Real Estate Digest

Volume 38 • Number 3March • 2012

Spring Awakening: Housing Rebound Begins to Thaw Nation

T he U.S. housing market will con-tinue and even accelerate its slow recovery in 2012, led by stabiliz-ing home prices and increasing

sales. These are among the key findings of a trifecta of indicators from real estate agents, bankers and builders.

The majority of more than 1,000 agents surveyed by RE/MAX say housing prices will stay the same or increase in 2012. Pro-jections are the strongest for the southern U.S., where 49.6 percent of agents say

prices will stabilize and 26.7 percent anticipate an increase. Agents in the Northeast see the biggest challenges, with 47.5 percent concluding that prices will decrease, 44.6 percent expecting prices to remain at 2011 levels, and only 7.9 percent anticipating an increase.

Thirty-nine percent of agents said their markets have already hit bottom; 34 per-cent say prices will stop dropping in 2012; only one in four (27 percent) say prices

will reach their lowest point in 2013 or beyond.

Economists upbeatNot just realtors are feeling optimistic.

The Economic Advisory Committee of the American Bankers Association believes 2012 will see low inflation and steady job growth, leading to a housing thaw.

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Volume 38 • Number 3March • 2012

“Despite severe shocks in recent years, the economy has shown resilience as it continues a gradual march forward,” said commit-tee Chairman George Mokrzan. “The economy is gaining momen-tum, with strong capital expenditures from businesses and moder-ate consumer spending setting the stage for sustained growth.”

The committee sees signs that housing price declines are eas-ing nationwide, but not in all areas, and there are risks that fore-closures could begin to pick up.

But, said Mokrzan, “Record affordability has made buying a home an attractive proposition, and should help increase de-mand.”

Homebuilders see improvementAnd finally, the National Association of Homebuilders reports

a doubling of housing markets showing measurable improvement in January 2012 over the previous month, with the addition of 40 new metro areas making the grade in the NAB/First American Improving Markets Index (IMI).

The IMI in January boasted 76 improving markets, up from 41 in December, with 31 states and the District of Columbia repre-sented by at least one entry.

“The positive trend is even more relevant when you consider the expanding geographic distribution of the list—which now in-cludes 31 states and the District of Columbia,” notes NAHB Chair-man Bob Nielsen.

While relatively small metropolitan areas continue to domi-nate the list, several major metros in diverse parts of the country have joined the field—including Dallas, Denver, Honolulu, India-napolis, Nashville and Philadelphia.

“This is an encouraging sign that gradually strengthening eco-nomic conditions are starting to take hold across a broader swath of America,” said Nielsen.

TRENDS

Voters to Politicians: Keep Hands off Homeownership

A majority of American voters say they value homeownership and oppose any steps by the government that make it more difficult to own a home, according to a nationwide poll of 1,500 likely vot-

ers, commissioned by Yahoo! Real Estate. In fact, the poll revealed a word of caution to any politician running for office or re-election that they better not put roadblocks in the

way of homeowners—or aspiring homeowners—if they want to win votes.

About 96 percent of homeowners surveyed say they are happy with their decision to own a home. Even among those who owe more on their mortgage than the home is currently worth, 84 per-cent say they are happy with homeownership. However, certain actions or threats by lawmakers lately are putting up roadblocks to homeownership, the voters say.

“The American electorate is sending a clear message that own-ing a home remains a cornerstone of the American dream and preserving a federal commitment to home ownership is essential to maintain a thriving middle class and getting housing and the economy back on track,” said Neil New-house, a partner of Public Opinion Strategies, who conducted the survey.

Here are two main messages that voters had for lawmakers, according to the survey: 1 Leave the mortgage interest deduction alone. Seventy-three

percent of voters say they oppose eliminating the mortgage in-terest deduction or reducing it in any way across income levels.

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In fact, 68 percent of voters say they would be less likely to vote for a congressional candidate who proposed to end the mort-gage interest deduction — which held true across party lines.

2 Do more to help homeowners and those who want to be. Three out of four voters—including homeowners and rent-ers—say it’s “appropriate” and “reasonable” for the federal government to provide tax incentives to promote home-ownership. Two-thirds of those surveyed say that the federal government should do more to help qualified homebuyers get a long-term or 30-year fixed-rate mortgage.

Also, nearly seven out of 10 voters who are not currently ho-meowners say they want to buy a home one day, but too many roadblocks remain. The biggest obstacles to homeownership re-ported were job uncertainty and saving for a down payment and closing costs, according to the survey.

“Even in a down housing market, home- ownership remains a core American value, with the vast majority of citizens who do not currently own a home saying they want to buy a home,” Bob Nielsen, president of the National Association of Home Builders, said in a statement. “Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation’s long-term commitment to home ownership.”

Home Affordability Offering Up 40-Year Deals

Home affordability is at 1971 levels, due to falling prices and record low mortgage rates, putting home-ownership in reach of more

families, according to the U.S. Department of Housing and Urban Development (HUD). Homeowners are bringing in nearly double the median income they need to cover the cost of an average home in many areas.

“With interest rates at historically low levels and markets across the country beginning to improve, homeownership is with-in reach of more households,” Bob Nielsen, chairman of the Na-tional Association of Home Builders, said in a statement.

Home sales have been ticking up, according to recent reports by the NAR as well as the Obama administration’s December Housing Scorecard.

However, some consumers are finding more stringent lend-ing standards for getting a mortgage a roadblock to homeowner-ship, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market.

Empty Shopping Malls Find New Life With New Tenants

U.S. malls and shopping centers experienced a slight improvement in occupancy during the fourth quarter of 2011, a relief for landlords that have been battling lackluster demand from retail-ers for most of the downturn.

But data service Reis Inc. cautioned that any recovery remains precarious and the outlook for this year is mixed, given the clouds hovering over the economy. While some retailers are expand-ing—such as Forever 21 Inc., Dick’s Sporting Goods Inc. and Dollar General Corp.—landlords can expect more headaches from high-profile store closures by companies such as Sears Holdings Corp. and Gap Inc.

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INDUSTRY

Exterior Home Improvements Provide Biggest Payback

When it comes to quick improvements, ex-terior fixes beat interior improvement every time. NAR’s 2011-12 Remodeling Cost vs. Value Report found that exterior projects such as siding, window and door replacements do not require expensive materials and they have

the added bonus of instantly adding curb appeal.The survey found that upscale fiber-cement siding replacement

recouped approximately 78 percent of its cost upon resale. Foam-backed vinyl siding could be expected to return 69.6 percent of costs, and upscale vinyl siding could recoup 69.5 percent of costs.

Also offering good return on investment were door replace-ments and upscale garage door replacements.

To access the full report, go to www.costvsvalue.com.

MORTGAGES

Serious Mortgage Delinquencies See Slow but Steady Decline

The “serious” mortgage delinquency rate in the 100 largest metropolitan areas is trending down from 10.4 percent at its peak in December 2009 to 9.3 percent.

The serious delinquency rate is the share of

loans in foreclosure plus the share of loans delinquent 90 or more days.

Foreclosure-Response said the decline has been driven by a de-crease in delinquent loans, which dropped from 5.5 percent in De-cember 2009 to 3.7 percent. It said the average foreclosure rate has flat-lined at 5.5 percent over the last three reporting quarters.

Builders Blast Fannie, Freddie Plan

The National Association of Home Builders is criticiz-ing a congressional proposal to raise fees charged by Fannie Mae and Freddie Mac and use the money to pay for an extension of the payroll tax cut through 2012. “Congress is essentially proposing to raise taxes on millions of potential homebuyers in order to pay for a payroll tax cut and other non-housing

legislative initiatives,” said NAHB Chairman Bob Nielson.Fannie and Freddie charge lenders “guarantee fees” to protect

against losses. Housing interests maintain those fees should re-main wholly within the housing finance system and not be used for outside purposes.

MARKETS

Looking for Growth? Texas and California Lead Nation

Brokers who believe more people equate to more home sales opportunities should be eying Texas and California as having the greatest po-tential. The Census Bureau reports Texas gained

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more people than any other state between April 1, 2010 and July 1, 2011—about 529,000. Texas was followed by California, which had a net increase of 438,000, and Florida with 256,000.

States losing population in the last year were Rhode Island, mi-nus 1,300; Michigan, down 7,400; and Maine, with a loss of 200.

Foreigners Eye Vacation Destinations

Web surfers from abroad are most interested in Las Vegas properties, followed by the near-Disney World cities of Orlando and Kissimmee, Fla., ac-cording to a survey from real estate technology provider Point2.

The report showed that most international Web visitors come from Canada, followed by the United Kingdom and Mexico. More than 14 percent of international property searches clicked on Las Vegas, while Orlando snared a little more than six percent and Kis-simmee about four percent.

Other cities frequently searched from abroad were, in order of popularity: Detroit; Pompano Beach, Fla.; Miami; Mesa, Ariz.; Davenport, Fla.; and Phoenix.

AGENTS’ CORNER

Six Tips for Working with Foreign Real Estate Buyers

With immigrants and foreign business entities looking beyond the coasts, the opportunity to work with foreign buyers isn’t limited to certain markets or to practitioners who travel overseas. Here’s how to succeed.

1 Remember that foreign clients may know real estate, but not U.S. real estate. You need to explain local market conditions and U.S. legal issues. But be careful not to talk down to them.

2 Focus on clients from one or two countries, especially when you’re just getting started. In that way, you can become more familiar with the culture and establish a wider network of contacts more rapidly.

3 Recognize that factors such as currency fluctuations and a need for market stability may influence buying decisions. Just being able to park money in the United States may be reason enough to buy.

4 Take it slowly. Recognize that people from some cultures re-quire more consultation and time to make a decision.

5 Develop a group of tax, legal and other experts in foreign ownership of U.S. real estate that you can offer foreign buy-ers as a resource. Once you’re seen as a trusted adviser, off-shore clients will often look to you for assistance in other parts of the transaction, such as finding legal advice.

6 Help bridge differences. Simple things such as converting a price from dollars to euros or square feet to meters can make a foreign buyer more comfortable, says Berger.

Six Winning Strategies to Turbocharge Your Website

With the market making noise, now’s a great time to evaluate and freshen your website. Here are six strategies to hit the ground running in 2012, says Tricia Andreassen, CEO/founder of Pro Step Marketing.

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1 Make sure you have a strong MLS search tool on the front page of your site. Having an interactive search tool where the visitor can choose a specific town, price range and even property type can be a powerful way to compel them to want to click-through and access listings. “Having an IDX-integrated search on the home page eliminates the need for buyers or sellers to click-through three or four levels just to view homes,” said Andreassen.

2 Double-check that you are the point of contact on every list-ing when the visitor searches the MLS. If you are driving peo-ple to the MLS search, don’t forget that the name of the game is lead generation. Make sure they can ask for more informa-tion easily, schedule a showing or even share the listing with a friend in a matter of seconds, all while positioning yourself as the point of contact and keeping an eye on the activity.

3 Build specialized buttons right on the front page so that visi-tors to your site can get information for what specifically in-terests them. For example, create buttons dedicated to “one-level living” or for “properties close to downtown.”

4 Consider a built-in blog within your site. This way your web-site has components for lead capture through search engines and your blog is working to add content and build relevance for the search engines. Do so, however, only if you feel you have the time and inclination to make the blog interesting and to keep it updated. “Make sure your visitors have the ability to retweet your information as well as share it in Facebook and other social media channels,” said Andreassen.

5 Incorporate social media-share features onto every page in your website. People want to see information and then they want to “like” it or share it on their Facebook wall or on their Twitter account.

6 Use built-in email campaigns so you can easily send specific emails to targeted groups. For example, let’s say you come across a great foreclosure deal and you want to let your foreclo-sure buyer pipeline know about it. “Have the tools so that you can email the entire group within moments to let them know about the new listing,” Andreassen said.

The information presented and conclusions stated in this newsletter are based solely upon our best judgement and analysis of information sources. It is not guaranteed infor-mation and is not necessarily a complete statement of all available data. Web site citations are current at time of publication but subject to change. This material may not be quoted or reproduced in any form, including copy machines or any electronic storage or transmission medium, in whole or in part, without permission from the publisher. A special edition of Real Estate Digest is available for real estate agents specializing in commercial property or high-end residential, and for mortgage brokers. Please call 866-762-7879 to order your personalized copies today.

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