Model Home Visitors Not Always Buyers

Home owners who are satisfied with their current dwelling and have no plans to move are visiting open houses and model homes for interior design tips, to get ideas for new amenities, and just to see how their home stacks up.

"I just like to look for anything that strikes me,” says Danny Vaca or Norco Hills, Calif., as he strolls through a $1 million-plus KB Home model in Sienna Ridge. “Our basic interior is done, but you always see these little knick-knacks that make you think, 'Hmm.' "

Some in the industry say that as many as 90 percent of model-home visitors aren’t really interested in buying, although others say the figure is actually lower because sometimes people who say they're just looking are really in the early stages of home shopping.

Home builders are well aware that looky-loos visit their model homes; it’s part of doing business, they say. Some builders even use looky-loos to their advantage by closely watching the visitors for clues about what features appeal to them and what might turn off prospective buyers.

Randall Lewis, executive vice president of the Lewis Group of Cos., pops into model homes several weekends a year just to eavesdrop as visitors critique floorplans and make comments. Why?

"To see where they spend their time, which rooms capture their attention and to hear their feedback," he says. "Model homes are a great laboratory for anybody in the business."

Source: Los Angels Times, Dawn Bonker (08/27/06)

Mortgage Rates Decline to 5-Month Low

Last week’s better-than-expected reading on the Consumer Price Index helped to push mortgage rates down to a five-month low, according to Bankrate.com’s weekly mortgage survey of large lenders.

The average 30-year, fixed-rate mortgage fell to 6.48 percent, the lowest since March 29, while the average 15-year, fixed-rate mortgage, popular for refinancing, dropped by a similar amount to 6.19 percent.

On larger loans, the average jumbo 30- year, fixed-rate declined to 6.74 percent. Adjustable-rate mortgages also backtracked. The average 5/1 ARM slid to 6.24 percent, and the average one-year ARM retreated to 6 percent.

Slower economic growth has helped bring fixed mortgage rates to a five-month low, along with the Federal Reserve Board hitting the pause button on rate increases. Although inflation remains a threat, bond investors are confident in the Fed's forecast that inflation will recede as the economy cools, Bankrate.com says in its report.

Fixed mortgage rates have fallen nearly one-half of a percentage point since the Fed last hiked rates at the end of June. At the time, the average 30-year fixed mortgage rate was 6.93 percent, meaning that the monthly payment on a loan of $165,000 was $1,090.

With the average 30-year fixed rate now 6.48 percent, the same loan originated today would carry a monthly payment of $1,040.74. With the recent pullback, fixed mortgage rates remain an attractive refinancing alternative for adjustable-rate borrowers facing sharp payment adjustments.

Source: Bankrate.com (08/24/06)

NAR: Existing-home Sales Down, Prices Soften

Existing-home sales were down in July, while home prices in many areas are slightly below year-ago levels, according to the National Association of Realtors®.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – dropped 4.1 percent to a seasonally adjusted annual rate1 of 6.33 million units in July from a downwardly revised pace of 6.60 million June, and were 11.2 percent below the 7.13 million-unit level in July 2005.

David Lereah, NAR’s chief economist, said higher interest rates dampened sales but that price softening is good news for the housing market because it is drawing buyers. “Many potential home buyers have been on the sidelines, some ‘kicking the tires,’ but mostly waiting for sellers to compromise on prices and terms,” he said. “Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.”

The national median existing-home price2 for all housing types was $230,000 in July, up 0.9 percent from July 2005 when the median was $228,000. The median is a typical market price where half of the homes sold for more and half sold for less.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.76 percent in July, up from 6.68 percent in May; the rate was 5.70 percent in June 2005. Last week, the 30-year rate declined to 6.52 percent. “An unexpected quarter-point drop in mortgage interest rates over the last month also could help to stimulate the housing market,” Lereah said.

NAR President Thomas M. Stevens from Vienna, Va., said most sellers continue to see excellent returns on their homes. “Considering that typical sellers have been in their home for six years, the average appreciation during that time is close to 60 percent,” said Stevens, senior vice president of NRT Inc. “This demonstrates the value of housing as a long-term investment – the longer you own, the better your return.”

Total housing inventory levels rose 3.2 percent at the end of July to 3.86 million existing homes available for sale, which represents a 7.3-month supply at the current sales pace.

--NAR

Affordable Ways to Make a Home Sparkle

A home seller doesn’t have to spend a fortune on redecorating in order to impress buyers. But it does take a little creativity and a clear understanding of the main goal: to remove personal clutter and make everything else shine.Here are a few simple (and affordable) suggestions for making a home more impressive to potential buyers:

Outside: Spread fresh mulch on the flowerbeds; paint the front door; and buy a new "welcome" mat.

The mudroom: Get rid of the litter box and the pet food bowls; put cleaning supplies out of sight; and hang coats in the closet, not on hooks.

The bathroom: Hide personal items such as athlete’s foot powder or laxatives; put toothbrushes in the medicine cabinet; buy a new shower curtain.

The closets: Ruthlessly thin out clothes and shoes; hang what’s left on matching hangars; and replace the light bulbs with 100 watts.

The kitchen: Get rid of all but the basics in the cupboards and clean everything off the counters.

Source: Universal Press Syndicate, Michael Walsh (08/20/2006)

Mortgage Rates Continue String of Declines

Freddie Mac reports a drop in the 30-year fixed mortgage rate to 6.52 percent during the week ended Aug. 17, marking the fourth-straight decline.

Rates are still 72 basis points higher than a year ago. A basis point is 0.01 of a percent. Five-year hybrid adjustable-rate mortgages, which carry fixed rates for the first 5 years and then float, fell 3 basis points to 6.18 percent.

One-year ARMs declined 4 basis points to 5.65 percent. The 10-year Treasury yield, the benchmark for mortgage rates, has fallen as well due to data that shows moderate inflation and weakness in the economy.

Source: Investor's Business Daily (08/18/06)

New-Home Construction Falls to 2-Year Low

New home construction continued to fall in July, dropping to its lowest rate in nearly two years, the U.S. Commerce Department reported yesterday.

U.S. housing starts fell 2.5 percent to 1.8 million. This is the fifth consecutive decline in housing starts and the slowest pace since November 2004.

Richard DeKaser, chief economist at Cleveland-based National City Corp., says builders are breaking ground for fewer homes because they have big unsold inventories of previous projects." What we are continuing to see is the supply side is slowing and declining at a pretty swift rate," said DeKaser. "We should expect to see more of this." The economist cited a survey released Tuesday by the National Association of Home Builders, which showed a plunge in builder confidence.

Builders' views on current and expected sales had fallen to its lowest level since February 1991.

Other observers are more optimistic. "Housing is still performing on a level that far exceeds the norm for the industry, albeit at a rate that has backed off somewhat from the 2 million-plus pace of recent years," says Bob Walters, chief economist for Michigan-based Quicken Loans.

Source: The Chicago Tribune, Sharon Stangenes (08/17/2006)

Overall Sales Down, But 20 States Show Increase

Existing-home sales, including single-family houses and condos, were down in the second quarter compared with the record set in the same period in 2005, according to the NATIONAL ASSOCIATION OF REALTORS®.

Despite the overall decline, 20 states showed increases in sales activity from the year earlier period. The quarterly report on total state existing-home sales shows the seasonally adjusted annual rate was 6.69 million units in the second quarter, down 7 percent from the record 7.19 million-unit level in the second quarter of 2005.

The biggest increase was in Alaska, where existing-home sales rose 48.6 percent from the second quarter of 2005. In Arkansas, the second-quarter resale pace rose 17.9 percent from a year earlier, while Texas experienced the third-strongest gain, up 11.3 percent. Twenty-eight states and the District of Columbia experienced declines. Complete data for two states was not available.

David Lereah, NAR’s chief economist, says two sets of market conditions are apparent in the report.“When you look at states with high housing costs or that have experienced a prolonged period of rapid price gains, you typically see slower home sales,” he says. “By contrast, states with moderately priced areas that have experienced healthy job creation are seeing sales gains.

The economic backdrop remains favorable for the housing market, which is helping home sales to level out.”According to Freddie Mac, the national average commitment rate on a conventional 30-year, fixed-rate mortgage was 6.6 percent in the second quarter, up from 6.24 percent in the first quarter; it was 5.72 percent in the second quarter of 2005.

NAR President Thomas M. Stevens from Vienna, Va., says interest rates have been trending down in recent weeks. “This is good news for buyers who have been on the sidelines; now there is a window of opportunity in the market,” says Stevens, senior vice president of NRT Inc.Last week, Freddie Mac, reported the average rate on a conventional 30-year, fixed-rate mortgage was down to 6.55 percent.

Regionally, the South reported an existing-home sales pace of 2.6 million units in the second quarter, down 4.2 percent from a year ago. After Arkansas and Texas, the next strongest increase in the South was in North Carolina, up 11 percent from the second quarter of 2005, while resales in South Carolina rose 9 percent; six other Southern states also posted sales gains.In the Midwest, existing-home sales declined 4.7 percent to a 1.54 million-unit annual sales level from the second quarter of 2005. The strongest increase in the region was in Indiana, up 4.8 percent from a year earlier, followed by Iowa, up 3.8 percent, and Missouri, with an increase of 0.8 percent.

The Northeast saw an existing-home sales pace of 1.15 million units in the second quarter, which was 5.2 percent below the year earlier period. Sales activity in Vermont rose 9.1 percent from the second quarter of 2005, while Maine increased 1.5 percent.

In the West, the existing-home sales level of 1.41 million units was 14.7 percent lower than the second quarter of 2005. After Alaska, the best performance in the region was in New Mexico where existing-home sales rose 6.2 percent from a year earlier; Wyoming sales increased 5.7 percent while Montana rose 5.2 percent.

— NAR

Study: For the Best Quality of Life, Head West

Seven of the 10 highest-ranked cities that offer the best quality of life are in Western states, according to a study that identifies American "dreamtowns."

Topping the list is Bozeman, Mont., where the weather can be very chilly but there are other attractive benefits such as a stunning mountain view and intellectual energy from Montana State University. Bozeman also was No. 1 because its number of small businesses grew by almost 28 percent during the past five years, its population increased 15.3 percent in the same period, and 41 percent of its residents have at least a bachelor’s degree.

American City Business Journals, a nationwide chain of weekly business newspapers, ranked the quality of life in small metropolitan areas. It's study looked at hundreds of cities with populations between 10,000 and 50,000 based on their per capita income and income growth, small business growth, ease of commuting, taxation, education, and the number of available managerial and professional jobs.

These are the cities that rounded out the rest of the top 10:

Jackson, Wyo.
Durango, Colo.
Easton, Md.
Laramie, Wyo.
Edwards, Colo.
Kill Devil Hills, N.C.
Pierre, S.D.
Silverthorne, Colo.
Los Alamos, N.M.

The study was inspired by increasing public interest in small-town life and business opportunities. More than 1.7 million people move from metropolitan areas to small cities or rural counties each year, according to U.S. Census Bureau research. The study identifies the small communities that would be most attractive to people considering such a move.

Source: Bizjournals.com (08/07/2006)

More B&B Owners Choose to Cash Out

Many bed-and-breakfasts are closing down as owners realize they can make a bigger profit by selling the home as a private residence than they do operating the business.

Rising interest rates also have made it more difficult for innkeepers to pay the mortgage and still make money. Historically, bed-and-breakfasts have sold for four to six times a year's gross revenues. Under that model, new owners could afford to buy a home, pay the mortgage and expenses, and bank the difference.

But because real estate values have soared so quickly, the formula no longer works. Now, such homes are selling at eight times annual revenues, and often much more. Revenues, meanwhile, are up only slightly: The average bed-and-breakfast room price is $144, up about 5 percent since 2002, according to Professional Association of Innkeepers International.

None of that is a concern for those who have the cash for a private home. The California Association of Bed and Breakfast Inns says seven of its members sold their properties last year, each to buyers planning to convert them into private homes.

In Cape May, N.J., bed-and-breakfast Columns by the Sea has been subdivided into condos that are being sold individually for about $550,000 each.

Meanwhile, Secretary of Defense Donald Rumsfeld bought the former Mount Misery Bed & Breakfast in St. Michaels, Md., for $1.5 million and is using it as a private home.

Source: The Wall Street Journal, Conor Doughergy (08/11/06)

Closing Costs Average $3,000 Nationwide

Nationwide, closing costs average $3,024, according to a study by Bankrate Inc., an online aggregator of financial rate information.

The study examined the closing costs charged by lenders in major cities in all 50 states and the District of Columbia, including origination fees, title search and appraisal costs. The cities with the highest closing costs were Buffalo, N.Y., $3,887; Houston, $3,578; Honolulu, $3,407; Cleveland, $3,354; and Miami, $3,349,

The cities with the lowest were St. Louis, $2,713; Detroit, $2,714; Concord, N.H., $2,734; Billings, Mont., $2,737; and Cheyenne, Wyo., $2,772.

Bankrate asked home buyers if the closing costs they paid were close to the so-called good faith estimate of closing costs. About 60 percent said the estimate was right on the money. But 13 percent said they paid a higher amount than the estimate, while 8 percent paid less. The remainder didn’t remember.

The survey of closing costs didn't cover government fees and other prepaid items that are essentially passed through by the lender for payment by the borrower.

Source: Bankrate.com (08/10/2006)

Fed Takes Break from Hikes

The Federal Reserve Board yesterday left short-term interest rates unchanged at 5.25 percent.

The Fed says the lull after 17 consecutive increases was because of the softening housing market, high energy prices, and previous rates increases.Home buyers "who are looking at longer-term fixed-rate products are going to get a pretty good deal," says Doug Duncan, chief economist of the Mortgage Bankers Association. Duncan believes rates on fixed-rate mortgages aren't likely to move much higher unless the Fed decides to boost rates again to stem inflationary pressures.

Yesterday, rates stood at 6.66 percent, nearly one-third of a percentage point below their recent peak of nearly 7 percent, according to financial publisher HSH Associates.

The pause also will slow the pace at which rate increases are being passed on to borrowers with adjustable-rate mortgages, though some borrowers could see their rates continue to rise if their payments are tied to an index such as the 12-month Moving Treasury Average, which reflects rate moves on a lagging basis.

Source: The Wall Street Journal, Jeff D. Opdyke, Jennifer Saranow and Ruth Simon (08/09/2006)

Home Buyers Not Drawn to New 40-Year Mortgages

Vermont is one of at least a dozen states that now offer 40-year mortgages, but only a small number of home buyers have applied for the loans being offered by several lenders statewide.

According to Chittenden Bank mortgage sales coordinator Kellie Stoll, "I think the intent was that it would help people qualify for a higher mortgage, but we haven't seen that."

The fact that buyers pay about 0.25 percent to 0.38 percent more in interest for 10 additional years is one of the reasons why TD Banknorth President Philip Daniels says his company is not offering a 40-year product at the present time.

However, John Hood of the New England Federal Credit Union, which began offering the option almost one year ago, says borrowers tend to focus on monthly payments--not total interest--because they generally refinance or sell within eight years.

--Burlington Free Press, Dan McLean (8/8/06)

Rates Move Lower On July Employment Report

Interest rates moved lower on today’s weaker than expected July employment report. Non-Farm Payrolls grew by 113,000 on expectations of 145,000 new jobs. The unemployment rate increased from 4.6% in June to 4.8% in July. Average Hourly Earnings increased 0.4%, slightly more than expected. Many market analysts now believe that the Fed will pause in its tightening cycle next week for the first time in two years.

Other economic news of note this past week included the Chicago Purchasing Managers Index which was slightly stronger than expected. June Personal Income and Spending were in line with forecasts. The Personal Consumption Expenditures Index increased 0.2%. The ISM Manufacturing Index was slightly stronger than expected and the ISM Services Sector Index was slightly weaker than expected. Crude oil futures are currently trading at just under $75 per barrel.

Next week look toward Tuesday’s FOMC announcement on monetary policy, Thursday’s International Trade and Friday’s Retail Sales reports as potential market moving events.

Current rate for a 30 year fixed loan is 6.50% with no points based on a $250,000 Purchase Transaction; $187,500 Loan Amount; 10-20% Down.

Current rate for a 15 year fixed loan is 6.25% with no points based on a $250,000 Purchase Transaction; $187,500 Loan Amount; 10-20% Down.

Current rate for a 5 year ARM is 6.50% with no points based on a $250,000 Purchase Transaction; $187,500 Loan Amount; 10-20% Down.

Posting info and rates provided by:
Grant Hickman
Senior Loan Officer
Premier Mortgage Group, LLC
1844 Folsom Street
Boulder, CO 80302
303-449-8855
ghickman@pmglending.com

Remodeling: Home Owners' Seven Deadly Sins

Remodeling isn’t always a good idea, says Holly Slaughter, brand manager and consumer-experience expert for RealEstate.com.

Here are what she calls the seven deadly home-improvement sins to consider before committing to projects that may work against you and lessen your resale value.

1. Over expanding. Outdoing all the homes on the block is never a good idea because it makes the house more expensive than the others and therefore harder to sell.
   
2. Making your home into something it’s not. Changing the style or the architecture is usually a big mistake.
   
3. Changing the purpose of a room. Keep kitchens as kitchen and baths as baths. They were built that way for a reason.
   
4. Under budgeting. People routinely under budget 20 or 30 percent fewer dollars and underestimate even more in guessing the time the job will take.
   
5. Doing the job yourself. Unless you have first-rate skills, hire somebody who does.
   
6. If it’s not broke, don’t fix it. Don’t waste money on renovations that won’t pay off. Buyers won’t necessarily pay for what makes a seller happy. Siding, windows, kitchens and bathrooms are the home improvement winners, according to Remodeling magazine.
   
7. Neglecting regular upkeep. They may seem boring, but cleaning the gutters, keeping the house painted and trimming the shrubs are the most valuable home improvements.Source:

Marketwatch, Amy Hoak (07/30/2006)

Charlotte, Seattle Top List of Housing Hot Spots

A survey conducted by online real estate Web site company HouseHunt Inc. pinpoints the nation's hottest housing markets, defined as those with residential appreciation rates of 5 percent to 10 percent and with more buyers than sellers.

In these markets, nearly half of all sellers get all or most of their asking prices; 78 percent get multiple offers, and properties usually sell within 30 days.

Charlotte, N.C., weighed in as the hottest metropolitan area market, followed by Seattle, Nashville, Salt Lake City, St. Louis, and Washington, D.C./Northern Virginia. Certain suburbs of Southern California and Chicago also made the list.

The non-metro areas with the most active markets include: Glenwood Springs, Colo.; Eagle River, Ark.; Meridian and Emmett, Idaho; Dallastown, Pa.; Covington, Ga.; and Newark, Del., according to HouseHunt.

Source: RisMedia.com, Beth Bresnahan (07/31/06)