“To buy a home for $170,000, the median national price, the borrower would have to come up with $34,000 in cash. It takes the average middle-class family 14 years to save that much money and closing costs, according to the Center for Responsible Lending.”—Tough down-payment proposals worry home buyers - The Washington Post
Business Terminology: Apprasial
[Real Estate] Apprasial:
process of valuing real property (any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, etc.). Value is usually the property’s market value.
There is a complicated process behind how appraisers evaluate the value of property. Every property is different from the next, which makes a centralized Walrasian auction setting (being ones like the NYSE) impossible for the trading of property assets.
U.K Housing Market
Data from the BBC earlier today has shown that U.K house prices have decreased slighty, vis-a-vis last year’s figures. Prices were down 0.3% using Nationwide’s data and 2.6% when taking data from Halifax.
These figures are hardly surprising when you consider the increase in unemployment, lack of confidence and a continual disparity between the increase in inflation on everyday goods against the stagnant state of salaries.
Joint ownership schemes seem to be the way forward in the short term for first-time buyers. However it inevitably has its flaws; both legally and in terms of the willingness of buyers to commit to such schemes. However, if you’re able to find a trustworthy second part, perhaps family or friends, then it could be good move.
Ergo predicts house pricing to continue to fall in the short-medium term as the unemployment rate looks set to increase, whilst financial institutions may still be feeling the pinch after last week’s events.
What's Ahead for Home Prices in 2012The bleeding is just about over. But don’t expect a speedy recovery. By Pat Mertz Esswein, Associate Editor - Kiplinger
The median home price in the U.S. has plunged nearly 40% in a little over five years, but the worst is definitely over: The market has finally wrung out the last excess valuations born of the housing bubble. Before you break out the party hats, note that this doesn’t mean prices across the nation are poised to rebound anytime soon. Alex Villacorta, director of research and analytics at Clear Capital, a provider of real estate data and analytics, says the housing market is in a suspended state, with positive and negative factors offsetting one another. But he doesn’t expect another free fall in prices, assuming things are left to work themselves out and there are no further shocks to the economy
Read more: http://www.kiplinger.com/magazine/archives/where-home-prices-are-headed.html?si=1#ixzz1hzuEzBmn
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Nationwide reports stability in housing market
The latest figures from mortgage lender Nationwide have reported a slight rise in house prices, with the average property now at £168,731, up 0.2% on the previous month.
The lender said that the figures followed on from a drop of 1.1% on the month before and reflected the stable position of the market so far in 2011, with the biggest increase being just 0.6% which occurred in February. It added that there had also only been 204,000 completed deals in the second half of 2011, the lowest total for two years.
Robert Gardner, chief economist at Nationwide, said that the figures were a reflection on the generally uncertain financial climate but also said that this was having the effect of moving people, especially the young, away from home ownership. He said: “The trend is part of a reflection of stretched affordability. House prices remain relatively high compared to incomes and together with more demanding deposit requirements this is dissuading or at least delaying some first-time buyers from entering the market.”
The Nationwide figures are slightly at odds with those from the Halifax who, earlier this month, reported that prices were up 1.2% month on month in June.
Federal Housing Policy (as briefly as I can manage)
Bailey Everywhere asked me the seemingly innocuous question, “What is federal housing policy.” Unfortunately that’s not a question I can answer in a line or two. But I can highlight a few policy goals.
Promote homeownership for all Americans
- Houses are useful for things like shelter.
- Homeowners are more likely to be invested locally than renters are.
- Homeowners have a vested property interest in maintaining and repairing property they own.
- Homeowners are less likely to move to new neighborhoods every few years when leases expire
- Land ownership is central to our national narrative about ourselves.
- We have a vicious history of racial discrimination in home ownership.
- Some of this involves individual owners refusing to sell to minorities.
- Much of it involves banks refusing to lend to minorities.
- Sometimes it has been more subtle—where banks would refuse to lend in majority-minority communities. (This was called red-lining—after the practice of drawing a red-line around the off-limits areas)
- More recently, we have problems where lenders steered minority borrowers into very, very bad loans even when they would qualify for much better loans. (“Reverse red-lining”).
Ensure a stable and healthy housing market
- Many Americans’ largest asset is their home. They have built equity in the home over twenty or thirty years. With a few hundred thousand dollars of home equity, payments from social security, and Medicare covering the medical expenses you can probably live out the remainder of a reasonably frugal life even if you haven’t been good about saving for retirement.
- Many people have invested in housing—so a robust housing market is good for investors.
- Pressure to build more homes is good for the housing industry
There is a pretty obvious tension between promoting homeownership and ensuring that the housing market keeps rising. If houses keep getting more expensive, it’s going to get harder and harder for those of limited-to-moderate income to afford them.
Local Economic Indicators : Silicon Valley
I always look for “signs of improvement” for my clients and found some interesting economic indicators in the Mercury News. Construction development rose 48% in June while filed bankruptcies fell in the same month. Other good news included single-family home sales rising 14% with the median price rising 2.2 %.
“The current environment of heightened regulatory scrutiny has the potential to subject the corporation to inquiries or investigations that could significantly adversely affect its reputation.”—A statement from Bank of America • Noting in a filing with the Securities and Exchange Commission that the company could be subject to huge penalties over their abusive mortgage practices. They’re not alone; Wells Fargo and Citigroup ware in the same boat, and it’s all thanks to the shady way that the trio dealt with their foreclosures. The reports from the companies suggest that all three will take a financial hit for said shadiness. Bank of America says that the state and federal inquiries “could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs.” In other words, they’re screwed for screwing over homeowners. Oops. source (via • follow)
Top Ten Reasons To Invest In Real Estate
Investing in real estate can be an overwhelming thought for most people. The idea of finding a good property, in a good neighborhood, with a growing population, and then finding a trustworthy renter can seem daunting. But as overwhelming as this may seem, with a little effort comes great reward. With countless benefits to owning an investment property, here are our Top Ten reasons to invest in real estate:
Mortgage Burden Looms Over Dutch
On the contrary to the below article: The Dutch housing market is different from other Global housing markets. The tax deductibility gives borrowers an incentive to make their tax shield as big as possible.
Households in the Netherlands carry heavy mortgage debt, which some economists see as a risk. The Netherlands’ large current-account surplus, at nearly 8% of GDP, and relatively low public debt, at 64% of GDP, could help absorb the shock to consumption if Dutch households face a credit squeeze.
Dutch Prime Minister Mark Rutte dismissed worries about the Netherlands’ mortgage debt. “It’s not a big issue…if you look at the whole picture,” he said, noting that the Dutch have saved as much in their pension funds as they have in mortgage debt—”and we have huge private savings.”
This isn’t public-sector debt. It’s private-sector debt. That wouldn’t be a problem if Dutch house prices were rising. But the market has stalled since August 2008. The country is one of the most densely populated in the world. Open space is seen as a precious commodity, and the government closely controls all construction to prevent sprawl. That means housing supply isn’t very responsive to house prices. Municipal authorities, not market forces, control how, when and where housing is built.
“The current level of house prices is on the edge of what is affordable, considering that there is a generational effect in the housing market,” said Mr. Xu-Doeve, the economic consultant.