Home Values

Case-Shiller Index Says Detroit And Washington DC Lead The Market

Standard & Poors released its November 2011 Case-Shiller Index this week. The index measures the change in home prices from month-to-month, and year-to-year, in select U.S. cities.

According to the data, for the second straight month, home values fell in 19 of the Case-Shiller Index’s 20 tracked markets. In addition, also for the second straight month, Phoenix, Arizona was the lone Case-Shiller-tracked city in which home values rose.

Overall, November’s Case-Shiller Index showed a 1 percent decrease in home values between October and November 2011, and a near-4 percent decrease between November 2010 and 2011, putting home values at roughly the same levels as 8 years ago. Don’t read too far into it, however.

The Case-Shiller Index, though widely-cited, remains widely-flawed.

As a buyer or seller in Lake County Indiana, for example, relying on the Case-Shiller Index for market research can lead you to improper conclusions. To understand the Case Shiller Index’s methodology is to understand why.

First, the Case-Shiller Index draws its data from a very limited geography.

There are more than 3,100 municipalities nationwide. The Case-Shiller Index tracks just 20 of them. And they’re not the 20 largest, either. Four of the Top 10 Most Populous U.S. Cities are excluded (Houston, Philadelphia, San Antonio, San Jose) whereas Minneapolis and Tampa are not.

Minneapolis is the 48th largest city in the United States. Tampa is number 55.

Next, when Case-Shiller Index gathers its data from its 20 cities, it only includes the home sale data of single-family, detached homes. This means that sales of condominiums and multi-unit homes are specifically excluded from the index. There are some cities — Chicago and New York, for example — where condominium sales represent a large percentage of the overall market.

The Case-Shiller Index ignores that.

And, lastly, when the Case-Shiller Index is published, it’s published on a 60-day delay. Its data is not “current”, therefore, and does little to tell buyers and sellers of St John Indiana and the country what’s happening in their home markets right this minute. Instead, the Case-Shiller Index tells us how the housing market looked two months ago.

If you’re active in the real estate market, either as a buyer or a seller, the Case-Shiller Index does you little good. For real-time data that’s actionable, speak to a real estate professional instead. It’s where you’ll find your best, most reliable and relevant information.

Home Values

Will Home Values Rise This Year?

Will your home gain value over the next 12 months? Nobody can know for sure, of course, but should recent housing trends continue, there’s concrete cause for optimism.

The housing economy has suffered since 2007, knocking home values down nearly 20% nationwide. And while some areas have fared better as compared to others but, in general, home values are down. 

Mortgage rates are down, too, and that’s good news for buyers in Schererville Indiana. The combination of low rates and low prices has led home affordability to an all-time high. As you’ll hear in this 4-minute interview with NBC’s The Today Show, carrying a mortgage costs 25% less per month as compared to just 3 years ago.

Some other notes from the interview include:

• There are more buyers out looking for homes today, which leads to more sales
• The housing market is expected to get gradually better, month-by-month, in 2012
• Foreclosures will continue to be a big part of the housing market

With housing supplies shrinking, buyers throughout Northwest Indiana may find their best “deals” today — before the Spring Buying Season begins in February.

However, we can’t forget that housing markets are local — not national. Each town and neighborhood has its own market drivers and prices where you live may have already started to climb.

For accurate, up-to-date data on the local housing market, talk with one of the local real estate agent.

Home Values

Housing and Mortgage: The Experts Make Their 2012 Predictions

As the new year begins, there are no shortage of stories telling us what to expect in 2012. Housing finished 2011 with momentum and mortgage rates closed at the lowest rates of all time.

Some expect those trends to continue through the first quarter and beyond. Others expect a rapid reversal.

Who’s right and who’s wrong? A quick look through the newspapers, websites and business television programs reveals “experts” with opposing, well-delivered arguments views. It’s tough to know who to believe.

For example, here are some “on-the-record” predictions for 2012 :

• Home prices will rise in 2012 (says Freddie Mac)
• Home prices will fall in 2012 (says CBS News)
• Mortgage rates will rise in 2012 (says American Banker) 
• Mortgage rates will fall in 2012 (says the LA Times)

The issue for buyers, seller, and would-be refinancers in Crown Point and nationwide is that it can be a challenge to separate a “prediction” from fact at times. 

When an argument is made on the pages of a respected newspaper or website, or is presented on CNBC or Bloomberg by a well-dressed, well-spoken industry insider, we’re inclined to believe what we read and hear.

This is human nature.

However, we must force ourselves to remember that any analysis about the future — whether it’s housing-related, mortgage-related, or something else — are based on a combination of past events and personal opinion.

Predictions are guesses about what might come next — nothing more.

For example, at the start of 2009, few people expected the 30-year fixed rate mortgage to stay below 6 percent, but it did. Then, at the start of 2010, few people expected the 30-year fixed rate mortgage to stay below 5 percent, but it did.

All we can know for certain about today’s market is that both mortgage rates and home values are low, creating favorable home-buying conditions in and around Northwest Indiana and nationwide.

At that start of last year, few people expected mortgage rates to even reach 4 percent. Today, rates “with points” price in the 3s.

What 2012 has in store we just can’t know.

Home Values

Top 5 New Year’s Resolutions for Improving Your Home

This time last year, you were probably filled with inspiration and visions of what your home could be. Excitement was in the air because you were finally going to take on all of those household projects that you’ve been wanting and needing to do.

But, if you were like a lot of homeowners, 2010 came and went rather uneventfully in terms of house projects. Maybe you ended up being busier than you thought you would be or maybe with the economy bottoming out, those projects just didn’t seem feasible. Now it’s 365 days later, and your home looks exactly the same as it did last year. In other words, the “resolution” you made about improving your home fell apart. Aside from basic maintenance, nothing got done.

The good news is things are looking up and it’s a brand new year! To help get you moving in the right direction, here’s a list of the Top 5 New Year’s resolutions for improving your home, which take into account everything from the time and cost involved to the overall “bang for your buck” these improvements will provide.

1. Two Words: “Paint” and “Paint.” Nothing improves the overall look of a home quite like a fresh coat of paint. This is true for both the outside and the inside of your home. For the outside, consider hiring professionals. This is the best way to ensure that the job is done quickly and correctly. When it comes to the inside of your home, there’s nothing wrong with doing it yourself. Once again, tackle one room at a time, and don’t move on until you’re happy. Remember, you can always paint over a color that looked better in the store than it does on your walls. For homeowners who are thinking of selling, stick to neutral colors when painting to help broaden the house’s appeal and make it easier to sell.
2. Curb Appeal. Step outside your home and walk to the middle of the street, being mindful of any traffic. Take a good look at your home. Be as objective as you can, and ask yourself how does it look? Is the lawn in need of a manicure? Could the yard use a little more foliage? Are the front door and the garage door beaten up or in need of paint? You see where we’re going with this. Assess which elements need a facelift, and then make it happen. You’ll have a smile on your face every time you pull up the driveway, and your neighbors will also love you for it.
3. Time to Update? Frequently homes that were built in the ’70s and ’80s seem more like they’re from the 1770s or 1880s. The reason is that newer-built homes come with niceties like dimmer switches for the lighting, crown molding, digital display thermostats, smoke detectors in every room, and the list goes on. Look around your home and determine where it may be reflecting its age. And, if you’re feeling a little ambitious and you have acoustic ceilings (also known as “cottage cheese” ceilings), consider getting rid of them. It’s a messy project, but it will improve the look and feel of your home.
4. Get Floored. Are your floors in need of a new look? There are more flooring options available now than ever before. Whether you’re partial to carpet, hardwood, or tile, there are choices that will fit any budget. The best part is that a new floor, regardless of type, will not only improve the look of your home, it will also increase the value. It may even be a good idea to talk to a real estate agent in your area to see what options are adding the most value to homes in your area. If your floors are relatively new but look a little drab, you may want to have them professionally cleaned. Either way, this is a great project to complete during warmer months.
5. Go with the Flow. Plumbing is very important to both homeowners and homebuyers. Is the hot water hot enough? Do the showers have the perfect pressure? Does the toilet run longer than it should? Some of these issues can be solved with a trip to the hardware store, while others will require a plumber. The important thing is that you start paying attention to these “minor” issues and work to get them resolved.

Plus…here’s a bonus tip you can do in just a few minutes and without any supplies!

Bonus Tip: Clear the Clutter. Clutter may seem harmless, but it can have a bigger impact than you might think. For starters, it’s a distraction that frequently keeps us from focusing on bigger projects. It also makes a home look messy and reduces valuable space. And for anyone who’s thinking about putting their home on the market, it’s a known fact that homes with less clutter will sell faster.

So here’s what you do, anytime you find that you have a little bit of free time, pick a small part of your house – or even your garage or shed – to focus on. Maybe it’s an entire room or maybe it’s just the entertainment center that’s cluttered with CDs and DVDs.

Remember, you don’t just want to straighten the clutter, you want to clear it out – and that means getting rid of all those things that you no longer use. You can even earn some money for your efforts by holding a garage sale or donating the items to charity. Just be sure to get a receipt so that you can include your donation on your tax return.

Regardless of which projects are on your to-do list for 2011, make a plan of attack and then tackle them one at a time. And don’t forget to take some before and after photos for your scrapbook or to possibly show a real estate agent in the future if you decide to put your house on the market.

Home Values

Confused About Your Home Appraisal – Know the Guidelines

The home appraisal process often baffles home buyers and homeowners alike. You may feel that your home is worth a higher dollar amount, and so the appraised home value may not always make sense to you.

First, it is important to know that the home appraiser is completely independent from mortgage lenders, home buyers, home sellers, homeowners, and real estate agents.

Second, the guidelines to which they adhere are dictated by the Uniform Standards of Professional Appraisal Practice (USPAP) and Fannie Mae. In most states, mortgage lenders must also disclose the purpose of the home appraisal, as each mortgage transaction carries its own set of rules.

These important appraisal guidelines help home appraisers put a fair market value on homes based on comparable home sales in the same area, for instance the community of White Oak Estates located in Highland Indiana and/or Munster Indiana.

The home must also be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at a higher percentage of their value in newer homes because the only way to obtain those upgrades was to put more money into the cost of building the home.

On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because typically 25-40% of the project involves demolition and the fixing of issues that aren’t uncovered until the project has already begun, such as plumbing or wiring that may need updating.

The value of the home upgrades must ultimately be supported by comparable home sales within the same marketplace such as home sales in Plum Creek in Schererville Indiana. These comparisons must be drawn from current real estate market activity within the last three to six months.

These guidelines further state that appraisers can only base their opinion on the value of home sales that have actually closed. This is a safeguard to prevent home appraisers from attaching too high a value to the home in question, and opening up the home appraisal for review.

Understanding and following the appropriate appraisal guidelines can help to create an easier and much smoother home loan transaction for you whether you are a home buyer or a homeowner.

Still confused about your home appraisal? Contact me for free review and explanation of your home appraisal.

Home Values

Top Real Estate and Mortgage Headlines for September 1st

It’s Wednesday and it’s the start of a new month. Here is today’s top real estate headlines according to the National Association of Realtors.

• Commercial Real Estate Yields Spur Investors
  Capitalization rates averaged 7.22 percent in the second quarter, or 4.29 percentage points higher than the yield on 10-year government bonds.
• Housing Less Likely to Be Wealth Builder
  The markets will stabilize, but some experts doubt that prices will rise faster than inflation.
• Mortgage Applications Slip Slightly
  The purchase index dropped 0.4 percent, but refinancings were up 2.8 percent last week as interest rates continue to fall, according to the Mortgage Bankers Association.
• No Class-Action Status on Phony Appraisals
  A U.S. District Court refused a request for class-action status in a suit by First American Corp. shareholders who said that the stock tanked when the company was charged with colluding with Washington Mutual to inflate appraisals.
• Hyperlocal Focus Is Key to Market Domination
  A multi-pronged approach including online and offline marketing plans and a six-month budget can help agents boost their share of the business.
• Google Invests in Low-Income Housing
  The Internet giant is spending $86 million on a tax-credit fund to finance the construction of 480 affordable housing units.

These are the top real estate and mortgage headlines for today, September 1, 2010.

Want to know how these national real estate headlines could impact you right here locally in Crown Point Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let my years of experience in Crown Point Indiana guide you to an informed and successful real estate transaction.

Home Values

Has 2010 Housing Predictions Been On Target? Not Exactly

As 2009 was ending, the “experts” were busy making forecasts about the U.S. economy and what to expect in 2010.

With respect to the housing markets, two predictions were made again and again:

1. Home prices would fall in the first half of 2010
2. Mortgage rates would be higher in 2010

Well, it’s July 1 and the year is half-over.  Both predictions are proving to be incorrect. Home values are rising in most markets and mortgage rates are down. Way down. 

It reminds us that economists are much more skilled with analysis of the past versus predictions of the future.

A pile of data can only get you so far.

Think of housing market predictions for Schererville Indiana. It’s like watching a local weather forecast. A meteorologist can look at the radar and tell you that rain is coming, but it’s never with 100% certainty.  There is always a chance of change.

The housing market is the same way.  Just as the U.S. economy is unpredictable, so are housing prices, and so are mortgage rates. 

Therefore, when you have a personal finance decision to make, evaluate your options based on the information at hand today rather than an educated guess about the future. The future, after all, is subject to change — despite what the experts forecast.

Home Values

Case-Shiller Shows Home Values Up In 90% Of Cities

Standard & Poors released its Case-Shiller Index Tuesday.  The index is a monthly home valuation report from select cities and among the private sector’s most popular home pricing models.

In reviewing the April Case-Shiller Index and its accompanying analysis, it appears that the housing market’s rebound is gathering momentum.

In the index’s 20 tracked cities:

• 18 of 20 improved from March to April 2010
• Versus April 2009, home prices are up nearly 4 percent
• The two “down” cities from April — Miami and New York — are off just 0.5% and 1.0% annually, respectively

Furthermore, as another sign of strength, San Diego, a city in which homeowners have lost a lot of equity since 2007, has now shown 12 straight months of home price improvement.

However, the Case-Shiller Index must be kept in context. It’s far from perfect.

For one, the index reports on a 60-day delay; it’s only now showing data from the end of April, when the federal homebuyer tax credit was expiring. Home sales have been weak since then it’s been reported.

And second, the Case-Shiller Index is limited to just 20 cities nationwide. Therefore, the index doesn’t consider every home sale in every American city — it only considers a select few. Many more U.S. homes are excluded from the Case-Shiller Index than are included.

Despite its flaws, the Case-Shiller Index remains important with respect to economic analysis. Much like the government’s Home Price Index, Case-Shiller helps to identify broader trends in housing that shape government and monetary policy.

Home Values

Consumer Confidence Hints at Higher Home Prices & Rates

The Consumer Confidence Index is rising, a potentially double-edged sword for residents of Schererville Indiana and for Americans, in general.

According to The Conference Board, economic confidence is as high as it’s been since August 2007 — 4 months before the start of the recession.  Americans are optimistic again.

Confidence matters to the economy because as confidence increases, in theory, consumer spending follows.  Consumer spending accounts for 70 percent of the U.S. economy.

It’s why Wall Street is responsive to confidence data.

When consumer confidence is rising, households start to make big-ticket purchases they may have otherwise put off indefinitely. Maybe it’s a replacing old appliances; or, trading in an old automobiles; or, splurging on a vacation.

Rising confidence can also spur real estate sales.

When confidence is rising, a growing family that chose to “make do” in their 3-bedroom, 1.5-bathroom starter home may opt to move-up to a 4-bedroom, 3-bath instead at a slightly higher monthly carrying cost.  And there are families in every city in every state making those same decisions.

As a result, the housing market gets a boost — especially in the mid-to-upper price ranges. Values rise on higher demand for homes.

The downside is that growing confidence tends to push conforming and FHA mortgage rates up.  This is because an expanding economy draws investment dollars away from bonds and into stocks — including mortgage bonds. 

The reduced demand for mortgage-backed bonds leads bond prices to fall and mortgage rates to rise.  Sometimes by a little, sometimes by lot.

So, if you’re buying a home or thinking of a refinance, rising confidence in the economy may be a signal to act sooner rather than later.  Talk to your real estate agent and/or your loan officer about next steps and get your plan in place.

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