• Northeast: rose 3.2 percent in February to 71.8 but remains 25.4 percent below a year ago.
• Midwest: declined 3.7 percent to 82.7 and is 17.4 percent lower than February 2007.
• South: fell 5.5 percent in February to 85 and is 30.3 percent below a year ago.
• West: dropped 9.8 percent in February to 84.6 and is 17.1 percent below February 2007.

• Mortgage rates: 30-year fixed-rate mortgages, which has fluctuated recently, should average 5.8 percent in the second and third quarters, but trend up to an average of 6.3 percent in 2009.

• Growth in the U.S. gross domestic product: expected to be 1.4 percent in 2008 and 2.4 percent next year.

• Unemployment rate: forecast to average 5.4 percent this year and 5.6 percent in 2009.

• Inflation: (as measured by the Consumer Price Index) is projected at 3.4 percent in 2008 and 2.2 percent next year. Inflation-adjusted disposable personal income is likely to grow 1.2 percent this year and 3.0 percent in 2009.

For more economic news and research reports, visit NAR's Research division at REALTOR.org.

See the article in its entirety here: http://www.realtor.org/rmodaily.nsf/pages/News2008040801

RISMEDIA, April 8, 2008-This spring, as it becomes a popular time for homeowners to begin preparing their homes for sale, Showhomes encourages them to do some essential steps to make sure the most important first step takes place: buyers make the decision to view the home.

“Many people think all they have to do is make sure the inside of their home is clean, but it really goes far beyond that when it comes to making sure your home looks its best so that buyers will take a look,” said Thomas Scott, vice president of Operations for Showhomes Franchise Corporation. “That is why we have released five essential tips that can help local residents stay on the right track when preparing their homes for a sale.”

Scott reveals five tips for selling a vacant home:

1. Curb Appeal - the better the curb appeal of your home is, the more attractive it is to prospective buyers.

- Trim overgrown bushes, weed beds and add a fresh layer of mulch
- Clean your front door and repaint if needed
- Add a fresh doormat
- Keep grass cut, edged and blown
- Plant some color in the beds to add contrast

2. Cleaning - for most buyers, dirt equals stress and the last thing most buyers want is more stress in their lives.

- Pressure-wash the driveway and sidewalks.
- Clean windows inside and out
- Pressure wash decks and patios

3. Paint - the condition and color of the paint can make a huge difference in how buyers react to your home. Select light neutrals - creamy kakis, pearly grays or soft greens.

4. Replace Worn Carpet - Dirty carpet is unsanitary and nobody will be able to overlook your worn carpet. Replace the top layer with inexpensive neutral colored carpet and you will always recoup the investment.

5. Stage your home - Buyers who look at vacant homes only see floors, walls and ceilings. With nothing else to look at, they focus on flaws. Because of this, vacant houses are very vulnerable to low-ball offers and often sell for 15-20 percent below list price.

For more information, please visit www.showhomes.com.

RISMEDIA, March 25, 2008-Sales of existing homes increased in February and remain within a fairly stable range, according to the National Association of Realtors®.

Existing-home sales - including single-family, townhomes, condominiums and co-ops - rose 2.9 percent to a seasonally adjusted annual rate of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.

Lawrence Yun, NAR chief economist, said the gain is encouraging. “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said. “Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.”

The national median existing-home price for all housing types was $195,900 in February, down 8.2 percent from a year earlier when the median was $213,500. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median with relatively fewer sales in higher priced markets.

Home prices within metropolitan areas are more telling. The most recent data shows roughly half of the metro areas in the U.S. with price increases, with healthy gains in markets such as Oklahoma City and Trenton, N.J. “In other areas such as Sacramento, a rapid price decline has induced buyers to come into the market and sales are now rising,” Yun said. “The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers.”

Read the article in its entirety: http://rismedia.com/wp/2008-03-24/is-the-market-turning-around-existing-home-sales-rise-in-february/

The Federal Reserve has lowered rates five times since September. Many people expected the 2.25% reduction in the Discount Rate and Fed Funds Rate to result in lower mortgage rates. In reality, mortgage rates and the interest rates reduced by the Fed are different animals. Mortgage rates can be in effect for 30 years while the rates set by the Fed can change from day to day. If past history is any indicator, we could anticipate mortgage rates actually rising as a result of anticipated inflation. In 2001, the Fed cut the Fed Fund rates from 6% to 1.75% over 11 months and because inflation grew, long term mortgage rates increased. The recent volatility and losses in the stock market indicate investors concern. The lowest rates we’ve seen to date occurred for about 3 hours immediately following the Jan 23^rd rate cut. Rates have increased slightly since then and have hovered in the mid 5% range.

I hear that there are a lot of foreclosures right now and short sales. I bet the bank will take a lot less than market value for short sales and foreclosure properties.

Unfortunately, there are a lot of bank owned and over encumbered properties on the market right now. Short sales and foreclosure properties are different. Banks own foreclosure properties and have had appraisals and several broker price opinions completed before putting the home back on the market.  A short sale occurs when a property is still owned by the homeowner and the bank approves a payoff that is less than the current principle balance. 

A short sale can be approved by the lender under certain circumstances. The first requirement is that the homeowner has a documentable hardship and is willing to provide the extensive written documentation required. Unfortunately, a declining market value doesn’t count as a “hardship” under the short sale requirements. If the seller has a documentable hardship and is willing to jump through all the hoops required for short sale approval by the mortgage company, they will not sell it for less than market value. Regardless of whether it is a foreclosure or a short sale, if a home in the same neighborhood with the same floor plan sold two weeks ago, the bank may not be willing to accept a sales price less than that property sold for. 

A final note on buying distressed properties: In the case of a foreclosure property, there may be significant deferred maintenance. If you are unable to complete repairs yourself, it may cost more in the long run to hire professionals to bring the property back to reasonable condition. Professional home inspections are highly recommended for any potential property purchase. In the case of a short sale, the lender can take a month or more to consider whether they will approve a reduced payoff. If you are on a specific time frame, waiting for a long time for bank approval to proceed can be frustrating and ultimately cost you money with a higher interest rate.

With so many properties on the market, the seller has to take a lot less. If I can’t “steal” it I’m not interested. There are plenty of other houses for me to buy.

There are a lot of homes for sale and buyers have more choices and more negotiating room than they’ve had in years and interest rates under 6% make homes more affordable than they have been in recent years! Many builders have dramatically curtailed the building of spec homes and some have begun to raise prices slightly on homes to be constructed for a specific homebuyer. The prices of new homes are once again higher than the price of a similar resale home. The inventory levels of active listings in Casa Grande have declined each of the last three months and are at the lowest level since June of 2007. The median sold price in Casa Grande in January 2008 was $154,750 with the highest median sales price occurring in August of 2006 at $196,000. Interestingly, at that time there were 873 resale homes on the market and there were 953 active resale listings on the market last month. New spec homes (completed new homes ready to move in) were much more plentiful in 2006 than they were last month. 

The media keeps saying that prices will drop a lot further. Should I wait to buy?

Many foreign buyers are actively purchasing in this area now, as their dollar is much more valuable than it’s been in years. The Arizona Republic reported in the Feb 3^rd, 2008 Business section that “several well known real-estate players are buying…” Catherine Reagor, the real estate columnist for the Republic said “Arizona economist and real estate investor Elliott Pollack is buying” and “longtime builder Greg Hancock, who sold his last housing firm to publicly traded Meritage Homes of Scottsdale, has invested in some lots in Pinal County.” Deep pocketed investors are positioning themselves well for the next market cycle by buying now. The expert’s crystal balls aren’t accurate enough to predict the exact bottom of this cycle but if knowledgeable investors are buying now, I pay attention! If you are a speculator looking only to make a short term profit, you may want to wait for market statistics to prove we have hit the bottom of this cycle and are on the way back up. If you are a potential homeowner who intends to occupy your home for a few years and aren’t living paycheck to paycheck, this may be an opportunity to make a smart purchase.

News concerning interest rates and financing regulations are changing daily. For the most recent news concerning housing, interest rates and financing changes, please see our website at www.yosthomes.com. Debbie Yost, CLHMS, CRS, GRI, CPC is the broker/owner of RE/MAX Casa Grande. Email her at Debbie@YostHomes.com with questions to be answered in next month’s article.

WASHINGTON, D.C. (CNNMoney.com) -- A bold new proposal to combat foreclosures was unveiled in Washington on Thursday.

The plan, dubbed "Help Now," was floated by the National Community Reinvestment Coalition (NCRC), a nonprofit community advocacy group. It calls for the government to buy up at-risk loans, restructure the terms to make them affordable and sell the reworked loans back into the secondary market.

"I think the plan is commendable. It doesn't let the home owner off the hook," said economist Mark Zandi of Moody's Economy.com. "They still have to pay at least part of the debt."

Help Now aims to improve upon the efforts of Hope Now, the alliance of lenders, mortgage servicers, non-profit community advocacy groups and investors led by the Bush administration to help troubled borrowers stay in their homes.

The Help Now approach will be more effective because, according to NCRC CEO John Taylor, it will make it easier for lenders to rework the terms of troubled mortgages. Indeed, the NCRC worked closely with most of the major lenders participating in Hope Now, including Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), Washington Mutual (WM, Fortune 500) and J.P. Morgan (JPM, Fortune 500), to create this proposal.

Even servicers that are already participating in Hope Now are afraid to rework loans, because doing so effectively violates the contract that lenders have with the investors who own their loan portfolios - often pension and hedge funds, as well as foreign investors.

Lenders remain reluctant to offer workouts despite the fact that the American Securitization Forum (ASF), which is a member of the Hope Now alliance and represents the investors, recently authorized lenders to do so, as long as it is in the best interests of the investors.

"Servicers are accountable to the investors, not the ASF," said Taylor. "But once the government owns the loans and tells them it's okay, then that clears the obstacle."

Under this proposal, the government would allocate as much as $20 billion up front. It would use those funds to buy up mortgages from investors in a reverse-auction process, at prices below the face value of the loans. In a reverse auction, sellers compete against one another, slashing prices until a buyer - in this case the government - says yes to a deal.

Since the government would buy the mortgages at a discount, it can pass the savings on to the borrowers by reducing the mortgage balances by the same percentage as the discount.

So if a batch of loans was bought at a 30% discount, the government would be paying $70,000 for a $100,000 mortgage. The government would then modify the mortgage, reducing the outstanding balance to $70,000. That would mean a big drop in the monthly payments, which would help many borrowers keep their homes.

The new, reworked mortgages will be underwritten conservatively, with loan-to-value ratios of no more than 90%, said Taylor. And no loans would be made unless borrowers were judged capable of keeping up payments based on their credit score, income and other underwriting criteria. Default rates should be reasonably low.

There would undoubtedly still be some at-risk borrowers who cannot afford even the discounted mortgages.

In those cases, the loan balances would be reduced even more, to $50,000 perhaps, from $70,000. In return, the government would obtain a second lien, said Taylor, representing the difference between what the government paid for the loan and what it further reduced the balance to. These liens would only be repaid to the government when the home is sold or the borrower refinances the mortgage.

It will be an uphill battle for Help Now to win backing from policy makers. "The one who has to take this plan and run with it is [Treasury Secretary Hank] Paulson," said Taylor.

Paulson, however, has been an enthusiastic supporter of Hope Now, nearly to the exclusion of other proposals. And he has adamantly opposed spending government money on any "bail-out" plans. The NCRC idea would involve at least some seed money, and the second liens may not get repaid for years - if ever. That could add up to big bucks.

Still, after another 10 or 12 weeks of economic turmoil, this new plan may start to attract support, said Economy.com's Zandi. Compared to the hundreds of billions on the price tag of the recently passed economic stimulus plan, the NCRC proposal looks cheap.

"Besides," he said, "the cost of doing nothing is worse." 

Lawmakers say they're optimistic that they'll be able to send a bill to President Bush for his signature by April.

Home values have declined across the country, giving homebuyers the best buys they've had since 2004.

Home prices have dropped so quickly and so far that valuations - the difference between what a home should cost and its actual price - are the lowest they've been since 2004, according to a report.

The Cleveland-based bank National City Corp. (NCC, Fortune 500), together with financial analysis firm Global Insight, revealed Tuesday that more than 88% of the 330 housing markets surveyed showed price declines and improved affordability during the last three months of 2007.

"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years."

But DeKaser cautioned that home prices could fall even further.

"This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued."

There are still 21 housing markets, or 6% of those surveyed, that are severely over valued, including Atlantic City and Madera, Calif. That's down from 56 overvalued markets at the peak of the housing bubble in 2006.

The report compares actual median home prices with what the authors determine are proper home values based on population density, relative income levels and interest rates, as well as historically observed market premiums or discounts, to determine whether markets are over or under valued.

The report also factors in market intangibles that make some areas more desirable places to live, and more expensive.

"Declines are no longer confined to once-frothy markets," said DeKaser.

The survey covered home valuations during the last three months of 2007, but DeKaser pointed out there's reason to believe that valuations are even more favorable for buyers today.

Price declines have continued into 2008 and interest rates, although they have inched up lately, have been steady or lower compared to late last year. There have even been wage gains; personal income rose 0.5% in December. Soaring foreclosure rates have added inventory to many housing markets, depressing home prices further.

The biggest gains in affordability occurred in California, Michigan and Florida, which are areas that have also been some of the hardest hit by foreclosures. Those states registered 43 of the 50 biggest price declines.

Bend, Ore. currently tops the overvaluation list. Home prices there were judged to be about 59% higher than their fair-market value. Miami, despite a median home price decline of 5.7% last year, is the most overvalued big city, by 44%.

All the best bargains were found in Louisiana and Texas. Houses in Houma, La. were under valued by 31.2%, according to the report. Dallas was the most undervalued big city, by 30%.

See the original article here: http://money.cnn.com/2008/03/04/real_estate/markets_less_overvalued/index.htm?postversion=2008030522