In-house innovation…

Innovative Home Products Poised to Hit Market

RIS Media | February 9, 2013 | link

innovative_kitchen [1](MCT)—In the market for a hot-water-dispensing refrigerator? That was just one of the innovative and unusual products on display last month at the International Builders’ Show in Las Vegas.

The annual event, put on by the National Association of Home Builders, serves as a massive showcase for new ideas and technology for the home.

Here’s a roundup of some that are vying for “how did we ever live without it” distinction:

In one of the notable kitchen offerings, General Electric Co. brings hot water to the refrigerator door. The new line of Cafe French-door models can heat 10 ounces in less than two minutes. Those hoping to save steps to the microwave, though, will have to wait until the doors debut in May.

For a high-tech twist on singing in the shower, Kohler Co.’s Moxie shower head and wireless speaker system plays up to seven hours and has wireless range of 32 feet. Magnets secure the speaker to the shower head, making it easy to pop out when it’s time to recharge the lithium ion battery.

Retro sinks’ colors got a redo from Kohler, too. No more avocado or harvest yellow; the new hues, developed by designer Jonathan Adler, include Annapolis Navy, Piccadilly Yellow, Greenwich Green and Palermo Blue.

A skylight that opens using solar power and closes automatically if it senses rain seems like a bright idea. The no-leak solar powered Fresh Air skylight by Velux is eligible for a 30 percent federal tax credit.

Ever wished for a little more light on the subject? Under-cabinet task lighting can be moved around with Halo’s track system and magnetic LED pucks from Cooper Lighting.

Glass stairs took another step toward practicality with the recent addition of decorative treads by Innovative Building Products. The treads, called ceramic frits, add traction.

Responding to consumer demand for better-organized homes and storage, ClosetMaid moved out of the bedroom closet. On display were systems for specialized craft rooms, the laundry room and the garage.

Building pest control into the walls of new homes is an interesting idea. Taexx’s Tubes in the Wall built-in pest control system includes scheduled service that can take place while the homeowner is away. This may not have been the sexiest display on the showroom floor, but it did feature a man dressed up as a giant pest.

The return of home equity…

Americans are tapping into home equity again

Diana Olick | NBC News | February 8, 2013 | link

Nearly 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic, and yet home equity lines of credit are suddenly on the rise again.

During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone.

“Home prices are definitely a factor” in the recent rise home equity lines of credit, said Brad Blackwell, an executive with Wells Fargo Home Mortgage. “As they increase, people have more available equity.”

Blackwell also pointed to increased consumer confidence, meaning borrowers now feel better about their ability to repay these loans. Both factors fueled a 19 percent jump in originations of home equity lines of credit at the end of last year, according to Equifax. In 2008, as housing was crashing, home equity line originations dropped 55 percent.

“Nationally we’ve seen a 31 percent increase in HELOC’s year-over-year,” said a spokesperson from JPMorgan Chase.

With home prices up 8 percent year-over-year in December, according to the latest reading from CoreLogic, homeowners are regaining home equity at a fast clip—1.4 million borrowers rose above water on their mortgages through the end of September. That number likely increased as price appreciation accelerated toward the end of the year.

Does this mean a return to the reckless equity withdrawals of the housing bubble? Likely not.

“I would guess that most of the current home equity line borrowing is quite prudent. We know that it is being very conservatively underwritten with plenty of equity,” said Guy Cecala, editor of Inside Mortgage Finance.

While it is too early to say exactly what borrowers are spending this new cash on, anecdotal evidence shows borrowers are largely sinking the money back into their homes.

“We are seeing more responsible uses today, like home improvements, education expenses or other major expenses that would be a more responsible use of a customer’s home equity,” Blackwell said.

The average home equity line in October of 2012 was just below $90,000 compared to October 2006, when lines averaged just over $100,000, according to Equifax.

Despite the recent surge, volume is still down dramatically from the height of the housing boom. Borrowers in 2012 took out a collective $7.2 billion in home equity lines through last October, compared to just over $28 billion in 2006.

The numbers are expected to go up in 2013, not just because home prices are rising, but because interest rates are rising. With higher rates, borrowers will not want to give up their rock-bottom fixed rates to do cash-out refinances; rather, they will turn to home equity lines instead. While these lines usually carry variable rates, banks are now offering new products with fixed rates. Wells Fargo recently promoted a line of credit where a portion of the loan is fixed for up to three years.

“We clearly want to lend, and we want to lend to the types of needs that our customers have,” Blackwell added.

Representation for refis…

Homeowner Refinancing Act Resubmitted by Senators Menendez and Boxer

Jann Swanson | Mortgage News Daiy | Feb 7 2013 | link

Two U.S. Senators have reintroduced legislation to help homeowners refinance into lower interest mortgages. The bill, The Responsible Homeowner Refinancing Act of 2013, removes the barriers preventing the Fannie Mae and Freddie Mac borrowers from refinancing their loans at the lowest rate possible.

The legislation, introduced by Robert Menendez (D-NJ) and Barbara Boxer (D-CA) had failed to pass the 112th Congress.   If passed it would direct the GSEs to require the same streamlined underwriting and associated representations and warranties under the Home Affordable Refinancing Program (HARP) to new servicers who now face stricter underwriting guidelines fear greater risk from putbacks and loan repurchases than do the current servicers who already have the risk.  This would level the playing field and unlock competition between banks for borrowers’ business.

When FHFA recently expanded HARP eligibility to underwater borrowers, they continued to require lenders to distinguish between borrowers with less than 20 percent equity and greater than 20 percent equity in ways that left higher equity borrowers with greater costs and administrative burden.  Although the GSEs lowered up-front fees for HARP loans with less than 20 percent equity, they left them in place for those with more equity.  This created the economically indefensible situation in which borrowers with significant equity in their homes and presenting lower risk could face steeper costs in refinancing than borrowers with no equity whatsoever and therefore higher risk. These additional fees can be as high as two percent of the loan amount, or an extra $4,000 on a $200,000 loan.

This bill prohibits the GSEs from charging up-front fees to refinance any loan they already guarantee, which is also in the best financial interests of the GSEs and taxpayers.

GSEs use Automated Valuation Models to determine home values without the need for slow and costly manual appraisals. However, borrowers who happen to live in communities without a significant number of recent home sales often cannot use these models and are forced instead to pay hundreds of dollars for a manual appraisal for a HARP refinance.

This bill requires the GSEs to develop additional streamlined alternatives to manual appraisals, eliminating a significant barrier and reducing cost and time for borrowers and lenders alike, especially in rural areas.

HARP already restricts participation to borrowers who are current on their loans and have demonstrated a commitment to making their payments on time – even in the face of loss of income or employment. There is thus no reason to require proof of employment or income for these loans, particularly given that the GSEs already retain the risk which will only diminish with lower interest rates. This bill eliminates employment and income verification requirements, further streamlining the refinancing process and removing unnecessary costs and hassle for lenders and borrowers alike.

According to the CBO, the bill pays for itself through reduced default rates on GSE loans, which saves taxpayers money.

Finally, the bill extends the HARP program for one additional year beyond its scheduled expiration of December 31, 2013.

Under HARP an average homeowner saves about $2,500 per year. This bill would increase the amount they could save and expand refinancing opportunities for millions of eligible borrowers.

The lowdown on land…

Educate your clients before they buy or sell land

3 places to look for hidden deal breakers

Alisha Alway Braatz | Inman News | Wednesday, January 23, 2013 | link


<a href="" target="_blank">Developer</a> image via Shutterstock.Developer image via Shutterstock.

Acquiring land and building houses, barns and businesses used to be a lot easier. Take the land runs of the 1890s. All a person really needed was a fast horse and hammer.

Nowadays, there are endless hoops to jump through, it takes a lot of money, and there are 12,862 rules. Helping a client buy or sell vacant land isn’t as easy as you might think. And you better think.

Buying land and building on it isn’t straightforward. Neither is selling bare land (simple as it may sound).

Thus, “Buyer beware!” is a phrase lazy Realtors repeat in their minds as they overlook three essential and elemental areas in which to educate their client: covenants, conditions and restrictions (CC&Rs); architectural review committees (ARCs); and development costs.

CC&R deal breakers

If you don’t do it already, start reading the CC&Rs of the neighborhoods in which you sell. You will learn invaluable information.

CC&Rs don’t just cover whether or not a trailer can be parked in a driveway — they can specify just about anything.

A few interesting ones I’ve run into include a ban on wood and wire fencing; no above-ground swimming pools or hot tubs allowed; and a rule against leaving your garage door open ever. Like, ever.

There are also age restrictions in some neighborhoods, leasing and rental guidelines, and a whole litany of fines, should any of the rules be broken. Navigating your clients through the treacherous CC&R deal breakers is a must. Yes, they should be reading all the material themselves — but you are also getting paid a pretty penny to help them finish a successful transaction.

Dramatic ARC

I love and hate ARCs, equally.

I love that a good architectural review committee can protect me from a purple home with neon yellow gutters, but I am irritated at having to turn in notification that I plan on staining my fence.

For the most part, ARCs are good things — unless you are building a new home in a new subdivision. Then, urrrghhh. What a headache. Especially if it is a private gated community.

Even if your job as Realtor officially ends with your clients’ purchase of a lot, it’s simply good form to prepare them for the impending and inevitable drama. But maybe they are the kind of people who like a good community barn-raising!? One can only hope.

Put a house on it

Finally, development costs. I know, I know — this is kindergarten stuff, right? Exactly. It’s the simple stuff that always gets overlooked because “Doesn’t everybody know it?” Hardly.

Assume that your buyers (and sellers) know nothing. Even if they claim to be real estate connoisseurs, write everything down, keeping a log of conversations and having your clients sign off on, well, everything.

But back to those pesky development costs. When dealing with bare land, be super-duper sure of its zoning. Check on the long-range land use plans if it is near the city center or on the edge of town. Is it in a flood plain? What about utilities? And a land survey? Or a soil sample?

I’m not saying you have to become a developer yourself, but you need to sit down with the buyers and discuss access, easements and building envelopes especially if the bare dirt doesn’t have utility access already.

Once they own the land, then they gotta put a house on top of it (usually). Add it all up, and is it really realistic?

I’ve seen too many deals gone bad simply due to the kindergarten stuff. So collect your blunt-tip scissors, Elmer’s Glue and the grape smelling Magic Marker, and get down to business.

Not only will you learn a little bit yourself, but you’ll be reinforcing why you are a professional Realtor and not just a part-time chauffeur.

Sellers holding strong…

Luxury Sellers Hang Tough on Prices

RIS Media | January 17, 2013 | link

R [1]Even though the time it takes to sell a luxury property has increased to as long as 260 days in Chicago, 287 in Miami and 197 nationally, overall, fewer sellers are cutting prices.

Wintertime sluggishness has slowed luxury markets across the nation. Days on market have been increasing in nearly every major market tracked by the Institute for Luxury Home Marketing, and inventories are at a seasonal low, down from 27,600 properties in June to 18,400 in January.

Rather than falling with the end of the summer buying season, low inventories have placed upward pressure on prices, which have risen from a median of 1.11 million in September to 1.23 in January, according to ILHM data.

Perhaps as a result of strong prices, sellers are not responding as they normally do in the winter by cutting prices to generate interest among buyers. In fact, fewer are reducing prices today than when days on market were lower last summer.

The percentage of homes on the market that have lowered their asking price at least once over the past 90-day period has fallen 10 percentage points since the end of the summer, from 31.4 percent of properties to 24.4 percent. This statistic illustrates how many listed properties may be behind the “price curve” –listed at a price above what the market is willing to pay for similar properties.

Even in strong seller’s markets, the percent price decreased will be 10-12 percent, so some repricing of individual properties is common in any market. In weaker markets, this value begins rise into the teens, 20 percent, 30 percent, and higher. Percent price decreased is an insightful gauge of demand levels in the residential housing market.

The National Association of REALTORS® reported that sales of luxury homes spiked in the final months of 2012 as high-end homeowners rushed to take advantage of lower tax rates before January 1.

Many sellers wanted to cash in on their homes before a widely expected capital gains hike — to 20 percent from 15 percent — that was part of the fiscal cliff budget deal. According to the National Association of REALTORS® (NAR), sales of homes valued at $1 million or more spiked 51percent in November compared with a year earlier.

The Good News: You Can Save on the Close

Strategies to help defray real estate closing costs

REThink Real Estate

Tara-Nicholle Nelson | Inman News | January 24, 2013 | link


<a href="" target="_blank">Cash to close</a> image via Shutterstock.Cash to close image via Shutterstock.

Q: I just finished the process of applying for a home loan with a well-known local mortgage brokerage. I was told that the only loan I could qualify for with my credit, income and $10,000 for a down payment was a house purchase price of $310,000, with a 3.5 percent FHA loan.

I was blown away to see that the broker listed an additional 4 percent in closing costs, which was almost $11,000 by itself, so that the total cash I’d need to put down to close on a house would be approximately $22,000.

What are normal closing costs, based on an approximate loan amount of $300,000? I feel like I’m getting scammed; should I compare lenders? This is so complicated!

A: It’s true — in all the talk of down payment and homebuyer education, closing costs get too little ink, given their size and power to make or break any buyer’s deal. Here’s what you need to know.

1. The fees you’ve been quoted are not bizarre or red flag-waving. I don’t have a copy of your good faith estimate, but I can tell you that the closing costs you’ve been quoted do seem right in the normal range for your area.

First off, Federal Housing Administration loans have higher-than-normal closing costs, ranging around 3-4 percent on average (including meaty fees for private mortgage insurance, which are often rolled into the overall mortgage, just so that you don’t have to pay them upfront). At lower purchase price amounts than yours, it’s not bizarre for closing costs to run as high as 5 or even 6 percent; at higher price points, they can be a bit lower.

Additionally, you should be aware that there are numerous line items included in closing costs that have nothing to do with your loan, and that render the closing cost quote you have a tentative estimate only (though most mortgage brokers usually estimate on the high side).

For example, at closing you’ll have to pay prepaid interest on your mortgage from the date of closing through the end of that month — if you close early in the month, that prepaid interest amount will run higher than if you close near the end of the month.

As well, the city of Oakland, Calif., will charge a hefty transfer tax of $14 per thousand dollars of the purchase price, which is customarily split 50/50 between buyer and seller. That tax, by itself, is more than $4,000 on a $310,000 purchase price, so would represent at least $2,000 of the $11,000 you’ve been quoted.

2. Strategies exist that might bring your closing costs down. Talk with your mortgage broker about whether there are any first-time-buyer or low- to moderate-income homebuyer programs offered in your city, county or state that might help defray some of your closing costs or otherwise help you stretch the cash you currently have saved for your down payment.

Also, talk with your real estate broker or agent about the prospect of getting your eventual home’s seller to pay your closing costs. FHA guidelines allow sellers to give buyers up to a 6 percent closing cost credit at the time of sale. Of course, whether you can negotiate such a deal is highly situation-specific. The individual selling the property you want to buy has to sign off. One way to boost your chances of finding such a situation is to look at homes listed slightly below the price range you would otherwise prioritize. Your agent can give you more insight on whether this is common on your local market.

Finally, ask your mortgage broker (and get a second opinion on) whether, with 5 percent down, you might actually be able to get a conventional (non-FHA) loan with lower closing costs. If you’ll have to come up with more than 6 percent to get an FHA loan, you might be able to find a non-FHA loan with lower closing costs and negotiate, say, a 1 or 2 percent seller closing cost credit and make the transaction happen with an overall lower amount of cash to close.

3. It’s never a bad idea to get a second opinion. While I can vouch that the closing costs you’ve quoted are not at all in the “scam” realm of things, based on the facts you’ve provided, feeling like you’re getting scammed is not a good way to start off the relationship with your mortgage broker-to-be. It’s essential that you not feel this way throughout your transaction.

Did your mortgage broker walk you through these fees or provide you with links or other documentation to help explain these fees? If not, you might consider talking with one or two other mortgage brokers, in any event, to find one who is willing to sit with you, explain and document such issues until you feel comfortable.

In fact, my favorite mortgage broker is often willing to sit down and go over another broker’s good faith estimate and explain it and any differentials between hers and the other broker’s — I’ve seen her do this multiple times, never criticizing the other broker’s estimate or calling him a fraud. That said, because of her extreme commitment to educating borrowers until they are completely clear, I’ve seen a number of them switch to her despite the fact that she said they were getting as good a deal from the other guy as she could offer them.

Consider doing this: Get referrals from friends, relatives and your agent to the mortgage brokers they love. Ask each broker to give you a good faith estimate, and then ask them to go over theirs and another broker’s with you. In the process, you’ll certainly find a broker who has the tone, style and trustworthiness you’re looking for.

The Good News: Positive Outlook

Despite Economic Uncertainties, “Housing Market is Healing”

Jann Swanson | Mortgage News Daily | Jan 15 2013 | link

Freddie Mac’s monthly economic outlook commentary for January looks principally at consumer attitudes which it says have remained “fairly resilient despite the ‘fiscal cliff’ drama that has played out.”  Still that confidence remains historically low three-and-a-half years into the economic recovery, but it is up from its Great Recession low on the Conference Board’s consumer confidence index.  The Outlook says, “As consumer attitudes on the economic outlook improve, more potential homebuyers will emerge and feel financially secure in making an offer to purchase a home.  Over the first 11 months of 2012, home sales were up 9 percent from the same period of the prior year, and we project a similar gain in sales for 2013″.

Business owners and managers have a less rosy view of the nation’s business outlook. The National Federation of Independent Businesses reported deterioration in its business optimism index at the end of 2012, with the November and December index levels the lowest since 2009, highlighting worries among small and mid-sized business owners about the health of the economy. Such concerns may retard hiring in the first part of 2013 until the uncertainties of the fiscal debates are behind us.

Just how much does policy uncertainty weigh down the economy? The Economic Policy Uncertainty Index, based on research by economists at Stanford and the University of Chicago, is constructed using estimates of news coverage about policy uncertainty, provisions in the tax code set to expire, and dispersion across professional economists’ forecasts of economic conditions.  This research shows that increases in policy uncertainty precede declines in economic growth and employment. For instance, increases in policy uncertainty equal to the increase observed from 2006-2011 could cost the US economy up to 2.3 percent in lost GDP and 2.3 million fewer jobs.

Some housing market uncertainty may have been eliminated with the release of a rule by the Consumer Financial Protection Bureau (CFPB) covering “qualified mortgages,” which implements the Dodd-Frank legislation’s “ability to repay” requirement.  While it will take some time to review the rule the early views have been cautious yet positive and reflect a reduction of some regulatory uncertainty.

Household formation should step up further to a net 1.20 to 1.25 million household increase in 2013.  In line with this there should be 930,000 housing starts in 2013, and 1.2 million in 2014 compared to 780,000  2012 and Freddie Mac predicting 5.40 million home sales in 2013 and 5.80 million in 2014 compared to 5.03 million in 1212.

Home prices will end the year up 5.3 percent over 2011 prices but the rate of appreciation is expected to fall back to 2.5 percent in 2013 then rise by 3 percent the following year.

The refinancing boom will continue into early 2013 but at a reduced pace compared to 2012.  Mortgage originations will decline to $1,360 billion in 2013 from $1,620 billion and to $1,000 billion the following year.  Refinancing which provided an 80 percent share of originations in 2012 will drop to a 65 percent share in 2013 and a 45 percent share in 2014.  At present Freddie Mac is projecting an average interest rate for 30-year fixed-rate mortgages of 3.6 percent in 2013 and 4.1 percent in 2014

Frank Nothaft, Freddie Mac vice president and chief economist said, “The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive. This has been a big change from a year ago, when some analysts worried that the looming ‘shadow inventory’ would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery.”

The Good News: Heads Above Water

More Homeowners Are Mortgage-Free Than Underwater

Corey Hopkins | Zillow Blog | January 10, 2013 | link

In recent years, we’ve heard a lot about homeowners’ mortgage debt and how it is impacting the housing market as a whole. In particular, we keep hearing about persistently high levels of negative equity, which happens when a homeowner owes more on their mortgage than their home is worth.

But there’s a flip side to that coin. Yes, a large number of homeowners are struggling to manage their mortgage debt. But, perhaps surprisingly, even more homeowners have no mortgage debt at all.

Almost 21 million Americans, or 29.3 percent of homeowners, own their homes outright, unencumbered by a mortgage, according to a recent Zillow® analysis of mortgage data. Analyzing data through the third quarter of 2012, Zillow found that 20.6 million homeowners nationwide own their homes free and clear of mortgage debt.

Using the same data, Zillow found that slightly more than 14 million U.S. homeowners with a mortgage were in negative equity, or underwater, in the third quarter.

Similar to negative equity, the free-and-clear homeownership rate is largely driven by home values – but in a different way. Underwater borrowers are pulled to the surface as home values rise. But we found that in areas with proportionally lower overall home values, free-and-clear homeownership rates are likely to be higher. This makes sense – smaller loan amounts are easier to pay back more quickly.

Demographic factors including the age and credit rating of primary borrowers also influence free-and-clear homeownership rates. Zillow found that 65- to 74-year-olds are most likely to be free-and-clear (20.5 percent), followed by 74- to 84-year-olds (17.9 percent). This is attributed to the fact that the longer someone owns a home, the longer they have to pay off their mortgage. Interestingly, when examining free-and-clear ownership rates as a percentage of homeowners in various age groups, Zillow found 34.5 percent of 20- to 24-year-old homeowners are free of mortgages.

Among homeowners who own their homes outright, 44 percent have a high VantageScore – representing their credit rating – between 800 and 900. Only 15.5 percent of homeowners with the highest credit rating of 900-990 are free-and-clear.

“So far we have used our unique data on how much homeowners owe on their homes primarily to identify underwater and delinquent groups of homeowners,” said Zillow Chief Economist Dr. Stan Humphries. “But looking at those homeowners who are free-and-clear is important, too. Homeowners unencumbered by a mortgage may be more flexible than indebted homeowners, and therefore more apt or willing to list their homes or enter the market for a new property. By determining where these homeowners are located, we can also gain insight into potential inventory and demand in those areas, as well.”