February 2012 Archives

Spring 2012 Home Sales Forecast Shows Short Window of Opportunity for Sellers

Home sales and pricing in the area are up, and days on market until offer have declined.   This scenario is in my opinion temporary, but offers homeowners a short window of opportunity to successfully sell at the highest amount that the market will bear in the least amount of time.    

This lack of inventory is due to a pause in foreclosures, but the recent $26 billion settlement between lenders and homeowners who were wrongfully foreclosed upon,  will show a revival of the process during the course of 2012, adding more housing stock to the inventory.   It is anticipated to see an estimated one million foreclosed houses to hit the market per year in 2012 and 2013.

There is also concern over the estimated 6,000,000 homeowners nationwide who are in default on their mortgages as well as the shadow inventory held by lenders. CoreLogic estimates there were 1.6 million homes, or nine months of supply of shadow inventory, as of October 2011.

If you would like to get an update of your home's current value, please contact me for a confidential consultation. 

Author: Stephanie Danielson, Broker/Owner (CDPE Certified)

Acuity Group Real Estate Professionals

601 Main St. Elk River MN 55330

Office:  763-633-3535

www.ACGProperty.com

 

Stephanie Direct: 612-242-8747 or Stephanie@ACGproperty.com

 

Acuity Group Specializes in Traditional Buyer/Seller Transactions, Short Sales, Investment Property Consulting and Management, Rentals and Property Management.

Traditional Listings, Buyer Representation, Short Sale Listing Experts, Certified Distressed Property Consultants & Specialists serving the following Minnesota Cities: Elk River MN, Zimmerman Minnesota, Big Lake MN, Rogers Minnesota, Otsego, MN, St. Michael Minnesota, Albertville MN, Princeton MN, Ramsey Minnesota, Anoka MN, Nowthen Minnesota, Monticello MN, Otsego MN, Oak Grove MN, Burns Township Minnesota, Monticello MN, Champlin Minnesota, Dayton MN, Hassen Township Minnesota, Coon Rapids MN, Blaine Minnesota, Fridley MN, Oak Grove MN, St. Francis Minnesota, Livonia Township MN, Andover MN, Becker Minnesota, Baldwin Township MN, Orrock Township, Minnetonka, Chanhassen, Chaska, Excelsior, Wayzata, Plymouth, Maple Grove, Golden Valley, St. Louis Park, Hopkins, Edina, Eden Prairie, Crystal, New Hope, Bloomington

 

 

 

An Unmanageable Mortgage Clouds Everything

When families are tapped out financially and faced with the uncertainty of not knowing how much longer they'll be able to stay in their home, the prospect of planning or having a positive outlook on the future seems out of the question.  Many of these homeowners are also upside down on their mortgage and owe more than their property value.

Many financially strapped homeowners feel frozen in action and it's no wonder, but here's the most important point that you need to know:

Even though millions of homes have been lost to foreclosure, you and those you care about absolutely do not need to add to that statistic.   More help is available now than ever before including mortgage modification, refinance, short sale, or deed in lieu of foreclosure to name a few.

As a real estate professional who has earned the Certified Distressed Property Expert (CDPE) designation, I am adept at navigating among the full range of solutions for helping financially distressed homeowners to make a fresh start.

If you, or someone you care about is looking to get out from under the cloud of unmanageable mortgage contact me today for a confidential consultation!    For more information visit,  www.ShortSaleAcuity.com.

Author: Stephanie Danielson, Broker/Owner (CDPE Certified)

Acuity Group Real Estate Professionals

601 Main St. Elk River MN 55330

Office:  763-633-3535

www.ACGProperty.com

 

Stephanie Direct: 612-242-8747 or Stephanie@ACGproperty.com

 

Acuity Group Specializes in Traditional Buyer/Seller Transactions, Short Sales, Investment Property Consulting and Management, Rentals and Property Management.

Traditional Listings, Buyer Representation, Short Sale Listing Experts, Certified Distressed Property Consultants & Specialists serving the following Minnesota Cities: Elk River MN, Zimmerman Minnesota, Big Lake MN, Rogers Minnesota, Otsego, MN, St. Michael Minnesota, Albertville MN, Princeton MN, Ramsey Minnesota, Anoka MN, Nowthen Minnesota, Monticello MN, Otsego MN, Oak Grove MN, Burns Township Minnesota, Monticello MN, Champlin Minnesota, Dayton MN, Hassen Township Minnesota, Coon Rapids MN, Blaine Minnesota, Fridley MN, Oak Grove MN, St. Francis Minnesota, Livonia Township MN, Andover MN, Becker Minnesota, Baldwin Township MN, Orrock Township, Minnetonka, Chanhassen, Chaska, Excelsior, Wayzata, Plymouth, Maple Grove, Golden Valley, St. Louis Park, Hopkins, Edina, Eden Prairie, Crystal, New Hope, Bloomington

 

 

 

 

BREAKING NEWS: The rate of defaulting owners is INCREASING....

Consider a Short Sale vs. foreclosure.  There are so many advantages when homeowners take the Short Sale route.  A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

BREAKING NEWS: The rate of defaulting owners is INCREASING....

 No surprised when you consider:

* 4,000,000 have already lost their homes to foreclosure

** 6,000,000 are in default. Headed to become tomorrow's foreclosure (unless they make the smart move to short sale)

*** 11,000,000 owners are considered 'underwater'. The average underwater owes $50,000 more on their homes than current market value.

**** The actual number of underwater owners is actually closer to 20,000,000 when those who are 'near underwater' are factored in. For example, someone owes $300,000 on a house that is worth $300,000. Any downward market fluctuation they are underwater. If they have to sell assuming market commissions, normal selling fees etc. they are underwater.

What is happening to drive up the delinquency rate?

Strategic default. Owners are making the financial decision to deleverage themselves out of a sinking asset. Many owners have been waiting to see if the market would improve or if there would be any sort of meaningful underwater owner bailout out program. Now that they know neither will happen millions are strategically defaulting...or at least considering it.

Information Source below: Transunion Press Release.

The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) increased for only the second time since the end of 2009, edging upward to 6.01% at the end of the fourth quarter in 2011. This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

Between the third and fourth quarters of 2011, all but 13 states experienced increases in their mortgage delinquency rates. On a more granular level, 64% of metropolitan areas saw increases in their mortgage delinquency rates in Q4 2011. This is the same percentage as found in Q3 2011, but up from Q2 2011 when only 21% of MSAs experienced an increase.

 "To see that, quarter over quarter, fewer homeowners were able to make their mortgage payments is not welcome news," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. "However, it was not unexpected. First, there tends to be a natural seasonality, evident well before the recession, of higher delinquencies in the fourth quarter; perhaps explained by borrowers balancing holiday spending vs. debt payments. Secondly, on the economic front, house prices continued to deteriorate in the fourth quarter and unemployment remained stubbornly high. This combination leads to more negative equity in homes and reduced real personal income that can affect borrowers' ability and willingness to pay their mortgages.

"The more encouraging news is that, when looking year over year, more homeowners are making their mortgage payments and the delinquency rate dropped over 6% since Q4 2010. While it is certainly good to see the rate dropping, at this pace it will take a very long time for mortgage delinquencies to get back to normal."

Many see the economic environment beginning to brighten, although modestly. Therefore, TransUnion's forecast predicts mortgage borrower delinquency rates to drift downward marginally in 2012, but in the meantime we may still see a quarter or two of slightly elevated nonpayment rates as some consumers are not able to, or decide not to, repay their mortgage debt obligations in light of the uncertain economic outlook.

TransUnion's forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and real estate values. The forecast would change if there are unanticipated shocks to the economy affecting recovery in the housing market or if home prices fall more than expected.

TransUnion's Trend Data database TransUnion's Trend Data is a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels. For the purpose of this analysis, the term "credit card" refers to those issued by banks.

Article by: Stephanie Danielson, Broker/Owner (CDPE Certified) Certified Distressed Property and Short Sale Expert

Acuity Group Real Estate Professionals

601 Main St. Elk River MN 55330

Office:  763-633-3535

www.ACGProperty.com

 

Stephanie Direct: 612-242-8747 or Stephanie@ACGproperty.com

 

Acuity Group Specializes in Traditional Buyer/Seller Transactions, Short Sales, Investment Property Consulting and Management, Rentals and Property Management.

Traditional Listings, Buyer Representation, Short Sale Listing Experts, Certified Distressed Property Consultants & Specialists serving the following Minnesota Cities: Elk River MN, Zimmerman Minnesota, Big Lake MN, Rogers Minnesota, Otsego, MN, St. Michael Minnesota, Albertville MN, Princeton MN, Ramsey Minnesota, Anoka MN, Nowthen Minnesota, Monticello MN, Otsego MN, Oak Grove MN, Burns Township Minnesota, Monticello MN, Champlin Minnesota, Dayton MN, Hassen Township Minnesota, Coon Rapids MN, Blaine Minnesota, Fridley MN, Oak Grove MN, St. Francis Minnesota, Livonia Township MN, Andover MN, Becker Minnesota, Baldwin Township MN, Orrock Township, Minnetonka, Chanhassen, Chaska, Excelsior, Wayzata, Plymouth, Maple Grove, Golden Valley, St. Louis Park, Hopkins, Edina, Eden Prairie, Crystal, New Hope, Bloomington

 

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes "the clearest sign yet of an improvement in mortgage credit conditions."

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says "any improvement in credit conditions won't be significant enough to generation actual house price gains," and potential ramifications from the euro-zone pose a threat to future credit availability.

Provided by: Stephanie Danielson, Broker/Owner (CDPE Certified)

Acuity Group Real Estate Professionals

601 Main St. Elk River MN 55330

Office:  763-633-3535

www.ACGProperty.com

 

Stephanie Direct: 612-242-8747 or Stephanie@ACGproperty.com

 

Acuity Group Specializes in Traditional Buyer/Seller Transactions, Short Sales, Investment Property Consulting and Management, Rentals and Property Management.

Traditional Listings, Buyer Representation, Short Sale Listing Experts, Certified Distressed Property Consultants & Specialists serving the following Minnesota Cities: Elk River MN, Zimmerman Minnesota, Big Lake MN, Rogers Minnesota, Otsego, MN, St. Michael Minnesota, Albertville MN, Princeton MN, Ramsey Minnesota, Anoka MN, Nowthen Minnesota, Monticello MN, Otsego MN, Oak Grove MN, Burns Township Minnesota, Monticello MN, Champlin Minnesota, Dayton MN, Hassen Township Minnesota, Coon Rapids MN, Blaine Minnesota, Fridley MN, Oak Grove MN, St. Francis Minnesota, Livonia Township MN, Andover MN, Becker Minnesota, Baldwin Township MN, Orrock Township, Minnetonka, Chanhassen, Chaska, Excelsior, Wayzata, Plymouth, Maple Grove, Golden Valley, St. Louis Park, Hopkins, Edina, Eden Prairie, Crystal, New Hope, Bloomington

 

 

 

It was just last spring that M Johnson made the hardest decision of her life as she and her husband Rick were caught in the vise of the housing bust.

Wanting to downsize their lives as they headed toward retirement, they bought a new house in Maple Grove MN, before they sold the old one, also in Big Lake Minnesota. Their previous home had been appraised at nearly $400,000 at the height of the market, but as the housing crisis ravaged Minnesota, they were told they'd be lucky to get $200,000 for it.

They were carrying a loan of $260,000 on their original home alone, meaning they were well 'underwater,' owing much more than it was worth. Combined with the mortgage on the new house, their housing payments had become an "anchor around our necks," she says, threatening to gobble up all their retirement savings and leave them with nothing.

The couple made a difficult call: They would do a 'strategic default,' and simply stop paying the old mortgage. "We really had to wrestle with it," said Johnson, 60. "We had worked all of our lives to build good strong credit, and we're proud people. But it came down to, 'Can we keep doing this?' We had to say 'No.'"

As the housing bust drags on, many homeowners are thinking like the Johnsons. Almost 11 million homes are now underwater, says financial information provider CoreLogic. Around 3.5 million homeowners are behind in their payments and another 1.5 million homes are already in the foreclosure process, according to online marketplace RealtyTrac.

As banks start to work through their backlog of distressed properties, the New York Federal Reserve estimates that 3.6 million foreclosures will take place during the next couple of years.

So, the question is: Does it make sense to keep paying a massive mortgage, knowing that it might be decades before a home regains its prior value? Or is that akin to - as columnist James Surowiecki recently wrote in the New Yorker - "setting a pile of money on fire every month"?

"I constantly get the saddest e-mails from people saying, 'I've exhausted all my life savings, my retirement is gone, and now I have to default,'" said Jon Maddux, CEO of YouWalkAway.com,
a foreclosure agency that helps clients with strategic default (and charges a fee for it). "But if they had seen the writing on the wall a couple of years earlier, stopped paying the mortgage and stayed in the home throughout the whole process, they would be in a much better financial position."

Moral Quandary

There's a moral component to that decision, of course. People naturally feel embarrassed about breaking a contract and not paying their bills; no one wants to be branded a deadbeat. But remember that companies default on their obligations when it makes financial sense for them to do so, via the bankruptcy process. Even the Mortgage Bankers Association itself, in a flourish of irony, arranged for a short sale of its Washington headquarters.

It's not personal; it's business. So think of strategic default as a business decision, and do a cold-eyed cost-benefit analysis of whether it makes sense for you, advises Carl Archer, an attorney with Maselli Warren in Princeton, New Jersey.

"People think it reflects on their integrity, and say 'I wasn't raised this way,'" said Archer. "But the more businesslike attitude is to say that there's a contract, there are penalties for violating that contract, and sometimes it just makes financial sense to break it."

The penalties largely revolve around your credit record, which admittedly gets blown up in the near-term. For a few years you can likely forget about qualifying for a mortgage or a car loan. When lenders are ready to take a chance on you again, you'll have to pay for the privilege, with stiff interest rates due to your default history.

What Happens to Scores

M Johnson watched her credit score go from a pristine 800 to 685, dropping every time she missed a payment. Credit-scoring firm FICO estimates that someone with a 680 score would see that number sink between 85-100 points after a strategic default, and someone with 780 could crater 140-160 points.

Not desirable, of course, but not the end of the world either. For Johnsons, for instance, she already had a loan on her Ford Focus, and the mortgage on her new house, before she even started the default process. She hasn't seen any changes on her credit cards since, in terms of limits or interest rates.

Now that the previous home was auctioned off in December, she can start slowly rebuilding her credit, a process that should take about seven years.

Strategic default isn't a decision to be taken lightly, of course. If everyone did it, the housing market -- and the banks -- would be in much worse shape than they already are.

The following are some of the issues to keep in mind:

1. Look to it as a last resort, not a first option. Your financial troubles could be alleviated with a simple refinancing, especially since 30-year mortgage rates are near record lows of below 4 percent. If the banks are hesitant to rework your loan, look into the number of government programs designed to keep you in your home, which can be researched at MakingHomeAffordable.gov.

2. Consider a Short Sale vs. walking away.  If a homeowner owes more on their property than it is currently worth, then they can hire a qualified CDPE (Certified Distressed Property Expert) Realtor to market and sell their property through the negotiation of a short sale with their lender (this is a process in which the lender agrees to settle on the debt for less than what is owed).  This is by far a much better option than walking away from the mortgage.  To learn more about the short sale process visit a website created to answer your questions:  www.ShortSaleAcuity.com

3. Location, location, location. Each state has its own rules and regulations regarding foreclosures, which affect both the length of the process and what you could be liable for in the end. In so-called 'non-recourse' states like Arizona, California and Texas, a lender cannot come after you for any deficiency (for instance, if your mortgage was $300,000 and they're only able to sell the property for $200,000). In other states they can pursue the difference, in theory - which is why some homeowners opt to file for bankruptcy, to free themselves from those potential obligations as well.

4. Use the interim to save like a demon. If you're in a state like New York or Florida, which require a judicial review of every foreclosure, it might be a couple of years before you actually have to pack up. In the meantime, be extremely disciplined about stockpiling cash. That will help you with a down payment for a rental, to pay for a car in cash if you need to, or to clear up other debts you might have. "Save money as if you were still paying the mortgage," says Archer. "If you don't, then you'll run out of both time and money, and then you'll be in a real tough spot."

5. Know the tax implications. Historically, if you have a debt that's forgiven, the canceled amount is considered taxable by the IRS. In the wake of the housing bust, though, the Mortgage Forgiveness Debt Relief Act was drafted to spare you those taxes. That legislation expires at the end of 2012, though - so if it's not extended, you could potentially face a tax bill for the difference.

6. Talk to a professional. A bankruptcy or real-estate attorney can help you through a very tricky process. The National Association of Consumer Bankruptcy Attorneys, for instance, has a searchable database of lawyers at www.nacba.org.

 Provided by: Stephanie Danielson, Broker/Owner (CDPE Certified)

Acuity Group Real Estate Professionals

601 Main St. Elk River MN 55330

Office:  763-633-3535

www.ACGProperty.com

 

Stephanie Direct: 612-242-8747 or Stephanie@ACGproperty.com

 

Acuity Group Specializes in Traditional Buyer/Seller Transactions, Short Sales, Investment Property Consulting and Management, Rentals and Property Management.

Traditional Listings, Buyer Representation, Short Sale Listing Experts, Certified Distressed Property Consultants & Specialists serving the following Minnesota Cities: Elk River MN, Zimmerman Minnesota, Big Lake MN, Rogers Minnesota, Otsego, MN, St. Michael Minnesota, Albertville MN, Princeton MN, Ramsey Minnesota, Anoka MN, Nowthen Minnesota, Monticello MN, Otsego MN, Oak Grove MN, Burns Township Minnesota, Monticello MN, Champlin Minnesota, Dayton MN, Hassen Township Minnesota, Coon Rapids MN, Blaine Minnesota, Fridley MN, Oak Grove MN, St. Francis Minnesota, Livonia Township MN, Andover MN, Becker Minnesota, Baldwin Township MN, Orrock Township, Minnetonka, Chanhassen, Chaska, Excelsior, Wayzata, Plymouth, Maple Grove, Golden Valley, St. Louis Park, Hopkins, Edina, Eden Prairie, Crystal, New Hope, Bloomington

 

Local housing prices appear to the have stabilized at the current time, if not edged up slightly due to the high volume of active buyers and low inventory.   A few homeowners that want to sell may be able to take advantage of this scenario, but many others still owe more on their mortgage than the market can bear and will not be able to successfully sell for quite some time.   But don't give up hope, considering RENTING!   The good news is that the pool of high quality rental tenants has never been better, plus homeowners and investors are receiving top rental rates!  Property Managers have more qualified tenants than available properties, creating a rental property shortage.

If you would like to explore the option of renting your home, or are a property investor, call Acuity Group.  We can assist you with all of your rental and property management needs! Our professional services include:  rental property intake,  marketing, screening, placement, doc preparation, monthly management, rent collection,  24 hour emergency call center, electronic payment options, rental licensing and year- end  tax prep.    To learn more or to request additional information about renting your home, visit our website:  www.ACGProperty.com  & click on "Rent Your Home" tab.

Report from Minnesota Assocation of Realtors February,

Image via Wikipedia

2012

Housing Industry Shows Signs of Recovery in Minnesota in 2011
Home prices and inventory levels remain keys to a continued improvement

With a new year ahead, home sales across Minnesota showed signs of recovery in 2011, according to the Annual Housing Report released by the Minnesota Association of REALTORS^®. The numbers of closed sales and pending sales were up for 2011, compared to 2010.
                                                       
Statewide, closed sales for 2011 were up 2.9% and pending sales were up 4.2% for the year compared to 2010. Higher closed and pending sales continue to help decrease inventory throughout Minnesota and are a positive indicator of a stronger housing market overall.

"Decreasing inventory remains a key factor in our continued recovery and the recovery of home values," said June Wiener, President of the Minnesota Association of REALTORS^®. "Removing more properties, including lower-priced properties, from the market will help prices rebound."

Home values remain a a cause for concern for many homeowners. The median sales price statewide in 2011 was down 8.4% from 2010. The median is the midpoint, indicating as many transactions above as below the stated price. In 2011, the median price statewide was $135,000.

Minnesota's Housing Affordability Index (HAI) increased in 2011 as interest rates fell and distressed properties made residential housing more affordable. At the end of 2011 the HAI was 140, an 11.1% increase from 2010. The HAI measures the median income of a Minnesota family compared to median home price. When the index measures 100, the median family has 100% of the income necessary to qualify and purchase a median priced home.

Looking at the final month of 2011, pending sales in December were a positive sign as well for Minnesota's housing market. Pending sales statewide were up nearly 14% from December of 2010.

"Closed sales were also up more than five percent in December compared to the same time last year," said Wiener. "Those numbers paired with a double-digit increase in pending sales across Minnesota reaffirms the trend that REALTORS^® are seeing in the marketplace a trend of a market continuing its recovery."

Article Provided by:  Stephanie Danielson, Broker/Owner (CDPE Certified)