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U.S. House Price Declines Continue to Slow: Global Insight
Single-family home prices fell during the second quarter, although at a slower rate than the first quarter, and the extreme overvaluation of house prices appear to be nonexistent, according to new research by Global Insight, an economic information company.

Its latest study, House Prices in America, finds that house prices fell 5.3 percent during the second quarter, less than the 6.6 percent decline recorded during the first quarter. Prices nationwide are down 4.8 percent from a year ago.

Fewer metro areas had price declines during the second quarter, with 152 of the 330 metro areas surveyed reporting falling prices, which represented 46 percent of all single-family housing units in the U.S. This is down from 267 metro areas (81 percent of single-family homes) during the first quarter and 295 areas (89 percent) in the fourth quarter of 2007 that had price declines.

California, Florida and Michigan account for the steepest declines, with 43 of the 50 worst performing metro areas. Las Vegas, Phoenix and Washington, D.C. also are among the bottom 50.

Six housing markets were judged to be extremely overvalued during the second quarter, compared to 51 markets in 2005. Markets with extreme overvaluation were limited to Hawaii, Washington, Oregon and Utah, as well as some pockets along the East and West Coasts. Most markets in the middle of the country remain fairly valued or undervalued.

This is third study released within the past week that suggests that housing price declines in the U.S. may be slowing. Last week, the OFHEO  and S&P-Case-Shiller released similar survey results.

Play It Safe

Is your home designed for kids? Probably not. But it is important to create a home that’s safe for kids, even if you don’t have children, especially if you want it to appear family-friendly.

    Safety gates, outlet covers and cabinet locks are some of the more obvious tools to child-proof your home, but potential hazards lurk elsewhere. Think about how kids often run into a room — and think about the sharp corners of tables, counters and bookshelves. In the kitchen, consider installing padding on the corners of islands and countertops. You might also want to consider installing a stovetop barrier to prevent pots from falling or being pulled off the stove and to protect children from hot splatters and spills.

                                                                                                                    

   As a Second Home Owner and a specialist (I am a RSPS-Resort and Second Home Property Specialist) in selling Second Homes to my friends, family, and referrals, I just read an interesting article in Kiplingers Tax Letter,  October 2008 newsletter.

Congress restricted a tax break for turning a second home into a main home: Some of the gain will be ineligible for the home-sale exclusion if the house is converted to personal use after 2008 and is later sold. The portion of the profit that’s taxed is based on the ratio of the time after 2008 when the home was used as a second residence or rented out to the total time that the seller owned the house. The rest of the gain remains eligible for the home-sale exclusion of up to $500,000 if you owned and used the house as your primary residence for two out of the five years prior to selling it.

This tightening may not bite you too badly if you owned the house for many years before converting it. For example, if you owned a vacation home for 18 years and make it your main residence in 2009 for two years before selling it, only 10% of the gain is taxed. The rest qualifies for the exclusion of up to $500,000. Homes owned for a short time prior to a post-2008 conversion fare the worst taxwise. And you can completely avoid the tax hit by converting before Jan. 1, 2009. Nor does the tightening apply if you turn a primary home into a vacation home. You can still exclude up to $500,000 of profit on the sale of the house if you owned it and used it as your principal residence for two years in the five years before the sale.

E-mail me if you are interested in buying or selling a second home at  PremierClients@gmail.com . Or if you want to talk about managing a second home as a rental, I do that also and have a property management/rental company. We also have a consierge service that you can view on our website.

According to the Better Business Bureau (BBB), many new-home owners are unaware of the limitations on home warranties, which can cause confusion and unnecessary frustration when problems crop up and repairs are needed. To prevent this, the BBB suggests prospective buyers do some research before accepting the keys to their new home.

1. Find out how long the warranty company has been in business. Request a reliability report from your local BBB.
2. Shop around for the best prices. Most home warranties cost between $300 and $395, but not all offer the same benefits — and make sure to factor in the deductible.
3. Ask questions regarding the company’s policy on home repairs. Many have their own service contractors but others allow you to choose your own.
4. Get a professional home inspection so you are aware of any possible problems that may not be covered by your warranty.
5. Call the warranty company to ask questions and see how the customer service department treats you; this might indicate how you’ll be treated during future calls.
6. Know what is covered and what is not. Typically, major operating systems and appliances are covered due to normal wear and tear for the first year.

Take a look at TodaysRealEstateShow.com. We decided to be on the first show. If you’re interested in being on one of the segments (agents, businesses, etc), you can contact the owners at www.TodaysRealEstateShow.com.

Click ON-DEMAND button then select to play the entire show or watch certain segments.

Ryan Vandanaker, a CPA and a Broker-Associate on our Team shares his thoughts on buying NOW.

What a great time it is to be a home-buyer or an investor. Just today I was checking on a “step-up” neighborhood that I hadn’t looked at for a couple of months and found out the prices had fallen about $30,000. That is after they had fallen $30,000 from last fall. The only problem is the banks are very cautious right now, especially if you have debt on the books. However, if you don’t have any debt or you have enough liquid funds, it is bargain central right now.

As an investor, my rule of thumb is that I want the property to cash flow on paper. If the current market rent will cover the expenses and debt service, it doesn’t matter when the market turns around because someone else is covering my payments for me. Effectively, I can wait as long as my mortgage is for things to come back around. Not to mention, the rental market is a good as I have seen it in the last 5 years.

As an investor, I have builder friends who just want to move inventory. In some cases, it means taking a loss but they get to stay in business. But, it provides extremely good opportunities for people that can see past the immediate future and look out 5 to 10 years. Remember, in September 2002 the Dow Jones was at 7700; by September 2007, it had crossed 14,000. The idea is to be a buyer when everyone else wants to sell and right now, with the amount of bank owned properties, they want to sell!

  Be ready to make a wise real estate decision.  Buyers sitting on the sidelines now can reap fabulous financing and incentives.  The inventory is plentiful and overstocked, which makes for a great Buyers market.  You need a good, great, that is, Real Estate Broker ,though, to guide you to and through the transaction process and to represent you-not the seller.  Perhaps you want to bid on an upcoming auction. For example, I went to an auction a few days back in Lexington, KY.  This home was formerly marketed at $620,000.-650,000.  Remember, at an auction the property is normally sold “as is-where is”.  This home had been vacant for probably 4 to 5 months, and reportedly had 2 feet of water in the basement level.  When I saw it, there was mold all over the walls in the basement and even in the 2nd floor laundry room, and there was no A/C turned on.  I believe an end-user  bought it for $480,000. (My guess is that he was going to live in it and not resell it.)  Probably a french drain and swales need to be dug and graded into the back yard and all the drywall and flooring need to be ripped out and replaced in the house.  Most of the appliances were missing, as well as many doorknobs,  intercoms, security and firemonitors, etc.  I am no inspection expert, but I would not advise my client to bid this high with this much work and rehab needed.  I don’t believe he got a deal at all.  He was not my client, but based on several inspections some of my team made on the home, he would pay more in the end than he would have paid at the latest listing price where it did not sell.  You need some guidance from the experts and pros. I believe in TEAMWORK, from all the agents on our TEAM with all their specilities, to our mortgage consultants, CPAs, accountants, financial advisors, home inspectors, appraisers, and of course legal counsel.  You need this TEAM of experts and professionals working with you and for you-and you deserve it and should demand it.

                              With your Brokers ability to access a property, to talk to and get an inspector in a home to be auctioned prior to the auction, why not get an estimate on this home for some or most of the rehab work needed to even inhabit the property?

A good Broker, not only can help you in the auction process by having it pre-inspected for you, but can also show you the latest comparable sales in the areas, perhaps get a quick appraisal, have you pre-approved for the transaction if you are not paying cash, and also knows many good and respectable contractors for any rehab work needed.

Don’t forget also that the commission is usually paid by the seller in an auction and has already been calculated in to the buyers premium or the selling price whether you use a Broker or not to represent you. So why not have the expert advice working for you and representing you?

Many problems that arise before a closing involve the issue of a clear title.  So many foreclosures and short sales that everyone is interested in right now have second or third liens or mortgages attached to the property (and remember that all liens stay on the property until they are released by that lienholder). An attorney or title company is needed to clear the title.  But often that has already been dealt with before an auction unless it is a master commissioner’s sale and then the 2nd or 3rd, etc. lienholder usually loses.  Your Broker will help you get all these answers from legal counsel prior to the auction (or any sale).

Mary Anne Simmons, TEAM Real Estate, Premier Real Estate &  Home Services, serving you in 6 states (FL, KY, TN, AL, NC, SC),  www.PremierRealEstateAndHomeServices.com,  PremierClients@gmail.com

and       

Kelly Karls, TEAM Real Estate, @properties Sales and Marketing, serving ChicagoLand,  Blog:kjPremier.com,  www.ChicagoHomeConnection.com  ,  kkarls@atproperties.com

                         Helping You Make Wise Real Estate Decisions

Some Good News on the Real Estate Housing market

New-Home Sales Up in July
New-home sales in July rose to a seasonally adjusted rate of 515,000, a 2.4 percent increase from the June rate of 503,000, according to figures released today by the U. S. Department of Commerce. However, this is 35.3 percent below the July 2007 estimate of 796,000.

The median sale price of a new home sold in July was $250,000, just below the median price of $250,800 a year ago. An estimated 416,000 new homes were available for sale, representing a 10.1-month supply at the current sales rate, improving from a 10.7-month supply in June.

New-home sales in the Northeast and West increased by 38.9 percent and 9.9 percent respectively, while sales in the Midwest and South declined by 8.2 percent and 2.5 percent respectively. All regions experienced double-digit year-over-year declines except the Northeast, which rose 4.2 percent.                                               

July Existing-Home Sales Show Gains
Existing-home sales, including single-family, townhomes, condominiums and co-ops, increased 3.1 percent in July to a seasonally adjusted rate of 5.00 million units from June but were 13.2 percent lower than the 5.76 million units estimated in July 2007, NAR reported this morning. The sales increase was the highest in five months, although sales have hovered in a narrow range over the past 11 months.

The national median sale price of existing homes was $212,400 in July, down 7.1 percent compared to a year ago when the median was $228,600. Housing supply rose 3.9 percent to 4.67 million existing homes available for sale at the end of July, which represents an 11.2-month supply at the current sales pace. NAR says the increase in supply may be due to an increase in condo inventory while the supply of single-family homes declined.

Three of the four regions saw improvement. Existing-home sales climbed 9.7 percent in the West in July to 1.13 million units and are 0.9 percent higher than a year ago. The median price in the West was $273,200, down 22.2 percent from July 2007.

In the Northeast, home sales rose 5.9 percent to 900,000 units in July, 11.8 percent below a year ago, while the median price was $278,700, which is 4.9 percent lower than July 2007.
In the Midwest, existing-home sales increased 0.9 percent to 1.12 million units in July, 17 percent below the estimate from July 2007. The median price in the Midwest was $175,400, up 1.0 percent from a year ago.

Existing-home sales in the South slipped 0.5 percent to 1.85 million units in July and are 18.1 percent below a year ago. The median price in the South was $179,300, down 3.5 percent from July 2007.

Maybe we have seen the bottom in  some areas.  Be ready to make a wise real estate decision.  Buyers sitting on the sidelines now can reap fabulous financing and incentives.  The inventory is plentiful and overstocked, which makes for a great Buyers’ market.  You need a good, great that is, Real Estate Broker, though, to guide you to and through the transaction process.  Next Blog:  Why You need a great Real estate broker to help you and represent you when you buy. 

                        Helping You Make Wise Real Estate Decisions

Mary Anne Simmons, TEAM Real Estate, Premier Real Estate &  Home Services, serving you in 6 states (FL, KY, TN, AL, NC, SC),  www.PremierRealEstateAndHomeServices.com,  PremierClients@gmail.com

and

Kelly Karls, TEAM Real Estate, @properties Sales and Marketing,serving ChicagoLand,  Blog:kjPremier.com,  www.ChicagoHomeConnection.com  ,  kkarls@atproperties.com