in the first quarter of 2010.


As a result, the first-time homebuyer share of sales soared to 45 percent in 2009 as households previously boxed out of the market jumped at the dramatically lower prices. Bargain hunters buying up troubled properties largely drove the gains in existing home sales last year. The National Association of Realtors® estimated that the share of existing home sales that were distressed in 2009 averaged 36 percent per month, topping out at fully 49 percent in March.


For a complete review of the State of the Nation's Housing see the full report online