Assist2Sell

The National Association of Realtors' (NAR) report says existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.  For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005.  Economists polled by Thomson Reuters say sales of previously occupied US homes completed in December fell 7.3 percent to a seasonally adjusted annual rate of 6.06 million, down from 6.54 million in November. Last year, first-time buyers were the main driver of the housing market, but their presence is on the decline, according to a survey of real estate agents released last week by research firm Campbell Communications.  NAR practitioner survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November and 47 percent in October. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors. "The majority of people who are going to use [the $8000 tax credit] have used it already," said Thomas Popik, who conducted the survey.

First the good/ not so bad news -- 

US housing prices dropped 32% from the peak in the second quarter of 06, to the bottom in the first quarter of 2009,  prices were up 6.3% by the end of 2009, according to a Standard & Poor’s (S&P)/Case-Shiller home price index annual report.  S&P chief economist David Wyss projects housing sales and starts to drop over the winter, but to remain well above their early 2009 lows, and to recover in the spring. Wyss projects 750,000 total housing starts in 2010, followed by an additional 1.18 million housing starts in 2011. He also projects national house prices to decline 8% over the winter months.  The S&P/Case-Shiller 10-city and 20-city composites peaked in June and July 2006, respectively and both bottomed out in April 2009.

Read /download the 2009 year end report here.

The Bad News -- 

A total of 3,957,643 foreclosure filings — default notices, scheduled foreclosure, and auctions— were reported on 2,824,674 U.S. properties in 2009, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007. The report also shows that 2.21 percent of all U.S. housing units (one in 45) received at least one foreclosure filing during the year, up from 1.84 percent in 2008, 1.03 percent in 2007 and 0.58 percent in 2006.

Foreclosure filings were reported on 349,519 U.S. properties in December, a 14 percent jump from the previous month and a 15 percent increase from December 2008 — when a similar monthly jump in foreclosure activity occurred. Despite the increase in December, foreclosure activity in the fourth quarter decreased 7 percent from the third quarter, although it was still up 18 percent from the fourth quarter of 2008.

"As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said James J. Saccacio, chief executive officer of RealtyTrac. "After peaking in July with over 361,000 homes receiving a foreclosure notice, we saw four straight monthly decreases driven primarily by short-term factors: trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline.

"Despite all the delays, foreclosure activity still hit a record high for our report in 2009, capped off by a substantial increase in December," Saccacio continued. "In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog."

Read the full article here

The Federal Housing Administration is temporarily lifting an "anti-flipping" rule, allowing borrowers using government-insured loans to be more competitive in bidding on foreclosed properties recently purchased from banks and even the government.

The Department of Housing and Urban Development's anti-flipping policy prohibits FHA financing on purchase transactions where the seller has owned the property for only 90 days. HUD found this policy blocked potential FHA borrowers from taking advantage of quick resales of real estate owned. REO sellers, generally, are unwilling to go with FHA borrowers because of holding costs and vandalism risk during the 90-day holding period. FHA is lifting the 90-day rule for one year starting February 1. FHA borrowers have "often been shut out from buying affordable properties," said FHA commissioner David Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity." FHA has been burned by property flipping scandals before. This time around it insists that all sales must be arms-length transactions with no evidence of flipping in the previous 12 months. If the resale price is 20% higher than the REO sales price, the lender has to provide supporting documentation and a second appraisal in some cases.

It’s about time!  I applaud the FHA for finally using some common sense. This “anti-flipping” rule was having a negative effect on everyone in the market.  The majority of today’s buyers are using FHA loans to buy homes. Many investors are turning down FHA buyers due to the 90-day rule, or they have to extend the closing period to reach the 90 days, which raises holding costs. Eventually these costs get passed onto the buyer.  A 90-day holding period is doing nothing but extending the transaction.

I’ve long said, to get this market cleaned up we are going to need investors.  Banks are not in the real estate business; they are in the money business.  Investors are the best group to buy up foreclosed properties, fix them up, and sell them or rent them.   Investors have the knowledge and local resources to get the job done quicker and more cost effectively than banks.

Is now the time to buy? This seems to be the debate that won't quit within the industry. A new year and debate continues. 

Brett Arends of the Wall Street Journal has an argument based on the latest Case-Shiller housing data, and checked against Census data.  In short, now is a good time to buy a home.  Real estate has now fallen 30% from its 2005 peak, at the same time as mortgage rates have also plummeted. In 2006 you had to pay an average of about 6.4% on a 30-year fixed loan, according to the Federal Reserve. Right now you can get deals for about 5%. On average, buying a home now is as cheap as it was in the mid-1990s, when houses were an absolute steal. But what about waves of mortgage resets coming in the next two years? What about all the unemployment? And the foreclosures?

Arends claims these are all valid arguments for refusing to buy homes when they are expensive, or even average priced. But the whole point about markets is that they adjust. Prices are now cheap. They reflect this bad news, and more. If you have a stable income, and you can get a 30-year mortgage at 5% or so, and you are willing to drive a hard bargain on a home in this market, this is your time.   Arends continues:  "Over and over again, history suggests that the best investments are the ones no one wants–gold when it was $260 an ounce, Amazon.com when it fell below $10 in 2002, Hong Kong shares during the SARS "crisis" in 2003, and so on. If an investment feels comfortable, it should make you nervous. If it makes you really nervous, that's probably good.

Read the story here.

Bob Pelzmann has been selling real estate for more than 25 years. It’s provided a good life for his family and, because of that, he gives back to those less fortunate.

“I got my license in the early 1980s. I worked real estate while I had another job and in 1984 I went full time,” Pelzmann said.

In 1990 he opened his own real estate company with a partner. When the two decided to part ways in 2000, Pelzmann and his wife, Maggie Richardson, bought the Assist 2 Sell franchise, naming it Assist 2 Sell Right Price Realty.

“We saw the market changing and the biggest change I saw was the traditional six-percent real estate companies were having a harder and harder time with the Internet. The Internet opened up a new business model and I looked around at the available franchises and the only one out there that combined a flat fee with full service was Assist 2 Sell,” he said.