Short Sales Losing Favor with Lenders?

Daily Real Estate News | Thursday, May 30, 2013

Lenders may be less inclined to approve short sales due to rising home prices, according to a new report by RealtyTrac.
During the first quarter, short sales posted a 35 percent drop compared to year-ago levels.
"The decrease in short sales was a bit of surprise given that 11 million home owners nationwide still owe more on their homes than they're worth," says Daren Blomquist, spokesman for RealtyTrac. "Rising home prices are taking away the incentive for short sales on the part of both home owners and lenders."
Foreclosure prices are on the rise, increasing 28 percent in the first quarter. The banks may be realizing they won’t necessarily lose a lot more money by letting a home go into foreclosure instead, Blomquist says.
However, foreclosure sales have been plummeting too, reaching their lowest levels since early 2008. Foreclosure sales made up 21 percent of the total market during the first quarter, which is down from 25 percent one year ago, according to RealtyTrac.
Foreclosure sales peaked in early 2009, when they made up 45 percent of all homes sold nationally.
Still, foreclosures are making up the biggest bulk of sales in certain states, such as Georgia (where 35 percent of sales were foreclosures in the first quarter), Illinois (32 percent), and California (30 percent), according to RealtyTrac.

Source: “Foreclosure sales fall to lowest level since 2008,” CNNMoney (May 30, 2013)

8 Fast-Growing Cities

Daily Real Estate News | Tuesday, May 28, 2013

Americans are continuing to flock to Texas. The state boasts the most cities that added the highest percentage of residents in the past year.
However, New York continues to hold the crown as the largest city in the U.S., and added 67,000 new residents between July 2011 and July 2012—which is the largest gain of any city in the nation.
The following cities saw the biggest increases in new residents between July 2011 and July 2012, according to the U.S. Census Bureau:

1. New York
   • New residents: 67,000
   • Population: 8.3 million
2. Houston
   • New residents: 34,625
   • Population: 2.2 million
3. Los Angeles
   • New residents: 34,500
   • Population: 3.9 million
4. San Antonio, Texas
   • New residents: 25,400
   • Population: 1.4 million
5. Austin, Texas
   • New residents: 25,400
   • Population: 840,000
6. Phoenix
   • New residents: 24,500
   • Population: 1.5 million
7. Dallas
   • New residents: 23,300
   • Population: 1.2 million
8. Charlotte, N.C.
   • New residents: 19,000
   • Population: 775,000

Source: “10 Big, Booming Cities,” CNNMoney (May 2013)

NAR Allows Public-Facing MLS Sites; Leaders to Look at realtor.com Content

Daily Real Estate News | Monday, May 20, 2013

The debate over public access to real estate information long-controlled by REALTORS® took center stage Saturday at the Board of Directors meeting of the National Association of REALTORS®.  At issue on the concluding day of the NAR Midyear Legislative Meetings & Trade Expo was whether MLSs should be able to charge members for establishing, maintaining, and promoting public-facing Web sites by including such sites in the “basic” services they provide to members.
Directors rejected the idea of “kicking the can down the road” to further consider technicalities of the proposal, as had been recommended by the NAR Executive Committee.
The move in favor of public-facing Web sites followed a separate discussion about the need for realtor.com to enhance and broaden its content and user experience in response to evolving consumer needs and expectations. Explaining that  “these are not ordinary times” for the industry, realtor.com president Errol Samuelson offered a presentation to the Board that described the accuracy of the site as second to none because of its leading-edge technology. He noted that “90 percent of the site is updated every 15 minutes.” The rest of the site is updated in the same day.
But the site’s lack of comprehensive content—such as the absence of FSBO properties from the site and a less than systematic approach to including new-construction homes and rental properties—puts realtor.com at a disadvantage, Samuelson said. He noted that the site is no longer No. 1 in terms of total visits or total audience.
The directors approved a motion for NAR leaders to convene meetings with Move Inc., which operates realtor.com, to discuss ways to enhance the site’s content and to present recommendations to NAR directors on how to achieve this goal at a special meeting to be held this summer.
Also at the meeting, the Board elected a new slate of officers for 2014 including: President-Elect Chris Polychron of Hot Springs, Ark; First Vice President Tom Salomone of Coral Springs, Fla.; and Treasurer Mike McGrew of Lawrence, Kansas. The slate joins Steve Brown of Dayton, Ohio, who will be 2014 President.  Appointed as vice presidents were Beth Peerce of Century City, Calif. and JoAnne Poole of Baltimore, Md.
Other highlights included:

• Membership— NAR membership dues remain unchanged at $120 (with $40 of that amount continue to be dedicated for REALTOR® Party programs), and dues for student membership were set at $25.
• Code of Ethics—The enforcement power of the Code of Ethics was strengthened significantly with the maximum penalty for violations tripling from $5,000 to $15,000.
• No Tax on Services —NAR adopted the following statement of policy opposing the application of state or local sales tax to rents and real estate services and other professional services, including real estate broker commissions, title searches, appraisals, home inspections, property management services, and any other services related to the real estate transaction.
• National Advertising Campaign —­­The Public Advocacy campaign was approved for funding for the next three years at the current level of $35 per member each year along with a name change to the Consumer Advertising Campaign. The new name is seen as better describing the campaign’s purpose, distinct from the association’s political advocacy efforts The national advertising campaign is central to the association’s consumer outreach efforts and is one of NAR most popular membership programs with 95 percent of REALTORS® favoring it.
• GRI Hours ­—The minimum hours of instruction for the GRI designation program were reduced from 90 to 60 hours in recognition of the time commitment and cost that has contributed to the substantial decrease in designees over the past five years, from 8000 in 2007 to 1455 last year.

—Wendy Cole, REALTOR® Magazine

Strong Fundamentals Shore Up Home Sales

Daily Real Estate News | Friday, May 17, 2013

Uncertainty over federal actions remains a big hurdle
Home sales are on a sustained upswing, with solid gains in volume and price predicted for the next few years thanks to improved market fundamentals. But whether the federal government will derail further improvement remains a question, REALTORS® heard Thursday.
Existing-home sales are expected to hit 5 million at the end of this year and then grow to 5.3 million in 2014, up from 4.3 million in 2011, National Association of REALTORS® Chief Economist Lawrence Yun told a packed audience at his residential economic forum at the 2013 Midyear Legislative Meetings & Trade Expo in Washington.

View slides from Yun's presentation.

Price appreciation will be strong, too. Yun said he expects gains of 8 percent this year and 5 percent next year.
The strong price growth reflects the overly tight inventory conditions in many markets, Yun said. And that’s not a healthy condition. What’s needed is a return to the market by small builders, but they can’t get financing because community banks, leery of banking regulations coming out of Washington, aren’t lending.
Until that regulatory uncertainty clears up, only the country’s largest builders, which have access to Wall Street bond financing, will be building. As a result, although building has picked up in the last year after years of flat-lining, the number of new units is barely at replacement level. To meet the pent-up demand that’s in the market right now, builders need to get some 1.5 million units on the market. They’re only getting about 1 million right now.
The good news is that the housing recovery is based on deep-seated improvements in market fundamentals. So as long as the economy stays on track, which economists generally say will be the case, the housing market should continue to improve well into the future.
To the extent that there are market risks, they largely stem from the federal government, which continues to look at ways to reduce its budget deficit. Washington is also writing rules to protect against future mortgage market problems.
Will the government pare back the availability of Federal Housing Authority financing through tightened lending rules? Will it require banks to meet stringent capital standards and underwriting requirements under Dodd-Frank Wall Street reform rules?
Another unknown is whether the government will it impose strict limits on the points and fees lenders charge for loan originations–what Yun called a kind of price control that could end up dampening loan availability.
Until these and other uncertainties are cleared up, the improving market will face headwinds, Yun said. As a result, although the market should continue improving, its gains are unlikely to be as robust as they otherwise would be.

—Robert Freedman, REALTOR® Magazine

Tax Reform Effort to Be Open and Serious

Daily Real Estate News | Thursday, May 16, 2013

Amid all the partisan squabbling in Washington, D.C., that makes national news headlines is a bipartisan effort by the House and Senate chairs of the tax-writing committees to roll out major tax-reform legislation this summer and have it considered by Congress before the end of the year.
Warren Payne, policy director on the tax-writing House Ways & Means Committee, met with the National Association of REALTORS®’ Taxation Committee Wednesday morning at the 2013 Midyear Legislative Meetings and Trade Expo. He told attendees that Rep. Dave Camp (R-Mich.), the committee chair, and his counterpart in the Senate, Max Baucus (D-Mont.), have been meeting weekly and are determined to make a good-faith effort to rewrite the country’s tax laws before the end of the year. Rep. Camp will be stepping down as Ways & Means chair at the end of this session, and Sen. Baucus has announced his retirement at the end of his term.
“They’re starting with a blank page,” said Payne.
The two lawmakers’ goal is to be transparent and open throughout the process by keeping stakeholders — including REALTORS®—informed at every step along the way.
Already some 20 hearings have been held in the House, and a Web site called taxreform.gov has been launched to help explain the effort and get input from people inside and outside the formal policymaking process. At the NAR meeting, Payne encouraged REALTORS® to go to the Web site and submit their views and to tell others to do so as well.
The determined effort to craft a bill from scratch means the mortgage-interest deduction and other vital homeownership and commercial real estate incentives are on the table, although Payne noted that Rep. Camp has said he doesn’t consider MID “a loophole,” but rather a fundamental part of the Tax Code.
To start the overhaul, Rep. Camp is working with four goals in mind:

1. The individual tax rate should be split into two levels: 10 percent and 25 percent
2. The corporate rate should be set at 25 percent
3. The U.S. tax system should put the country in a competitive posture compared to other nations
4. The alternative minimum tax should be repealed

Camp also is working on the assumption that the tax overhaul will be “tax revenue neutral” over 10 years, which means it will be targeted to bring in $42.2 trillion over that period, no more, no less.
Payne said the 1986 tax overhaul is being looked at as a model for both what to do and what not to do. On the positive side, the 1986 effort shows how lawmakers can craft complicated tax legislation by finding areas of consensus, while on the negative side it shows what happens when lawmakers aren’t open and transparent throughout the process. He was referring to the changes to passive losses that many experts have said shattered the commercial real estate market.
Those passive-loss changes weren't thoroughly vetted by the industry and other experts before they were approved. The result, many say, was massive, unexpected dislocation in commercial real estate that is still being felt today.
To avoid another debacle like that, Rep. Camp is keeping an open line of communication with all stakeholders, and in fact he and his staff are in regular communication with NAR and other groups to get input and minimize surprises. “We value our open communication with you,” Payne told the

REALTORS®. “We want to have your input at every point along the way.”
–Robert Freedman, REALTOR® Magazine

Don't Get Caught Flat-Footed on MID, REALTORS® Warned

Daily Real Estate News | Wednesday, May 15, 2013

Though partisanship in Washington, D.C., is at a historic high, that doesn't mean lawmakers won't take on tax reform later this year, possibly putting the mortgage interest deduction and other tax incentives important to real estate into play, said Jeffrey Birnbaum, a long-time Washington journalist who captured the 1986 tax reform battle in an award-winning book, Showdown at Gucci Gulch.
“Don’t count out the chances of tax reform,” Birnbaum told hundreds of REALTORS^® in Washington this week for the 2013 Midyear Legislative Meetings & Trade Expo. “It could start out slow and could gain momentum,” which is how the massive 1986 reforms unfolded.
Birnbaum noted that both Democrats — including President Obama — and Republicans have said they would like to overhaul the tax code, and although partisan differences have become a stumbling block to members’ ability to reach consensus on many issues, there’s an unusual dynamic at work in the two tax-writing committees that could end up being a game-changer. That dynamic is the retirements of Rep. Dave Camp (R-Mich.), chair of the House Ways and Means Committee, and Sen. Max Baucus (D-Mont.), his counterpart on the Senate Finance Committee.
Both have said they want to move forward with tax reform before they go, and the fight over raising the federal debt ceiling, which is expected to be reached this fall, provides a possible trigger event for them and other lawmakers to come to agreement on big tax changes, said Birnbaum.
What’s more, the federal budget deficit is coming down more quickly than lawmakers expected, thanks to the improving economy and the across-the-board spending cuts under the “sequester” that took effect at the beginning of this year. It’s possible the government could go from a $1.1 trillion deficit this fiscal year to a surplus by fiscal year 2015, which would ease the give-and-take on tax and other issues as lawmakers come to agreement on reform.
Birnbaum said the the risk to real estate is that lawmakers will be looking to the MID as one of the biggest places to find money to offset any tax cuts they agree to. That puts at particular risk the amount of MID benefit available to higher-income households and those with second homes. “No one should take [the] MID for granted,” he said.
The capital gains tax rate applied to the carried interest of general partners in investment partnerships will also be on the table, as will deductions for charitable contributions and employer-sponsored health plans.
Birnbaum said it’s important for REALTORS^® to stay engaged, because “you don’t want to be caught flat-footed if Congress overreacts,” which it often does when it legislates, Birnbaum said. He added that the visits that real estate professionals are making to Capitol Hill this week are just the kind of engagement that’s needed now. “Lawmakers will be able to hear from you directly,” he said.
Rep. Randy Nuegebauer (R-Texas), chair of the House Financial Services Committee's Subcommittee on Housing and Insurance, who followed Birnbaum on the speaker’s podium, complimented REALTORS^® for their strong presence on Capitol Hill. “You’re well represented here,” he said. “You’re at the table with us, and we’re delighted to work with you. We want to make sure these fixes we want to do are right.”


—Robert Freedman, REALTOR® Magazine

Rising Housing Market Likely to Lift Job Mobility

Daily Real Estate News | Tuesday, May 14, 2013

Home owners are starting to feel freer to move where the jobs are, Reuters reports, as worries about homes that won't sell or will sell at a loss begin to fade.
Since early 2012, home prices in the major metro areas have been rising. Homes are also selling faster: It took 62 days, on average, to sell a home, compared with 91 days one year prior, according to March data from the National Association of REALTORS®.
The increase in mobility from the recovering housing market is expected to have a hand in lowering the jobless rate.
"Until the real estate market picked up, people wouldn't even consider a move without the certainty that they could sell their homes," Jerry Funaro, vice president of global marketing for TRC Global Solutions, a Milwaukee-based relocation service, told Reuters. "Companies are now more inclined to make offers since we're seeing real estate markets across the country coming back.”
The number of people who moved last year increased to 35.6 million, with the mover rate climbing to 12 percent, according to the U.S. Census Bureau. That marked an increase over the 11.6 percent low set in 2011.
"It's not a huge gain, but when you consider that for two years, we've had the lowest migration rates since World War II, any move up is good news," William Frey, a demographer at the Brookings Institution in Washington, told Reuters.
Meanwhile, in April, the jobless rate dropped to its lowest point in more than four years, reaching 7.5 percent, due to an increase in hiring among employers.

Source: “Insight: Housing improvement may herald return of U.S. workforce mobility,” Reuters (May 13, 2013)