Thursday, December 30, 2010

Pending Home Sales Continue Recovery, Improvement Seen in 2011

Pending Home Sales Continue Recovery,
Gradual Improvement Seen in 2011

 Washington, DC, December 30, 2010 - Pending home sales rose again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator, rose 3.5 percent to 92.2 based on contracts signed in November from a downwardly revised 89.1 in October. The index is 5.0 percent below a reading of 97.0 in November 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity. “In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”
The PHSI in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009. In the Midwest the index declined 4.2 percent in November to 78.3 and is 7.7 percent below a year ago. Pending home sales in the South slipped 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009. In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said. “Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3 percent around the end of 2011; at the same time, unemployment should drop to 9.2 percent.
For perspective, Yun said that the U.S. has added 27 million people over the past 10 years. “However, the number of jobs is roughly the same as it was in 2000 when existing-home sales totaled 5.2 million, which appears to be a sustainable figure given the current level of employment,” he explained.
“All the indicator trends are pointing to a gradual housing recovery,” Yun said. “Home price prospects will vary depending largely upon local job market conditions. The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”
Existing-home sales are projected to rise about 8 percent to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4 percent in 2012. The median existing-home price could rise 0.6 percent to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.
“As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” Yun said.
New-home sales are estimated to rise 24 percent to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21 percent to 716,000.
Yun sees Gross Domestic Product growing 2.5 percent in 2011, and the Consumer Price Index rising 2.3 percent.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Wednesday, December 29, 2010

2011: The Year a House Again Becomes a Home

2011: The Year a House Again Becomes a Home

by The KCM Crew on December 29, 2010

For almost a decade now, every time we talked about real estate we immediately discussed money. We didn’t talk about the value of a home but instead about the price of the house. We didn’t worry about a roof over our heads but instead the ceiling on our interest rate. We didn’t care as much about where we raised our family as we cared about how much we increased our family’s net worth.

That will change in 2011. The KCM Crew believes very strongly that real estate will return to what it has been for the 200+ year history of this country: a place for us and our families to live comfortably. It will also prove to be a great long term investment as it always has been.

Our parents and our grandparents didn’t buy their homes as a short term financial investment. They bought it so they had a place of their own to come home to at the end of the day; a place to raise their family; a place they could feel safe.

Sure they dreamed of a ‘mortgage-burning’ party. They realized it was a form of forced savings. They were taught that, if they paid their mortgage every month, they would wind up with a little retirement account decades later.

And, they realized that wouldn’t happen if they rented.

However, in the last decade, we somehow forgot that the financial aspect was the serendipity not the major reason to buy. We believe that 2011 will be the year that people return to the historic reasons families purchased a home. This is the year when we again remember that homeownership is a major part of the American Dream.

What about the challenges to a housing recovery? Let’s look at them.

The Economy

Most reports are showing that the economy is doing better than expected. This shopping season provided additional proof of this point. As the economy recovers, so will consumer confidence. This will be great news for housing.


There is much talk about a ‘jobless recovery’. We agree that unemployment will continue to be a challenge. However, when you talk about housing, it is not the unemployment rate that is all telling. Instead, it is the change in the rate. As unemployment skyrocketed, people started to worry about their own job. Any change creates concern. Unabated concern turns to fear. Fear causes paralysis. The spike in unemployment has plateaued. People no longer have the feeling that ‘they are next’. The fear will diminish and people will start moving on with their lives. This too will be great news for housing.

Interest Rates

It seems the bottomless pit in which rates have been falling does have a floor after all. And it seems we have found it. Those purchasers who had been waiting for the best interest rate may have already missed it.


Economists are projecting that prices will not see any appreciation in 2011. Sellers who had been waiting for 2006 to return will come to the realization that waiting any longer makes little sense. They will instead decide to get on with their lives and sell this year.

Prices probably will soften further. However, the possible savings to potential buyers will be minimized by a rise in interest rates.

Bottom Line

This is the year that normalcy returns to real estate. People will buy and sell based on the desire for a better life for themselves and their families. They will realize that is the true value of homeownership and they will be willing to pay for that value.

See the original post at the KMC Blog:

Foreclosures in Massachusetts plunge in November

Foreclosures in Massachusetts plunge in November

By Jenifer McKim, Globe Staff

Foreclosures plunged in November in Massachusetts as lenders suspended home seizures following increased scrutiny of their procedures, new data showed today.

Foreclosure deeds fell to 416 in November, dropping more than 40 percent from the number of foreclosures recorded during the same month last year and marking the lowest recorded number of foreclosures in the state in November since 2007, according to the Warren Group, a Boston company that tracks local real estate.

Petitions, the first step in a foreclosure process, fell to 1,109 in November, down almost 43 percent from November last year. November is only the third month in 2010 that foreclosure starts dropped below 2,000.

Timothy M. Warren Jr., cq chief executive of the Warren Group, said he'd expected foreclosures to fall because lenders temporarily suspended activity following increasing concerns across the US about sloppy and fraudulent procedures. Issues include admissions from bank workers now known as robosigners that they signed legal documents without reading them.

"With federal and state governments taking an even closer look at how banks are going about the foreclosure process, I suspect that petitions to foreclose will remain at low levels,'' he said.

To see town-by-town data, click here.


Thursday, December 23, 2010

Homes Sales Resume Upward Trend With Stable Prices

Existing-home sales got back on an upward path in November, resuming a growth trend since bottoming in July, according to the National Association of Realtors®.

Existing-home sales across the U.S., which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 5.6 percent to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9 percent below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit.

Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” he said.
Yun added that home buyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”

In the Northeast where we live, existing-home sales rose 2.7 percent to an annual pace of 770,000 in November but are 33.0 percent below the cyclical peak in November 2009. The median price in the Northeast was $242,500, which is 9.2 percent higher than a year ago.

See the full story at

Monday, December 20, 2010

Top 10 Real Estate Stories of 2010 | Inman News

Top 10 Real Estate Stories of 2010

The health of the national and global economy figured prominently in the state of the housing market in 2010. Still hobbled by high unemployment and millions of distressed owners and foreclosed homes, real estate sales are expected to come in lower this year than the 2009 level, with prices roughly flat. This report highlights the major issues impacting the business of real estate in 2010.

1. All eyes on the economy
2. Goodbye, tax credits
3. Robo-signing complicates foreclosure crisis
4. FHA grows role in lending, tightens underwriting
5. Mobile market matures
6. A year of data deals
7. Congress approves face-lift for financial system
8. Major franchise firms push for growth
9. Zeroing in on location, neighborhood
10. Election 2010: The people have spoken

The full article and details on each story can be seen at:

New law clarifies Mass. homestead protections - The Boston Globe

New law clarifies Mass. homestead protections

Protecting your home against creditors will be easier now that Governor Deval Patrick signed into law a bill that automatically provides Massachusetts homeowners with a $125,000 cushion against debt collectors... if they hold that much equity in their properties.

The legislation, signed on December 16, 2010, clarifies ambiguities in a law first enacted in 1851. The statute, amended a number of times in ensuing years, provided $500,000 in protection from creditors — but only for homeowners who file a so-called homestead declaration with a county registry of deeds, a process that can cost between $35 and $100. Under the new law, homeowners do not have to make such a filing unless they hold more than $125,000 in equity in their homes. They can still get $500,000 in protection if they file a homestead declaration.

“It is an important piece of consumer protection,’’ said Michael Goldberg, co-chairman of the legislation committee for the Real Estate Bar Association for Massachusetts. “It ensures that homeowners in the Commonwealth have the protection of a modernized, understandable homestead law.’’

Read the entire article at

Thursday, December 16, 2010

Home Owners Recoup More with Exterior Replacement Projects, REALTORS® Report

Home Owners Recoup More with Exterior Replacement Projects

December 16, 2010 - The latest cost vs. value report on remodeling a home is now out. What will get you the biggest bang for your buck? A steel entry replacement door averaged a return of 102% of what you spend. Most of the other projects will return you less than 100% of what it costs you, according to this report.

 This report comes out each year and gives the average return on investment for many common home remodeling projects across the US, and is broken down by region. This year, remodeling projects done in New England don't return as much as project done in some other parts of the country, such as the west coast and south Atlantic coast. Lower labor costs seem to make the difference in the southeast, while higher return values is the reason that the west coast's remodeling projects net more money at resale.

Now the problem I have with the report is not so much the value returned, but with the costs of the projects. Maybe that's because I do the majority of my own remodeling projects, or maybe because I get more than one estimate when it comes to hiring a contractor.

For example, I had an exterior fiberglass door installed in my home last year, replacing the original cracked wooden one. According to the report, for the New England area, I should have paid $3,662 for the project. I purchased a good quality door for $349.00 at Home Depot, and the labor to remove the old door and install the new one was $500. I got 3 estimates for labor and this was the middle one. So the total cost for the job was $849, a far cry from $3,662. The value of replacing my front door is $2,079, a figure I would agree with. That means my return on investment (or cost vs. value) is 245%! Quite a difference from the 56% return that the Cost vs. Value report states. 

I believe that many of the cost estimates are overstated. The cost for replacing a roof is put at $23,232. That is around the estimate I got for replacing my roof...but included adding on a full dormer in the rear and 2 doghouse dormers in the front of the house! Just replacing my roof (admittedly, not a large job because it is a cape) was $4,500 to $7,000 (4 estimates received) including removing the existing 2 layers. I did have one client pay over $20,000 for a new roof, but that included removing and disposing of the existing clay tile roof - not an easy job. Yes their are roof out there on McMansions that will easily run in excess of $20,000, but that is not the norm. Most roof replacements I have seen have been in the neighborhood of $5,000 to $15,000. Then again, replacing your roofing isn't really an upgrade. But in a home buyer's mind your home is significantly less valuable if the roof has to be replace within the next few years. They just expect to buy a home with a good roof that will last for years.

Some of the biggest returns are changes made on the exterior of the house. First impressions are extremely important when selling a property, and if you have pealing paint, a cracked front door, shingles falling off the roof and a rotted garage door, the buyers may never go inside to see your beautiful newly remodeled kitchen and bath.

If your home needs some updating, read the Cost vs. Value Report. It contains some good information. But remember that you can probably do better than what is claimed by doing the work yourself, or by making sure you get multiple bids/estimates for any remodeling project.

 Jim Armstrong