After years of wild swings, the U.S. housing market is slowly returning to normal.
The latest forecast from Fiserv (FISV) Case-Shiller predicts home prices will increase by an average of 3.3% annually over the five years ending September, 2017.
“2012 was the first year since 1997 that the housing market has resembled something [close to] normal,” said David Stiff, Fiserv’s chief economist.
“For the past 15 years, home price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology.”
From 1998 until the housing bubble peaked in 2006, home prices grew by 5% or more a year. But once the bubble burst, home prices plunged, falling 30.5% through the end of September 2012.
It wasn’t until late 2011 that markets started to stabilize, according to Stiff.
Between September 2011 and September 2012, average U.S. home prices rose 3.6%.
By then, 62% of the 384 metro areas Fiserv tracks reported rising home prices, up from just 12.5% of all markets during the same period a year earlier.
Many of the metro areas hit hardest by the housing bust recorded the biggest price gains during those 12 months.
In Phoenix, for example, prices climbed back by nearly 21%; prices in Detroit rose almost 16%; and homes in San Jose, Calif., gained 12.5%.
Appliances account for nearly 13 percent of a household’s energy costs, according to the U.S. Department of Energy, with refrigeration, cooking and laundry at the top of the list.
And, while purchasing more energy-efficient appliances can be a good way to reduce your current electricity use, that’s not always practical. You can, however, use your appliances more efficiently. Here are some tips on how to do just that:
A refrigerator uses five times the electricity of a television, according to the DOE, which suggests the following ways to cut back on the energy consumption of your fridge:
Cover liquids and wrap foods. Uncovered foods can produce moisture, making the compressor work harder.
Maintain proper temperatures. No need to keep the fridge too cold.
Recommended temps are between 37 and 40 degrees Fahrenheit for the refrigerator, and 5 degrees Fahrenheit for the freezer section.
Defrost regularly. If you have a manual-defrost model, never let the frost build up more than one-quarter of an inch. Build-up decreases energy efficiency.
Check the door seals to make sure they’re airtight. A quick way to do that: Close the door over a dollar bill; if you can easily pull the bill out, the seal may need replacing.
Here’s a fact about dishwashers that may spur you to go green. The DOE says that a pre-1994 dishwasher model uses about 10 gallons of water per cycle; in contrast, current Energy Star-rated units use 5.8 gallons or less. And, because most of the energy used by a dishwasher goes to heating water, the more gallons used per cycle, the more money you dish out. Here are some water and energy-saving tips to help you curb costs:
Wash full loads. The dishwasher will use the same amount of water, whether it’s half-full or fully loaded.
Scrape, don’t rinse. Modern dishwashers can handle heavily soiled dishes. Soak or pre-wash only in the case of burned/dried-on foods, says the DOE.
Check the manual. Some dishwashers have an internal heating element, which might allow you to set your home’s water heater to a lower temp and still get good results.
Let dishes air dry. The no-heat air-dry cycle uses less energy.
When it comes to doing laundry, switching your temperature setting from hot to warm can cut a load’s energy use in half. If you’re doing several loads a day, or week, this simple change can make a big impact. The Department of Energy also suggests the following tips:
Wash and dry full loads. Use the appropriate water level setting if you are washing a smaller load.
Clean the lint screen. Frequent cleaning of your dryer’s lint screen (and vacuuming of lint that collects below it) will boost air circulation, and can help prevent fire hazards. Set up a reminder to bring in a professional to clean the dryer vent periodically.
Dry heavy items on their own. Dry towels and other similar items in a separate load from light-weight clothes. Consider using a clothes-line in the warmer months.
Use the cool-down cycle. This allows clothes to finish drying with the heat that is already in the dryer.
Powering appliances can be costly. But, finding ways to curb energy use one appliance at a time can help save you money and help conserve natural resources at the same time.
This post comes from the editors of The Allstate Blog, which helps people prepare for the unpredictability of life.
Applying for a mortgage is a big deal. There’s a lot of paperwork involved. And it must be filled out carefully and completely to ensure that the process goes smoothly. Here are five good reminders before you get started.
1. Fill in the mortgage application (Form 1003) completely.
Many borrowers mistakenly give partial answers and omit information. This can lead a loan officer to make incorrect assumptions. For example, say you’ve worked for 4 years for Company X. You state this information on your application. But Company X underwent a name change this past year, and was originally called Company Z when you started working there. This fact should be clarified when filling out your paperwork, or it could cause a hiccup.
2. Tell your loan officer of any past credit problems up front.
Problems such as tax liens or other financial events are likely to be uncovered during the loan process reports. If they aren’t disclosed up front, the lender may think that you are trying to hide something.
3. Gather your most recent statements.
Gather your most recent tax returns (past two years), and three months of bank and investment (401k + IRA) statements. Remember to provide all pages, even the last pages that may be blank. At the bottom of a bank statement it might say: “1 of 6,” and often the last page can be left intentionally blank. But that last page is actually important because without it, the lender may suspect missing information. Also remember to copy both the front and back of statements.
4. Document any large deposits to your bank accounts.
If a deposit is greater than your typical paycheck an underwriter may require some additional documentation. For example, you may have sold a car, and if so, you’ll need to provide a signed bill of sale, corresponding copy of the title and proceeds check (to prove the money was not borrowed).
5. Avoid buying high ticket items prior to or during a home purchase.
Such purchases, especially on credit, may change a borrower’s ability to obtain a home mortgage because their debt-to-income ratio may change as a result.
– Bob Waun, Bankers Home Loan
1.) Demand Is High
Homes are selling at a pace not seen since 2007. The most recent Existing Home Sales Report by the National Association of Realtors (NAR) showed that annual sales in 2012 increased 9.2% over 2011. There are buyers out there right now and they are serious about purchasing.
2.) Supply Is Low
The monthly supply of houses for sale is at its lowest point (4.4 months) since May of 2005. The current month’s supply is down 21.6% from the same time last year. Historically, inventory increases dramatically in the spring. Selling now when demand is high and supply is low may garner you your best price.
3.) New Construction Is Coming Back
Over the last several years, most homeowners selling their home did not have to compete with a new construction project around the block. As the market is recovering, more and more builders are jumping back in. These ‘shiny’ new homes will again become competition as they are an attractive alternative to many purchasers.
4.) Interest Rates Are Projected to Inch Up
The Mortgage Bankers’ Association has projected mortgage interest rates will inch up approximately one full point in 2013. Whether you are moving up or moving down, your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.
5.) Timelines Will Be Shorter
The dramatic increase in transactions caused many challenges to the process of buying or selling a home in 2012. We waited for inspections, dealt with last minute appraisals and prayed that the bank didn’t ask for ‘just one more piece of paper’ before issuing a commitment on the mortgage. There are fewer transactions this time of year. That means that timetables on each component of the home buying process will be friendlier for those involved in transactions over the next 90 days.
Tips by The KCM Crew
Forget the myth that winter is a bad time to sell real estate. While sales usually inch lower in the cooler months, some real estate pros are saying this winter in particular may be a great time to sell a home.
1. Mortgage rates are near record-breaking lows.
2. Home prices are starting to rebound in many markets across the country. The National Association of REALTORS® reported that home prices in December were 11.5 percent higher than a year earlier.
3. Homes still remain a good deal: Prices are rising but remain mostly below 2007 highs, and in many areas, the cost of buying is cheaper than renting.
4. Distressed homes that typically sell at big discounts — up to 20 percent off — are still widely available. Short sales and foreclosures accounted for 22 percent of all existing home sales in November.
5. Household demographic changes: Many buyers used to want to wait until the end of a school year before moving, but households are changing and moving schedules are less tied to school terms. That’s because households with children are making up a smaller part of the mix nowadays. According to William Frey with the Brookings Institution, 80 percent of all households in the U.S. do not include children. has declined.
6. Household formation is growing. “Many people who ran into tough economic times several years ago are again looking at real estate ownership,” says Wendy Forsythe, executive vice president with Atlantic & Pacific Real Estate. “Enough time has passed so that many of these individuals have re-built credit, built up their savings and now qualify for FHA, VA and conventional financing.”
Existing-home sales, prices climb in 2012
The housing market strengthened last year as growing demand from buyers lifted sales and prices of existing homes, but contributed to tighter supplies of homes for sale. A recap:
Existing home sales are poised to keep marching upward
this year after hitting their highest level in five years in 2012,
Home sales are set to keep marching upward this year after hitting their highest level in five years in 2012, economists say.
Existing-home sales for the full year rose 9.2% from 2011, according to preliminary data, the National Association of Realtors reported Tuesday.
New home sales, which will be reported Friday, have also been improving.
Housing is finally contributing to the economy’s recovery. No longer the drag that it’s been since the housing bust began in 2006, housing’s positive influence will grow more this year, says Moody’s Analytics chief economist Mark Zandi.
He expects housing to contribute a fifth of the economy’s growth this year. That’s a big turnaround from 2009, when it subtracted more than 1 percentage point from GDP growth, he says.
Housing has historically led the U.S. economy out of recessions. That didn’t happen this time, and it’s one reason the economic recovery has been weak, says David Crowe, chief economist for the National Association of Home Builders.
Now that housing appears to be mending, with prices rising and more new construction, “the recovery will start to feel more normal,” Crowe says.
New home sales are especially important to the economy because buyers then spend money on a raft of other items, such as furnishings, appliances and landscaping. Rising home prices, meanwhile, increase household wealth.
December’s existing-home sales, down 1% from November to a seasonally adjusted annual rate of 4.94 million, were almost 13% higher than a year earlier, the NAR says.
Last month’s numbers were weaker than expected, but “the trend is still up,” says Liz Ann Sonders, Charles Schwab chief investment strategist.
Home sales — and prices — are being driven higher by:
— Interest rates. They averaged 3.38% for a standard 30-year-fixed rate mortgage for the week ended Jan. 17. Average interest rates for 30-year-fixed loans have been below 4% for the past 14 months, Freddie Mac data show.
The low rates, along with home prices that fell more than 30% from their 2006 peak, has vastly improved housing affordability.
— Job growth. The unemployment rate stood at 7.8% in December, down from its peak of 10% in the fall of 2010. A better job market is enabling more people to move out on their own, which is driving housing demand. Net household formations topped 1 million in each of the past two years, Sonders says. That’s more than twice the level of 2009 and 2010.
— Falling supply. The supply of homes for sale in December fell to 4.4 months, based on December’s sales pace, the NAR says. That’s the lowest level since May 2005. Supplies are dwindling in the face of rising demand, fewer foreclosures and reluctant sellers.
Not all economists see brighter days ahead for housing, given what market researcher CoreLogic says was a 7.4% jump in home prices in November from a year earlier.
Higher taxes and cuts in government spending, along with still-tepid job growth, will weigh on the market this year, says Steven Ricchiuto, chief economist for Mizuho Securities.
Interest rates, too, aren’t likely to go lower unless the economic recovery falters. The low rates have already sucked in home buyers who were waiting to buy, he says.
“You’ve probably already seen the best of the housing recovery,” Ricchiuto says.
Winter is officially here but is your home ready for it? According to the National Severe Storms Laboratory, winter storms can be dangerous because most of the safety risks they pose are indirect. While these factors result from the storm, they may be delayed rather than immediate and are not always obvious.
For example, ice on roads may contribute to vehicle accidents and shoveling snow can sometimes lead to heart attacks in those already at risk. Homeowners have an additional set of concerns to add to these.
Wind and snow can damage trees and power or phone lines, but in most cases this will be inconvenient rather than dangerous. If someone should be injured or otherwise need medical attention after such damage, however, it could interfere with calling for or receiving help.
Snow and especially ice on driveways and sidewalks can pose dangers, either to people personally walking on slippery surfaces or cars trying to drive on them. When clearing snow and ice, homeowners should be careful to ensure they stay warm, and go inside to take breaks if necessary. While the risk varies depending on geographical location and weather patterns, hypothermia and frostbite can cause serious illness and injury or even death in the wrong circumstances, so caution is
When inside, however, there are still hazards that can reach homeowners during the season. Among the worst is bursting pipes, since they can lead to flooding that damages a home structurally in ways that are difficult and time-consuming to repair. Emptying or insulating plumbing can prevent this in many cases. Another problem is snow on roofs, which can be heavy enough to break the structure. This is expensive to repair. These types of damage can make it attractive to move out, but will generally make it impossible to sell a home until repairs are concluded.
Home repair contractors
To deal with these and other problems, professional assistance is best. One contractor told U.S. News and World Report the most common type of damage in his experience is on the roof. This may result from broken or missing shingles and be impossible to see at a glance, since the damage is in the form of small gaps that allow water from melting ice and snow to seep into the home.
Experts note that the time pressure when dealing with such home damages can prevent homeowners from shopping around for contractors and getting competing bids, especially since storm conditions tend to mean that the best contractors get a lot of work. Because of this, it is recommended that homeowners hire a professional to check pipes, heating and cooling systems and other relevant aspects of the home before severe weather strikes. This also gives them a chance to develop a relationship with a contractor and ensure he or she is punctual.
View this post and more like it at http://blog.coldwellbanker.com
Falling inventories, continued pick up in housing demand, low mortgage rates and improved affordability are key factors that will continue to underpin home prices, according to Barclays 2013 outlook report on housing.
Housing starts for the first quarter are expected to be 944,000 and jump to 973,000 by the second quarter. Inventory supply is also projected to stabilize at current levels and even move modestly higher through the year.
If the fiscal cliff were to hit, the housing industry would likely slow, but not enough to a point where it would become particularly vulnerable to a sharp contraction.
Residential investment spending is a sector that would spring back quickly if the ‘cliff’ occurred because upward momentum in the spending remains strong, Barclays said.
Residential spending grew 13.8% year-over year in the third quarter, however recent data indicates that there’s no further acceleration. Particularly, housing starts increased 41.9% year-over-year in October, with the November homebuilders index showing strong gains in the upcoming months.
“New home inventories have fallen to their lowest levels ever, as homebuilders have held housing starts below even the depressed pace of new home sales in recent years. Now that new and existing home sales are on sustained upward trends, new home inventories have fallen enough that builders need to raise housing starts to prevent inventories from falling further,” the report said.
The S&P/Case-Shiller Home Price Index rose 0.39% month-over-month in September, marking the eighth consecutive monthly increase.
The indices outperformed expectations of home price increases in 2012 as a result of shadow inventory.
Distressed home pricing has rebounded in line with, if not stronger than, non-distressed pricing.
Real estate wealth, which has dragged on consumer spending since 2007, is expected to begin to boost consumer spending sometime in 2013.
“This would mark an important turning point for household balance sheets, where net wealth effects from falling financial prices and the collapse of the housing market have been significant impediments to the strength of consumer spending and, in turn, the pace of the broader recovery,” Barclays said.
Housing policies will prove to be an additional risk for housing.
The Federal Housing Administration projected $16.3 billion shortfall in reserves in its actuarial review. FHA-backed loans represent about 20% to 30% of new homebuyers.
To avoid any long-term solvency, the agency will “likely have to raise additional revenue and improve the quality of its portfolio by increasing insurance premiums, raising the down payment requirement and lowering conforming loan limits.”
While many home sellers would prefer to sit back and hope for the best regarding the sale of their home during winter, the cold and snowy season means they might have to put in some work at their residence to help get it off the market, according to Bankrate.
The website reports home sellers would be wise to spend some time and energy improving the look and feel of their home prior to allowing prospective home buyers to tour the residence with their real estate agent.
One of the more arduous winter tasks for homeowners is shoveling. Bankrate reports home sellers need to keep on top of heavy snow accumulation on their property. Specifically, clearing walkways of snow is ideal so that buyers who wish to tour the home can clearly get to the front door.
Additionally, the website reports it is smart to ensure the driveway and street area in front of the home is clear of snow so home buyers have plenty of areas to park if there’s an open house.
One task home sellers should perform is monitoring the weather for days which they plan to showcase the home to potential buyers. Should there be a snow storm or other inclement weather on the day of an open house, sellers should be flexible and consider changing the date of the showcasing to prevent buyers from having to travel the roads, according to Bankrate.
The last thing home sellers and their agents want is for buyers to come visit a home when they would risk their safety in doing so.
To make the home look warm and appealing during the winter, Bankrate reports home sellers may want to hang up some decor to accent their home and the snow outside, if there is any.
However, instead of adorning the house with holiday arrangements and pieces, the website report home sellers would be better off hanging wreaths and wrapping garland around banisters. Too many holiday decorations tends to be a put-off for some buyers, according to Bankrate.
Also, more playful home sellers could build a snowman in the yard, according to the website, which could be a great welcome for prospective buyers – particularly those with families.