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Michael Gillis

Michael Gillis
701 W. Market Street  Perkasie  PA 18944
Phone:  215-469-0213
Office:  215-453-7653
Fax:  267-354-6911

My Blog

Survey Shows Dual Income Couples Fueling Market

November 14, 2012 1:28 am

Dual income households are comprising a greater portion of the housing market and helping sales recover, according to an annual study recently released by the National Association of REALTORS®.

According to the 2012 National Association of REALTORS® Profile of Home Buyers and Sellers, 65 percent of all buyers are married couples, 16 percent are single women, nine percent single men, eight percent unmarried couples and two percent other; percentages of single buyers were slightly higher in 2011. However, just two years ago, 58 percent of buyers were married, 20 percent were single women, 12 percent single men and seven percent unmarried couples; the overall marketshare of single buyers declined a total of seven percentage points over the past two years. Before 2010, the marketshares moved within a very narrow range, generally a percentage point or two.
Paul Bishop, NAR vice president of research, said the study is painting a clearer picture of the impact of mortgage limitations. “We’ve known for some time that stringent mortgage credit standards have been holding back home sales, but these findings show single buyers have been hurt the most over the past two years. Total home sales would be 10 to 15 percent higher without these unnecessary headwinds,” he said. 
“The continued growth in married couples as single buyers shrink demonstrates that households with dual incomes are more successful in obtaining a mortgage.  However, given the historically favorable housing affordability conditions, most single-income buyers could also purchase a home and stay well within their means, if lending requirements were more sensible,” Bishop said.
First-time homebuyers edged up to a 39 percent marketshare in the past year from 37 percent in the 2011 study.  Long-term survey averages show that four out of 10 buyers are typically first-time buyers, who are critical to a housing recovery because they help existing homeowners to sell and make a trade.
The study shows the median age of first-time buyers was 31 and the median income was $61,800.  The typical first-time buyer purchased a 1,600 square-foot home costing $154,100, while the typical repeat buyer was 51 years old and earned $93,100.  Repeat buyers purchased a median 2,100-square foot home costing $220,000.
The median down payment for all homebuyers was nine percent, ranging from four percent for first-time buyers to 13 percent for repeat buyers. First-time buyers who financed their purchase used a variety of resources for the down payment:  76 percent tapped into savings; 24 percent received a gift from a friend or relative, typically from their parents; and six percent received a loan from a relative or friend.  Eleven percent tapped into a 401(k) fund, and six percent sold stocks or bonds.  Ninety-three percent of entry-level buyers chose a fixed-rate mortgage.
Seventy-eight percent of recent homebuyers said their home is a good investment, and 46 percent believe it’s better than stocks; 92 percent were satisfied with the buying process.
Source: The National Association of REALTORS®
 

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29 Percent of Borrowers That Refinance Shorten Mortgage Term during Third Quarter

November 14, 2012 1:28 am

In the third quarter of 2012, 29 percent of borrowers that refinanced an existing mortgage chose to shorten their loan term, based on the Freddie Mac Quarterly Product Transition Report released today. Further, refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate.

Of borrowers who refinanced during the third quarter of 2012, 29 percent reduced their loan term, while 68 percent of borrowers kept the same term as the loan that they had paid off; three percent chose to lengthen their loan term. 
More than 95 percent of refinancing borrowers chose a fixed-rate loan. Fixed-rate loans were preferred regardless what the original loan product had been. For example, 82 percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the third quarter, the highest share since the second quarter of 2010, while the remaining 18 percent chose to refinance back into a hybrid ARM.   
Those borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. For example, 25 percent of HARP borrowers shortened their loan term when they refinanced during the third quarter, compared with 31 percent of borrowers who refinanced outside of HARP. Further, of those borrowers who were refinancing out of an ARM, if they refinanced under the HARP program, then more than 95 percent chose a fixed-rate mortgage; in contrast, of borrowers that had an ARM but did not refinance through HARP, about one-half opted for another hybrid ARM.
Source: Freddie Mac

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Positive Housing Sentiment Continues Steady Climb

November 13, 2012 1:28 am

Americans continue to show growing confidence in home price increases over the next 12 months, providing further indications of a slow but steady housing recovery, according to results from Fannie Mae's October 2012 National Housing Survey. Taken together with rental price expectations, which surged in October and remain much higher than home price expectations, more consumers may be motivated to purchase a home in the coming months.

"This has been a year of steady growth in the percentage of consumers with positive home price expectations," said Doug Duncan, senior vice president and chief economist of Fannie Mae. "Increasing household formation, encouraged by an improving labor market, is adding additional momentum to the housing recovery and putting upward pressure on rental price expectations. Expected increases in both owning and renting costs may encourage more consumers to buy and add further strength to the housing recovery already under way."  

Continuing the positive upward trend seen over the past year, survey respondents expect home prices to increase an average of 1.7 percent in the next 12 months. The share who say home prices will decrease in the next year dropped to 10 percent – 13 percentage points lower than October 2011 and the lowest level since the survey's inception in June 2010.

Additionally, the positive difference between those saying home prices will go up and those saying they will go down remained steady at a survey high of 26 percentage points. The percentage who believe mortgage rates will go up climbed four percentage points to 37 percent following a steep drop in September. Returning to the July 2012 level, respondents' average rental price expectation jumped by 0.8 percent to 3.9 percent, and 50 percent believe home rental prices will rise in the next year – a three percentage point increase over last month and the highest level since the survey began. 

When asked about the state of the economy, the share of respondents who say it's on the right track dropped to 38 percent, down three percentage points from last month. Conversely, those who say the economy is on the wrong track climbed three percentage points to 56 percent. The share of consumers who expect their personal financial situation to get better or stay the same over the next year remained essentially level at 43 percent and 40 percent, respectively.

Other highlights from the survey include:
  • Consumers' average home price change expectation edged up slightly to 1.7 percent, continuing the positive trend of the past year. 
  • Ten percent of those surveyed say that home prices will go down in the next 12 months, a 13 percentage point decrease since October 2011, and the lowest level since the survey's inception in June 2010. 
  • After a sharp drop last month, the percentage who think mortgage rates will go up rose four percentage points in October to 37 percent. 
  • Seventy-two percent of respondents say it is a good time to buy, while 18 percent say it is a good time to sell, consistent with the trends seen over the past six months. 
  • The average rental price expectation jumped up by 0.8 percent to 3.9 percent, a return to the level seen in July 2012. 
  • Fifty percent of those surveyed say home rental prices will go up in the next 12 months, a three percentage point rise over last month and the highest level since the survey's inception in June 2010. 
  • Nineteen percent of respondents say their household income is significantly higher than it was 12 months ago, a slight increase from last month's total of 17 percent. 
  • Household expenses remained stable over the past month, with 56 percent responding that their household expenses stayed the same compared to 12 months ago.
Source: Fannie Mae
 

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How to Protect Yourself from "Storm Chaser" Contractors

November 13, 2012 1:28 am

After storms like Hurricane Sandy, it is not uncommon for fraudulent "storm chaser" contractors to flock to damaged neighborhoods offering to help with home repairs. Unfortunately, homeowners in affected regions could soon be inundated with these fraudulent contractors knocking on their doors.  Additionally, states sometimes ease licensing requirements to meet demand, which can bring in fly-by-night contractors. 

"After any natural disaster there is an increase in storm-chasing contractors attempting to take advantage of distressed homeowners," said HomeAdvisor CEO Chris Terrill. "Post-Sandy, we have seen an 87 percent increase - as compared to what we saw after Hurricane Irene - in requests for generator installation, roof repair, tree removal and siding repair in the areas most heavily impacted by the storm.

Since these repair categories are in such high demand, we anticipate storm chasers to target these specific tasks and homeowners should be on alert in the coming weeks."
HomeAdvisor's Four Warning Signs a Contractor May Not Be Reputable: 
  • The most common contractor fraud involves "storm chasers" that go door-to-door soliciting work they never plan to provide. Don't accept offers from any traveling or door-to-door salespeople. 
  • A reputable contractor will never ask for cash and will never require that the entire job be paid "up front." 
  • Be wary of contractors who use scare tactics such as signing for repairs that they say are urgent. Before agreeing to any additional costly repairs, seek other opinions. 
  • Get written estimates and don't always go with the cheapest price. Dramatically cheaper prices may indicate contractor fraud is present in one form or another.  
Four Questions Homeowners Should Ask a Contractor Before Signing an Agreement: 
  • How long have you been in business? 
  • Are you licensed and registered with the state? 
  • Can you provide a list of references? 
  • Do you belong to any professional associations? 
Source: HomeAdvisor
 

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Metro Area Home Prices, Sales Increase

November 13, 2012 1:28 am

Growth in metropolitan area median home prices increased in the third quarter, and more areas are showing gains, according to the latest quarterly report by the National Association of REALTORS®.

The median existing single-family home price rose in 120 out of 149 metropolitan statistical areas (MSAs) based on closings in the third quarter compared with the same quarter in 2011, while 29 areas had price declines. In the second quarter, 110 areas showed increases from a year earlier, while in the third quarter of 2011 only 39 metros were up.
Lawrence Yun, NAR chief economist, said the growth in home prices gets down to supply and demand. "Housing inventories have been gradually trending down from a record set in the summer of 2007," he said. "Earlier this year, a broad equilibrium began to develop in most areas between home\buyers and sellers, which led to a sustained upturn in home prices. We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to increase supply to meet the needs of our growing population and household formation."
The national median existing single-family home price was $186,100 in the third quarter, up 7.6 percent from $173,000 in the third quarter of 2011, which is the strongest year-over-year price increase since the first quarter of 2006 when the median price rose 9.4 percent. In the second quarter, the price increased 7.2 percent from a year earlier.
The median price is where half of the homes sold for more and half sold for less; medians are more typical than average prices, which are skewed higher by a relatively small share of upper-end transactions.
Some of the price gain resulted from a smaller share of distressed home sales in the market, but the higher prices significantly reflect a market recovery. Distressed homes - foreclosures and short sales which generally sell at deep discounts - accounted for 23 percent of second quarter sales, down from 30 percent a year ago.
A separate breakout of income requirements to buy a home on a metro area basis shows buyers in the vast majority of areas had ample income in the third quarter, assuming they could meet stringent mortgage credit standards.
Total existing-home sales, including single-family and condo, rose 3.2 percent to a seasonally adjusted annual rate of 4.68 million in the third quarter from 4.54 million in the second quarter, and were 10.3 percent higher than the 4.25 million pace during the third quarter of 2011.
At the end of the third quarter, 2.32 million existing homes were available for sale, which is 20.0 percent below the close of the third quarter of 2011 when 2.90 million homes were on the market.
According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged a record low 3.54 percent in the third quarter, down from 3.80 percent in the second quarter and 4.31 percent in the third quarter of 2011.
A breakout of incomes required to purchase a median-priced existing single-family home by metro area shows the typical buyer had more income than necessary in the third quarter. Income amounts are determined using several down payment percentages, assuming a mortgage interest rate of four percent and 25 percent of gross income devoted to mortgage principal and interest.
In the condo sector, metro area condominium and cooperative prices - covering changes in 54 metro areas - showed the national median existing-condo price was $180,800 in the third quarter, up 7.7 percent from the third quarter of 2011. Thirty-three metros showed increases in their median condo price from a year ago and 21 areas had declines.
First-time buyers purchased 32 percent of all homes in the third quarter, down from 34 percent in the second quarter; they were 32 percent in the third quarter of 2011.
Source: The National Association of REALTORS®

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Builder Confidence in the 55+ Housing Market Continues to Improve

November 12, 2012 6:50 am

Builder confidence in the 55+ housing market for single-family homes showed significant improvement in the third quarter of 2012 compared to the same period a year ago, according to the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI). The index more than tripled year over year from a level of 12 to 36, which is the highest third-quarter reading since the inception of the index in 2008.

“Many builders and developers in the 55+ housing segment are reporting an increase in demand from consumers,” said NAHB 50+ Housing Council Chairman W. Don Whyte. “We are seeing improvement in certain parts of the country where people are moving off the fence and either purchasing a home or renting an apartment that is designed to more specifically suit their lifestyle.”

There are separate 55+ HMIs for three segments of the 55+ housing market: single-family homes, multifamily condominiums and rental apartments. Each index measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic). An index number below 50 indicates that more builders view conditions as poor than good.

Although all components of the 55+ single-family HMI remain below 50, they at least doubled from a year ago: present sales climbed 25 points to 36, expected sales for the next six months increased 27 points to 42 and traffic of prospective buyers rose 20 points to 33.

The 55+ multifamily condo HMI had a significant increase of 13 points to 23, which is the highest third-quarter reading since the inception of the index in 2008; however, condos remain the weakest segment of the 55+ housing market. All 55+ multifamily HMI components increased considerably compared to a year ago as present sales rose 13 points to 22, expected sales for the next six months jumped 19 points to 29 and traffic of prospective buyers climbed 11 points to 22.

Meanwhile, the 55+ multifamily rental indices, which already recovered substantially last year, showed continued but more modest increases in the third quarter: present production climbed six points to 31, expected future production increased nine points to 35 and current demand for existing units and expected future demand improved two points to 42 and 44, respectively.

“Like other segments of the housing industry, the market for 55+ housing is continuing on a steady upward path, driven by improving conditions in additional markets around some parts of the country,” said NAHB Chief Economist David Crowe. “While we expect the upward trend to continue as the recovery broadens, the speed of the recovery is being constrained by factors as tight mortgage credit, making it difficult for potential 55+ customers to sell their current homes, and shortages of inputs to construction such as buildable lots that are beginning to emerge in some market areas.”

Source: National Association of Home Builders

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Mortgage Rates Settle in Near Record Lows

November 12, 2012 6:50 am

Freddie Mac released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates mixed following the monthly employment report but continuing to hover near their record lows over the past six weeks. Last year at this time, the 30-year fixed-rate mortgage averaged 3.99 percent, dropping below 4.00 percent for the first time since Freddie Mac started reporting its weekly mortgage rates survey in 1971.

News Facts
• 30-year fixed-rate mortgage (FRM) averaged 3.40 percent with an average 0.7 point for the week ending November 8, 2012, up from last week when it averaged 3.39 percent. Last year at this time, the 30-year FRM averaged 3.99 percent.
• 15-year FRM this week averaged 2.69 percent with an average 0.7 point, down from last week when it averaged 2.70 percent. A year ago at this time, the 15-year FRM averaged 3.30 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.73 percent this week with an average 0.6 point, down from last week when it averaged 2.74 percent. A year ago, the 5-year ARM averaged 2.98 percent.
• 1-year Treasury-indexed ARM averaged 2.59 percent this week with an average 0.4 point, up from last week when it averaged 2.58 percent. At this time last year, the 1-year ARM averaged 2.95 percent.
• Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Borrowers may still pay closing costs which are not included in the survey.

"Mortgage rates remained near record lows following the employment report for October. The economy added 171,000 jobs, above the market consensus forecast, and the two prior months were revised up a combined 84,000. The Labor Department also reported that the unemployment rate ticked up to 7.9 percent and that average hourly wages were unchanged," says Frank Nothaft, vice president and chief economist for Freddie Mac.

Source: Freddie Mac

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More Cash Sales, Shrinking Time-on-Market Show Changing Buyer Dynamics

November 12, 2012 6:50 am

All-cash buyers have surged since the housing downturn while the typical amount of time it takes to sell a home is shrinking, revealing the changing dynamics of today's homebuyers and sellers.

Academic experts took a closer look at cash buyers and how time-on-market impacts home sales during the "Changing Dynamics of Recent Home Buyers and Sellers" session at the 2012 REALTORSs® Conference and Expo. Funding for the research was provided by the REALTOR® University Center for Real Estate Studies.

"We've seen a tremendous increase in cash buyers since the housing downturn that we haven't seen before in history," said Lawrence Yun, chief economist of the National Association of REALTORS®. Yun said a decade ago all-cash home purchases were less than 10 percent of the market but have increased steadily since 2008, to as much as 30 percent of sales.

Yun said the increase in more buyers paying cash for real estate reflected tight lending conditions and an increase in investor sales, which account for the bulk of cash sales. Increases in the number of international buyers, who often have financing difficulties when purchasing a home in the U.S., are also adding to the rise in cash sales. NAR research shows that 62 percent of international purchases were all cash; the percentage has continually increased since 2007.

Recent NAR research on down payment sources may offer insights into how cash buyers are receiving funds for home purchases. According to the 2012 NAR Home Buyers and Sellers Profile, 40 percent of repeat buyers use the proceeds from the sale of their primary residence as a source of down payment, but downsizing boomers may have enough equity left from their home sale to pay all cash for their next purchase. Yun also noted that one in 10 buyers rely on proceeds from the sale of stocks or 401k disbursements for down payments; those with stable jobs and who saw investment gains in recent years may be using those cash funds to buy a home outright rather than financing the purchase.

Dr. Grant Ian Thrall, president of the American Real Estate Society, agreed that cash sales have increased dramatically in recent years. Thrall spoke at the session and conducted an in-depth market analysis to gain greater insights into cash buyers.

"Research shows a bias toward cash sales for newer and lower priced homes," Thrall said. "Many of those sales are occurring within the first 60 days that the home is on the market, and more than half sold within the first 120 days."

Thomas Springer, professor of Finance and Real Estate at Clemson University, discussed how time-on-market responds to employment changes and varies with shifting market and economic conditions. Springer analyzed market data from more than two dozen metro areas. His findings indicate that, at the property level, time-on-market is a function of property characteristics, price and market factors; however, at market level, time-on-market is a function of local, national and global economic and market factors.

Springer determined that time-on-market is a possible indicator of market conditions or risk and that in a vibrant market, time-on-market is shorter, whereas distressed markets often have a longer average time-on-market.
Yun said that tightened inventory conditions are also impacting time-on-market, which has steadily decreased nationally since the start of the year, as are homebuyers' search processes.

"Tightened inventories in some places mean homes are selling more quickly and reducing time-on-market," Yun said. "Our research shows that last year, homebuyers saw 10 homes before buying, down from 12 the year before, and more than half of buyers reported that finding the right home was the hardest part of the home search process."

Source: National Association of REALTORS®

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Foreclosure Data - September 2012

November 2, 2012 6:38 am

CoreLogic® has released its National Foreclosure Report for September that provides monthly data on completed U.S. foreclosures and the overall foreclosure inventory. According to the report, there were 57,000 completed foreclosures in the U.S. in September 2012, down from 83,000 in September 2011 and 59,000 in August 2012. Prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 3.9 million completed foreclosures across the country.

Approximately 1.4 million homes, or 3.3 percent of all homes with a mortgage, were in the national foreclosure inventory as of September 2012 compared to 1.5 million, or 3.5 percent, in September 2011. Month-over-month, the national foreclosure inventory was down 1.1 percent from August 2012 to September 2012. The foreclosure inventory is the share of all mortgaged homes in any stage of the foreclosure process.

"The continuing downward trend in foreclosures along with a gradual clearing of the shadow inventory are signs of stabilization and improvement in the housing market," said Anand Nallathambi, president and CEO of CoreLogic. "Increasingly improving market conditions and industry and government policy are allowing distressed homeowners to pursue refinancing, loan modifications or short sales rather than foreclosures."

Homes lost to foreclosure in September 2012 are down 50 percent since the peak month in September 2010 and 22 percent less than the beginning of the year. While there is significant progress to be made before returning to pre-crisis levels, the trend is in the right direction as short sales, up 27 percent year over year in August, continue to gain popularity.

Highlights as of September 2012:

• The five states with the highest number of completed foreclosures for the 12 months ending in September 2012 were: California (108,000), Florida (92,000), Texas (59,000), Georgia (55,000) and Michigan (51,000). These five states account for 47.7 percent of all completed foreclosures nationally.
• The five states with the lowest number of completed foreclosures for the 12 months ending in September 2012 were: South Dakota (20), District of Columbia (58), Hawaii (436), North Dakota (583) and Maine (625).
• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (11.5 percent), New Jersey (7.3 percent), New York (5.3 percent), Illinois (5.2 percent) and Nevada (4.9 percent).
• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.5 percent), Alaska (0.7 percent), North Dakota (0.7 percent), Nebraska (0.9 percent) and South Dakota (1.1 percent).

Source: CoreLogic

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Top 5 Fall Rodent-Proofing Tips

November 2, 2012 6:38 am

Some parts of the Northwest have already seen snow, and as the cool temperatures start to settle in for the next few months, homeowners are advised to pest-proof their homes now, because fall is when most insect and rodent pests seek shelter for the winter months.

As the weather starts to cool, rodents and other pests move inside to overwinter and breed. A pregnant female mouse can produce an average of eight pups in a litter, and a rat, seven pups on average, and there are typically four to five litters per year. Their gestation period is about a month, so before you know it, one mouse can turn into a major problem for homeowners.

Mice can fit through an opening the size of a dime, so it is important to fix any cracks in and under siding, doors and windows. In addition to warmth, rodents enter homes looking for food and water. They prefer cereals and grains, but will eat just about anything.

As you prepare your home for winter, here are five recommended tips:

• Make sure all holes, gaps and cracks larger than a quarter of an inch are sealed.
• Replace door sweeps and make sure doors and windows close tightly.
• Clean out gutters and install gutter guards to prevent leaves and debris from accumulating.
• Store firewood as far from the home as possible.
• Trim branches, plants and bushes that hang over the home.

With the recent increase in the number of vector borne diseases caused by Hantavirus and Bubonic plague, it is extremely important to be proactive in protecting your home this winter against mice and rats. Both diseases tend to occur more frequently in rural parts of western states, which are where rodent activity is higher this year.

Source: Orkin

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