Entries Tagged 'Appreciation' ↓

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Yesterday we published the list of the Top 10 Most Expensive Markets for an average home, today we are going to cover the least expensive markets in the country.

The average home in this survey by Caldwell Banker is 2,200 square feet with 4 bedrooms, 2 1/2 baths, a family room, and a 2 car garage. I some parts of the country the price tag can be over 2 million dollars, but these cities will find the average price all under 160,000 dollars.

6 of the ten cities in the survey are military towns which is a great thing. To live the average lifestyle our military should not have to suffer as pay is not the driving force for our soldiers and sailors.

So if you are looking to live in a place with a lower cost of living but having the ability to own the average American home, here are the places.

Top 10 Most Least Markets For “Average Home”

1. Killeen, Texas $136,725
2. Minot, N.D. $139,033
3. Arlington, Texas $139,175
4. Canton, Ohio $146,333
5. Muncie, Ind. $150,000
6. Topeka, Kan. $150,075
7. Fort Worth, Texas $151,250
8. Tulsa, Okla. $153,750
9. Grayling, Mich. $155,000
10. Wichita, Kansas $156,500

via CNN

Tags: Killeen, Minot, Arlington, Canton, Muncie, Topeka, Fort+Worth, Tulsa, Grayling, Wichita

If you are looking to buy the average home in the United States, these are the most expensive markets. The average home in this survey by Caldwell Banker is 2,200 square feet with 4 bedrooms, 2 1/2 baths, a family room, and a 2 car garage.

Looking over the list, California has 8 of the top 10 most expensive towns for the average home which is not a surprise with the fantastic run up in property values in 2007. Also on the list are Greenwich, Connecticut and Boston, Massachusetts in the northeast.

This has to account for the attention placed on housing out in California. When the average person is having to dig up nearly a million to get into a home housing becomes the leading discussion in the household. And if you held onto a home during the run-up you have a great deal of your wealth tied up in the real estate market.

Top 10 Most Expensive Markets For “Average Home”

1. Beverly Hills, Calif. $2,206,883
2. Greenwich, Conn. $2,018,750
3. La Jolla, Calif. $1,800,000
4. Santa Monica, Calif. $1,785,000
5. Palo Alto, Calif. $1,677,000
6. Newport Beach, Calif. $1,617,500
7. Santa Barbara, Calif. $1,599,667
8. San Mateo, Calif. $1,498,023
9. San Francisco, Calif. $1,451,250
10. Boston, Mass. $1,381,250

Tags: Beverly+Hills, Greenwich, La+Jolla, Santa+Monica, Palo+Alto, Newport+Beach, Santa+Barbara, San+Mateo, San+Francisco, Boston

And I am glad for it. No money down on an asset as large as a home is and was pure madness in my mind. Sure, a few ended up making a nice profit at the end either through appreciation or speculation, but many others were burdened with the threat of a fluid housing market potentially destroying their financial future.

Investors look to multiply the effectiveness of their investments. If they can get into an investment with no money down then the risk level many will assume will be much greater than the market can handle. We are seeing the affects of this now. If I can speculate on 5 homes with no money down and no appreciable assets as collateral and the investment goes south, I have not really been hurt. Even if I lied on the applications and committed mortgage fraud the chances of being prosecuted are very slim.

So I walk away from the investments and look for something new. But now the market has 5 homes that probably do not have the proper maintenance performed on them hitting the market putting pressure on inventory and price and that affects all those in the surrounding community. When and if these houses do sell, average pricing will be impacted potentially putting others upside down in their homes.

So closing the no money down loophole is great for the housing market as it will make those buying a home forced to have a stake in the transaction. Their will be the immediate pain of working through the false inventory out there, but once there is some appreciation the market will be much stronger and less volatile in the long run.

“If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,” said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn.
The company was notified by its lender earlier this month that the lender no longer will cover no-money-down loans.
In recent years, no-money-down mortgage loans have helped buyers, especially those new to the market, stretch their budgets and get into homes they might not otherwise have been able to afford. Four out of 10 first-time buyers used no-down-payment mortgages in 2005 and 2006, according to surveys by the National Association of Realtors. via the ContraCostaTimes.com (subscription required)

Few know the amount of work that a real estate agent or mortgage brokers puts into all of the aspects of their business. The combination of prospecting, selling, showing, managing, repairing, coddling, prodding, advising, cajoling, and advising is taxing for all those in the industry.

But as you are all independent contractors, I hope the coming 12 months provide more need for your services and you business grows proportionally to your desires.

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And thank you again for taking the time to read our site. If you have any suggestions or recommendations on something you would like to have covered, don’t hesitate to email me at tom@therealestatebloggers.com .

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“Hitting the Numbers” is all because of the evil mortgage brokers according to the spokesman for the Appraisal Institute Alan Hummel. Hummel speaking to a Senate subcommittee on mortgage abuse tried to deflect the huge amount of over-inflated appraisals back on the mortgage companies as if the appraisers have no responsibility for the unethical work.

To me this is bure baloney. Am I saying that the mortgage brokers do not put pressure on Appraisers to find the right dollar amount on a loan? I am sure they do.

However, the appraiser is also a professional who should guard their honor and reputation as their most important asset. The reality is that to make the numbers work is the easy way out for appraisers who substitute their reputation for money. It was a decision every one of them made.

And when you have to feed your family you may make that decision, I understand. But at the end of the day every appraisal that was fudged to hit the numbers lies squarely at the feet of the appraiser and his company. They decided that exchanging their ethics for revenue was the course of action and can blame no one else.

And they should bear the responsibility for their actions.

In prepared testimony Tuesday before a Senate subcommittee on mortgage industry abuses, Alan Hummel, spokesman for the Appraisal Institute said “Appraisers face pressure from various parties involved in mortgage transactions. They are told to doctor their appraisals or else never see work from those parties again.”

Hummel blamed poor regulation of mortgage brokers and lenders, and weak or nonexistent enforcement of real estate practitioners. via CNN

The State of Ohio has declared war on improper appraisals in the attempt to stabilize it’s difficult housing market. Ohio’s Attorney General accuses 10 company’s for setting a specific estimated value on properties and then communicating that value to the appraiser as the target to hit. The act of influencing an appraiser is illegal in Ohio.

With foreclosures rising quickly in the state, they were up 135 percent in April, Ohio is trying to stop inflated appraisals from putting homeowners deeper in a hole. If the home is mortgaged for more than the market will bear, the homeowner typically will not be able to sell if financial difficulties occur and the home will be forced into foreclosure.

The lawsuits seek 25,000 from each of the defendants, 7 mortgage brokers, 2 lenders, and an appraiser. They are:

• Ace Mortgage Funding LLC in Cincinnati
• American Home Brokerage Corp. of Garden Grove
• Apex Mortgage Services LLC in Columbus
• First Ohio Banc & Lending Inc. of Independence, Ohio
• Island Financial LLC of Twinsburg, Ohio
• Premiere Service Mortgage Corp. of West Chester, Ohio
• Robert C. Roach, president of The Valley Mortgage Group of Austintown, Ohio.
• Sage Credit Company LLC, Irvine, California
• Wall Street Mortgage Bankers Ltd.  East Rockaway, New York.
• All-Line Appraisals of Phoenix, which arranges property valuations for lenders and other clients, was also sued.
  via the OC Register

While this is no surprise to those in the trenches, there is going to be a backlash on appraisals that are made to hit the target dollar amount. Honestly in the appraisal business is important for the market to work. You are not doing a favor to the homeowner by appraising a property over the true value in a stagnant market. If difficulties befall the homeowner, they will not be able to sell will be forced into foreclosure.

If you are looking to invest in real estate and the opportunities in the United States are not exactly lighting your fire, look overseas. Right now Singapore is on fire as housing and commercial prices are exploding all over the country. The economy is changing from manufacturing to tourism and finance and the property prices are increasing accordingly.

With more than 12 different REITs to choose from there are ways you can live in the United States and still invest in Singapore’s real estate industry.

As it aims to become a playground for Asia’s rich, Singapore is shifting its economy from manufacturing to tourism and financial services, building yacht marinas and casino resorts next to the gleaming skyscrapers that house its private banks. On the ground, this translates into a growing influx of prosperous foreigners — and fast-rising demand for luxury homes and prime office space.
Prices for Singapore’s private residential properties rose 4.8% in the first quarter of this year from the previous quarter, after gaining 10% in 2006. Prices for the island’s top-end and midrange residential real estate could be up as much as 35% for the full year, predicts UBS Securities. Rents in the sector should surge 30% to 40%, Citigroup forecasts.
Office properties are just as attractive, in part because more buildings are being demolished for redevelopment rather than completed this year, resulting in a shortage of supply. Singapore’s prime office rents, which climbed 20% to 11.80 Singapore dollars (US$7.78) a square foot last year, could reach S$14.50 by the end of 2007 and S$18.50 in 2008, Citigroup estimated in a recent research note. Although the government has released new land for construction projects, “the prime office-space shortage will persist for at least three more years,” a Goldman Sachs report predicted. via the WSJ.com.

One of the regions of the country that saw the biggest run up in real estate prices over the past 5 years was Baltimore. So when the slowdown occurred, most were expecting carnage in the city. But as the Baltimore Sun reports, real estate prices can not be quantified by a geographic region such as a metropolitan marketplace.

While some sections of the city and surrounding areas have lost value, there are pockets that saw over 20 percent increases last year. Is this surprising, maybe is you are thinking the sky is falling. However,  those that watch markets work know that buying and selling real estate know that moving over a couple of streets can change the characteristics of the marketplace.

So buying a home in a part of town that has appreciated greatly may not make a whole lot of financial sense right now, but look around and you may find a part of town that is gentrifying or is transforming and tremendous profits may be out there for you.

Areas with declines were generally expensive, with homes costing $500,000 on average, while many of the fast-appreciating communities were more affordable, according to a Sun analysis of home sales data that offers the first detailed look at the post-housing-boom landscape. Half of the region’s 10 most costly ZIP codes in 2005 saw a drop in average price last year, from Monkton in Baltimore County to Davidsonville in Anne Arundel.

Local real estate agents say they believe the market is on an upswing after months of sluggishness. January seemed to bear that out, with sales rising for the first time in more than a year just before the all-important spring season. But even last year, average prices increased at least 10 percent in a third of Baltimore’s suburban communities — and in a remarkable three-quarters of city neighborhoods.

Prices in half of the city’s neighborhoods, in fact, jumped at least 20 percent.

“That just confirms what I see and what I hear,” said Joseph T. “Jody” Landers III, executive vice president of the Greater Baltimore Board of Realtors. “We see pockets where there have been some slight declines … but you continue to see some strong gains. … You also have to put that into some historic context: For two decades, there was no price appreciation in many of these neighborhoods.” via baltimoresun.com

Housing sales are down in 40 states scream the headlines. My reaction is Thank God Almighty.

Look folks, we know that the marketplace got flooded with a combination of forces. Low interest rates, easy (non existent?) mortgage requirements, and speculators who came over from a depressed stock market. If that is a surprise to anyone, raise your hands. When sales activity is breaking records like it did in 2005 by such a large margin there is no place to turn.

Some call it a bubble and I think they were right. But it was not the bubble that others hope for. Many naysayers thought that the bubble was one you would see coming out of the mouth of a 10 year old just before mom had to start picking gum out of her hair. I saw it as the really cool bubble that all your friends said “awesome” to, and then you knew it was time to start chewing the gum to get it back so you could try again.

My impression, we had a period of exuberance. Some markets that were speculator driven such as Florida and Arizona have seen the volume drop severely. Other markets that were over bought due to panic buying, San Diego, Washington, and Boston, are facing some appreciation loss.

To me, watching the landscape, I am happy. There is a great deal of appreciation out there. Mortgage companies and the government are figuring out that stated income loans to those receiving welfare is not a smart move. The subprime lenders are paying for their greed but rational lending is reasserting itself.

Builders have backed off and slowed production to realistic levels. Interest rates are finding their equilibrium. The money that was pouring into real estate by speculators is heading back to the stock market and it is having a strong year, protecting the country against a real estate driven recession.

And for the most part, housing has held onto its gains. If you had said all these things on some sites you would be laughed out of town and still may be. And they will use the tools that politicians have used for years to illustrate individual cases (or narrow regional pockets) where some have gotten hurt. But folks, this is capitalism. It is rough and tumble. People make and lose money every day in the capital markets.

If you bought a home that you know you could not afford but were hoping that appreciation would protect you and you were caught. I am sorry, but you placed a bet and lost. However, for the majority of buyers out there, they have seen a great 5 year window of appreciation that is not backsliding significantly. That is wonderful as the market catches up.

WASHINGTON - The slump in housing deepened in the final three months of last year with sales falling in 40 states and median home prices declining in nearly half of the metropolitan areas surveyed, a real estate trade group reported Thursday.

The National Association of Realtors report showed that the biggest declines were in former boom areas.

The biggest percentage decline occurred in Nevada, a drop of 36.1 percent in the sales pace in the final three months of 2006 compared to the same period in 2005.

In other former boom areas, Florida saw sales drop by 30.8 percent, in Arizona sales were down 26.9 percent and they fell 21.3 percent in California.  via BostonHerald.com.

A new study by the firm Fidelity Investments seems to warn off homeowners from counting on home equity as a primary vehicle for their retirement. Now, I am a firm believer in spreading out ones assets between many sources planning for retirement, but this reports doom and gloom may have to be taken with a bit of salt.

Fidelity Investments is not a player in the real estate market, but a huge player in the stocks and bonds world. So while their advice may carry some water, I would not sell my home tomorrow if I was thinking solely of my retirement. Housing assets are just one plank of a successful retirement strategy.

“When we started the work, the real question was: If I have home equity, how should I think about using it in retirement,” said Guy L. Patton, executive director of the Fidelity Research Institute. “The conclusion: The returns on residential real estate are probably less than what most people think they are.”
Over the more than 40-year period, real compound returns on stocks outpaced that of residential real estate, according to the study, with 5.95% average annual returns on stocks compared with 1.35% in realty. A dollar invested in stocks in 1963 would have compounded to $12.36 by 2006, while the same dollar would have grown to $1.79 in real estate.
The median price of new homes in the United States has risen since the early 1970s, with an average annual appreciation rate of 5.9% since 1963. But there have also been sharp corrections three times during the time period. It’s one thing if the homeowner is able to “ride out” the sharp downturns; it’s another if they’re considering the home as a potential retirement asset in the near future, the report said. via MarketWatch.