What is your Home's Style? An Architectural Guide for Homes

Have you ever looked at a home and wondered how to describe it other than saying it is a one or two story building? We all know every house has its own style which can be a blend due to renovations and structural changes. Still they usually fit into somewhat specific categories.  Here are some tips about styles you can use as a guide.  REALTOR® Magazine has compiled a convenient compendium of common styles. Click on each name and learn to highlight the details that give a home character, history, and romance.

Residential Styles

Americans Value Home Ownership, But Still Consider Renting

In the wake of the recent recession, home ownership remains part of the American Dream. But, according to a new MacArthur Foundation survey, the appeal of renting is increasing and many believe the housing crisis is not over. 
A new national opinion survey from the John D. and Catherine T. MacArthur Foundation finds that attitudes about home ownership have changed a great deal in the wake of the housing crisis. 
“America is going through a transformational period,” says Peter Hart, chairman emeritus of Hart Research, which conducted the survey on behalf of the foundation. “The unexpected is becoming the expected... [and] housing attitudes are indeed part of this new transformational world.”

Hart Research conducted telephone interviews of 1,433 adults between Feb. 27 and March 10, 2013, in an effort to help the MacArthur Foundation discover how Americans’ valuation of their homes may have changed in light of recent economic turmoil. The findings of the survey were released in a report titled, "How Housing Matters: Americans’ Attitudes Transformed By The Housing Crisis & Changing Lifestyles."

The good news for those in real estate is that home ownership is still an aspiration for 72 percent of all renters surveyed. This proportion is even higher among renters under age 40, at 84 percent.
The researchers also found that the appeal of renting may have been bolstered by recent economic insecurity. More than half of survey respondents stated that, given the nation’s current economic situation, buying a home has become less appealing (a little over one-quarter stated that home ownership has become more appealing). By almost the same margins, respondents stated that renting has become more appealing since the crisis.

Yet Rebecca Naser, a vice president with Hart Research, said that these views need not be seen as mutually exclusive. “There’s a tendency for people to view attitudes about home ownership and renting like it’s a zero-sum game,” Naser said. “[But] you can still aspire to owning a home and see renting in your future... People are being more methodical and careful in the housing choices they’re making.”

Hart agreed, noting that changes in life expectancy and the timing of major life events also make a difference in housing preferences. He said that young people marrying later and old people living longer may opt to rent as a more flexible option, but that this does not exclude owning at an earlier or later date.

In a larger sense, the housing crisis also appears to have impressed the sociological value of home ownership upon Americans. A vast majority of survey respondents deemed housing to have “major positive impacts” on the safety and economic security of communities and neighborhoods. The study also found that at least three in five respondents believe that unstable housing situations can have “major negative impacts” on mental health, physical health, educational outcomes, and parental relationships within a family unit. Survey architects said these attitudes appear to come from first-hand accounts of recession-related struggle.


Big Predictions for Housing for Next 2 Years

Home sales are projected to post some big gains in the next two years, according to Fannie Mae’s latest monthly economic outlook. Fannie Mae economists predict that existing-home sales will rise by 10.5 percent this year, and by 6.2 percent in 2014. The economists made even bolder projections for new single-family home sales -- growing 15.1 percent this year and 44.1 percent in 2014.

"We expect home prices to firm further amid a durable housing recovery, continuing to boost household net worth, gradually diminishing the population of underwater borrowers, and reducing incentive for strategic defaults," according to Fannie Mae’s report.

Fannie Mae projects that mortgage rates will stay low by historical averages this year, but the 30-year fixed-rate mortgage will rise from an average of 3.5 percent during the first quarter to an average of 4 percent during the final three months of 2013. During the fourth quarter of 2014, mortgage rates are projected to tick up to a 4.5 percent average.

Mortgage applications for purchases are projected to increase by 16.8 percent this year and by 17.1 percent in 2014. However, a decline in applications for refinancings will likely cause mortgage originations to be down 14.5 percent this year and by 31.4 percent in 2014, Fannie economists predict.

Source: “Fannie Mae sees housing upturn as 'intact',” Inman News

Middle Class Tax Benefits from Housing

The tax benefits of the mortgage interest deduction (MID) are primarily targeted to the middle class. According to 2012 Congressional estimates, 65.4 percent of the tax benefit is collected by households who have economic income of less than $200,000.

Of course, the claims for the MID are going to vary state-to-state given differences in house prices and other costs of living, household incomes, and tax items such as property taxes or state income/sales taxes, which in part determine whether a homeowner claims the standard deduction.

Fortunately, the Internal Revenue Service publishes state-level data of tax statistics. And these state level data, for which the income classifier is equal to adjusted gross income (AGI), illustrate the degree to which MID-benefiting taxpayers are concentrated in the middle class.

Housing Starts Break a Milestone

Housing construction passed the psychological mark of one million starts in March coming in at 1.036 million homes, up 7 percent from an upwardly revised February level of 968,000. The surge was due to a 31 percent increase in apartment construction to a level of 417,000 units, the highest since January 2006. Single-family construction fell 4.8 percent to 619,000 from an upwardly revised February level, which was the highest since May 2008. The first quarter single-family average was 628,000 up 6 percent from the fourth quarter 2012.

Housing permits were down 3.9 percent but from a February high not seen since July 2008. The first quarter average was 915,000 up 2.6 percent from the fourth quarter. Builders were stock pilling permits in February and the inventory of unused permits dropped 9 percent in March as a replacement for drawing more permits. Single-family permits were virtually unchanged so the change was due to a 10 percent drop in apartment permits likely because we are approaching the sustainable level of apartment construction.

Regionally, starts were up in all regions except the Northeast, which was down 5.8 percent monthly but up 12.6 percent annually. Midwest starts were up 9.6 percent month-to-month and 28.4 percent from March 2012. The South was up 10.9 percent monthly and 58.2 percent annually and the West was up 2.7 percent monthly and 53.7 percent annually. The mixed results were in line with NAHB expectations for 975,000 starts in 2013 or a 25 percent improvement over 2012.

Source: NAHB Eye on Housing

Notes from "The Mortgage Professor" Opportunities to Refinance

Interest rates have been at historically low levels for some time now. Some borrowers have refinanced two or three times, but there are others who so far have allowed the opportunity to pass them by. I am not referring to borrowers who haven’t refinanced because they can’t meet today’s standards. My focus is on those who can refinance profitably but don’t for a variety of reasons.

ERRONEOUS BELIEFS: The following beliefs that prevent or discourage refinancing have been related to me by borrowers. All are false:
—Borrowers have to wait some minimum period after taking a mortgage before they can refinance.
—The borrower who refinances loses the benefit of principal payments already made.
—The borrower who paid points to reduce the interest rate on the current mortgage should wait until the interest savings have covered the cost of the points.
—The borrower who has had a mortgage for a long time has to begin the process of paying off their debt all over again.
—It is better for a borrower who has been making extra payments to continue that practice, rather than refinance.

UNREALISTIC FEAR OF ADJUSTABLE-RATE MORTGAGES: There are borrowers with fixed-rate mortgages, or FRMs, who would not profit from refinancing into another FRM, but who would profit from refinancing into a lower-rate adjustable-rate mortgage — but they don’t because of fear of a possible rate increase. In many cases, this fear is not justified because the borrower can pay off the loan within the initial fixed rate period on the adjustable-rate mortgage, or ARM, which can be five, seven or 10 years.
To pay off the loan fully within the initial ARM rate period, the borrower must have the capacity to make payments larger than the required payment on the ARM. The previous payment on the FRM might be large enough to do the trick, or it might not. Even if the borrower can’t pay off completely within the initial rate period, paying a higher rate for a few years on a much reduced balance will not come close to wiping out the interest savings during the preceding years.

FAILURE TO EXPLOIT AN INVESTMENT OPPORTUNITY: Many mortgage borrowers can’t refinance profitably, or think they can’t, because their house has declined in value and a refinance would require the purchase of mortgage insurance. But if they have investment assets that can be liquidated to pay down their mortgage balance, the rate of return on investment will be far higher than the return they are earning on those assets now. This is called “cash-in refinancing” because the borrower is putting cash into the transaction.

Here is an example: John has a 6 percent mortgage with 300 months to go and a $100,000 balance, but his house is worth only $100,000, which makes him ineligible for a refinance. But if he pays down the balance to $80,000, he can refinance into a 4.5 percent loan with closing costs of 2 percent. If he stays in the house for 5 years, the rate of return on his investment, consisting of $20,000 in balance pay-down plus $1,600 in closing costs, would be more than 9 percent. The return is riskless to the borrower.

REJECTED AND GAVE UP: Some borrowers have not refinanced because they tried and were rejected, and then gave up. But not all rejections are created equal — depending on the reason, some deficiencies are fixable. Here are a few:

—You met the underwriting standards of the federal agencies — Fannie Mae, Freddie Mac, the Federal Housing Administration — but not those of the particular lender who rejected you. Some lenders have “overlays” that impose more restrictive requirements than those of the agencies, and where this is the case, you might well be approved by going to another lender.

—You were rejected because your credit score was too low for reasons that are quickly remediable. Examples would be scores lowered by a reporting mistake, or by credit card balances that are large relative to the maximums.
—You were rejected because your equity in the property was too small based on a faulty appraisal. A new appraisal obtained through a different lender could provide a different outcome.
—You were rejected because your debt-to-income ratio was too high and you have the means to reduce it — for example, by borrowing against a 401(k) in order to pay down other debt.

Jack Guttentag is professor emeritus of finance at the Wharton School of the University of Pennsylvania. More information can be found at http://www.mtgprofessor.com

S & P Outlook for U.S. Housing

The U.S. housing market continues to show signs of recovery, outpacing the relatively weak U.S. economic recovery. Standard & Poor’s baseline forecast assumes that the U.S. economy will continue to grow slowly in 2013, avoiding any substantial negative economic impact from the looming fiscal cliff and growing federal deficit. The U.S. economy grew 3.1% in the third quarter of 2012, up from 1.3% the previous quarter, and the unemployment rate declined to 7.7% in November from 8.7% a year ago. Both are moving in the right direction to support continued housing recovery in 2013. We believe that as long as the U.S. remains in recovery mode, U.S. housing fundamentals will continue to improve, bolstered by low interest rates and rising home prices. Taken together, we expect these trends to support improving consumer confidence and lead to a return to historical housing supply-and-demand fundamentals.

Our baseline forecast for housing assumes that U.S. national home prices (which rose 7% through the first nine months of 2012) will rise 5% in 2013, after a few months of seasonal weakness at the start of the year. Moderate economic growth, federal refinancing and loan modification programs, low mortgage rates, rising household formation, and limited new supply will contribute to price recovery, in our view. However, tight lending remains a key concern for housing demand because the limited availability of credit could weigh on borrowers.

Although the GSEs (government-sponsored entities, such as Fannie Mae and Freddie Mac) have been vital players in the U.S. mortgage finance market, 2012 was a strong year for mortgage banking, largely because of refinancing activity. This trend will likely continue in 2013, but banks may struggle to duplicate strong performance next year. Many non-bank finance companies have expanded their portfolios through servicing transfers at the cost of others exiting the business.

An improved outlook for housing, along with higher home prices, could increase the availability of mortgage credit and ease lending constraints, allowing borrowers with lower quality credit histories to refinance. More than 1.3 million borrowers have moved from negative to positive home equity in 2012, because of rising home prices. Homeowners with positive equity are able to refinance, taking advantage of the current very low interest rate environment. With more affordable mortgage payments, and some equity in their homes, consumers are less likely to default, which we view as positive for housing supply fundamentals. On the demand side, the rise in household formation over the past year is also positive for housing demand, in our view.

The impact of a recovery in housing fundamentals varies across the many housing related sectors and securities that we rate. While we expect all sectors to benefit from an improved housing forecast, the pace and depth of the improvement will depend on many factors, including each sector’s ability to participate in the recovery and their exposure to legacy portfolios and markets.

Banks’ Mortgage Earnings Will Moderate In 2013
Mortgage banking was a bright spot for banks in 2012, as refinancing volumes rose with the help of government programs and low borrowing rates. Banks may struggle to duplicate that strong performance in 2013 because the pool of borrowers eligible to refinance is shrinking, though rates are likely to remain low, and supportive government programs remain in place. Credit losses from residential mortgages continued to decline during the year, though the number of problem loans remains high and will continue to contribute to elevated losses in 2013 across the industry. Litigation risks for banks related to mortgage exposures grew in 2012 and are likely to continue to weigh on the industry in 2013 as state and federal regulators and investors seek to recoup losses from the past few years. Overall, the legacy residential mortgage exposure of banks should continue to weigh on results, but that drag on earnings and capital should continue to slow.

Homebuilders Benefit From Demand For New Homes
Buyers for newer homes returned to the single-family home market in 2012, resulting in better than expected operating results for most of the homebuilders we rate. Sales volumes and average selling price exceeded our initial expectations, and we currently expect that the homebuilders we rate will deliver on average 20% more homes in 2012 compared with 2011. Most new homebuilders have also posted healthy increases in average selling prices, outpacing overall market trends, as buyers gravitated toward competitively positioned new home communities and the supply of existing homes for sale has remained very low.

Despite our expectation that favorable housing demand and supply fundamentals will continue to support strong revenue and EBITDA growth in 2013, our outlook on the homebuilding sector remains stable. Improved fundamentals reduce downside risk in our view, particularly for the lowest rated companies, but we expect upside rating momentum will likely be more muted as homebuilders draw down their sizable cash balances (a primary support to liquidity over the past few years), and raise additional debt capital for future land and inventory investment in anticipation of higher sales volumes. The effect of this additional debt issuance will likely slow the leverage improvements necessary for more positive rating actions over the next 12 months.

We also remain concerned that the impact of a potential recession in the U.S. would be more significant for homebuilders than many other sectors, since a drop in consumer confidence would likely derail buyers’ appetite for large discretionary purchases such as single-family homes. In addition, decisions on numerous regulatory and policy initiatives that would have an impact on housing are slated for the first half of 2013, many of which could significantly affect the availability and cost of mortgage financing.

Click here, to read the full report.

5 Tips You Should Know Before You Rent

Before you start shopping for a home to rent to need to understand the process. First off, it's not the same as renting an apartment. Different criteria is used and different fees are involved. But you wonder what does it take to be able to qualify for a house? Read on if this fits you, I'll do my best to help demystify the process.

With an apartment you are renting one of many units a corporation owns and they expect a higher turnover rate of tenants. When you rent a home, it's a single unit that costs more to maintain. Landlords who own single family homes are looking for a more stable tenants which means their standards are a little higher.

Property managers who handle single family homes or duplexes usually only require a 30 day notice for when you want to vacate. That means most of those notices show up at the beginning of the month when the tenant pays the rent. Others may show up in the middle of the month and those are usually either homes that are being rented out for the first time or those that have had to have some rehab done after the previous tenant.

You could call every property manager out there and ask to be put on their list when something becomes available. However, the more efficient way to handle it would be to work with a Realtor who specializes in the area where you want to live. Almost every property manager will list their inventory in the MLS, because they want the most exposure they can get for prospective renters so the time the house is vacant (and not bringing any income to the landlord).

As a Realtor, I can access that information as soon as it is input and share it with my clients - even if it is not a listing from my own office. If its a property in a high demand area, you may miss out on it if you are hoping you'll drive by it and see the sign - not all management companies put out signs.

Now about the qualifications...Individual homes will usually be a little stricter. Just because it has a yard doesn't mean they will automatically allow you to have any pets you want. Each landlord will have their own guidelines for pets and will have a required deposit for each pet - usually $300-$400 and non-refundable. If you think that you can just hide the fact that you have a pet, think twice. If it is discovered that you lied on the application or brought in a pet after moving in, without the landlord's approval, this could be grounds for an eviction. If you have an eviction on your record, it will make it extremely hard to find a new place to live.

Costs to move in...There will be a security deposit that will need to be paid upfront along with the first month's rent prior to move in. It will usually be equal to, or more of the monthly rent. It can not be spread out over several months. It is not your last month's rent. It is the "security" the landlord has against the event that a tenant damages the house. If the damage is greater than the deposit, the landlord can take the tenant to court to pay for the additional costs. You do not want to have a judgment on your record; it will make it very hard to find another house to rent because those records will also be checked as part of the required credit report.

Credit Reports...Each property manager will run a report for each person who will be living in the house over the age of 18. How well or how badly you pay your bills will affect whether or not your application will be approved. The landlord wants to make sure you will be paying the rent and on time. Even if you make lots of money but you can't seem to remember when bills need to be paid that will affect your credit. Understanding is given for an occasional late, but not a repeating history.

Need more details? Give me a call. I can be reached at 210-827-2858.

Boomerang Buyers - Buying Again After Foreclosure

Generally, buyers must wait at least three years after a foreclosure or short sale to qualify for a government-backed Federal Housing Administration mortgage. It can take seven years to get a conventional loan backed by Fannie Mae or Freddie Mac.

“I think over three-fourths of these folks will take a stab at the comeback trail,” says Paul Scheper, division manager for Greenlight Financial in Irvine, Calif. “Even though some are coming off a bitter experience, most will be looking to regain the American Dream.”

In the nation as a whole, more than 3.4 million households potentially could qualify for an FHA loan because it’s been three years since their short sale or foreclosure. But many people still do not have the money or sufficient credit to get a loan. Natalie Lohrenz, the Credit Counseling Service’s director of development and counseling, says there are two types of foreclosed homeowners: those who had a bad loan they couldn’t afford, and those whose finances got nuked.

The first type couldn’t make their house payments, but still had enough income to stay on top of their other bills. The second — because they went through a divorce, illness, job loss or business reversal — basically ended up with nothing, and trashed their credit across the board.

Here’s a breakdown of waiting periods for boomerang buyers who lost their homes due to a foreclosure or a related event:

—Seven years for a government-backed Fannie Mae or Freddie Mac loan.
—Three years for a Federal Housing Administration (FHA) loan.
—One to two years for a FHA loan if there were extenuating circumstances (such as illness or death of a wage earner).

Short sale:
—Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
—Four years for Fannie Mae or Freddie Mac with 10 percent down.
—Two years for Fannie Mae or Freddie Mac with 20 percent down.
—Three years for an FHA loan.

Deed in lieu of foreclosure:
—Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
—Four years for Fannie Mae or Freddie Mac with 10 percent down.
—Two years for Fannie Mae or Freddie Mac with 20 percent down.
—Three years for FHA.
—One to two years for FHA loan with extenuating circumstances.

SOURCE: Fannie Mae, Department of Housing and Urban Development

New ‘Kids’ on the Block Are Willing to Work Hard to Make Their Homes Unique to Fit Their Lifestyles.

There’s a new type of home buyer on the market. They know what they want and are ready to get their hands dirty to transform a house to meet their unique needs. Stereotypical luxury and prototypical homes do not entice them; rather these consumers strive to own homes that stand apart and suit their personal lifestyle... Enter the next generation of homebuyers.

Better Homes and Gardens® Real Estate today released national survey findings of 18 - 35 year-old Americans that reveal the next generation of homeowners are rewriting the rules to home ownership and reinterpreting traditional norms to fit their values. Results indicate that the next generation of homeowners seeks essential, purposeful homes (77%) equipped with the technological capabilities they have grown accustomed to, as opposed to stereotypical luxury homes preferred by many in their parents’ generation. The findings also demonstrate that 82 percent of “Millennials” surveyed embrace their independence with gusto and prefer to handle home improvements on their own instead of turning to their parents for money; a stark contrast to the general misconception that paints young Americans as coddled or entitled.

“It’s critical that real estate professionals understand what embodies a quintessential home for the Millennial generation, which vastly differs from the traditional norms of generations before them,” said Sherry Chris, president and CEO of Better Homes and Gardens Real Estate LLC. “These survey findings allow our brand to continue to best serve the next generation of home buyers and find homes that can or do appeal to their lifestyles and unique spirit. Understanding technologies to communicate with this generation is now only one piece of the puzzle for agents; ‘smart’ technological capabilities must now be ingrained into the home itself.”

Key findings from the Better Homes and Gardens Real Estate survey include:

The Fix - It Generation:
While home ownership presents new responsibilities and surprises for first-time homeowners, Millennials are prepared for home maintenance tasks. Nearly 1 in 3 (30%) Millennials surveyed would actually prefer a “fixer-upper” to a house with minimal repairs needed. They aren’t afraid of rolling up their sleeves either. Nearly half (47%) of survey respondents would be more likely to tackle a home maintenance problem themselves, rather than calling a professional to handle the job. Furthermore, 72 percent of Millennials consider themselves just as handy, if not more so than their parents.

Bigger Isn’t Always Better:
Unlike their Baby Boomer parents, 77 percent of Millennials surveyed would prefer an “essential” home compared to a grand stereotypical luxury home.This generation wants their living quarters to be as unique as they are; more customized and less “cookie cutter” (43%). To that end, Millennials seek for each room of their home to serve a purpose fit for their lifestyle. For instance, 1 in 5 of survey respondents agree that “home office” is a more appropriate name for their dining room based on what they typically use it for, and 43 percent would like to transform their living room into a home theater.

Home, Sweet (Smart) Home:
When it comes to the next generation of home owners, more than half (56%) of Millennials believe home technology capabilities are more important than “curb appeal.” If a home is not up-to-date with the latest tech capabilities, 64 percent of Millennials surveyed would simply not consider living there. In addition, 84 percent of the younger Americans surveyed believe that technology is an absolute essential to have in their homes. The most sought-after tech being an energy efficient washer and dryer (57%), security system (48%), and smart thermostat (44%).

Their Home, Their Way:
Millennials have a fresh perspective on furnishing a home. Fifty-nine (59) percent of those surveyed would rather have extra space in their kitchen for a TV, as opposed to a second oven, and they seek to be entertained in every room of their home. While kitchen renovations are likely to remain a top improvement priority, tech updates are highly desirable, as well. In fact, 41% Millennials would be more likely to brag to a friend about a home automation system over a newly renovated kitchen.

These findings are an extension of a 2012 Better Homes and Gardens Real Estate home ownership survey, which revealed that in spite of the recent housing crisis, Millennials are undeterred from buying a home and believe owning a home is a key indicator of success.

Luxury Sellers Staying on Prices

Even though the time it takes to sell a luxury property has increased to as long as 260 days in Chicago, 287 in Miami and 197 nationally, overall, fewer sellers are cutting prices. Wintertime sluggishness has slowed luxury markets across the nation. Days on market have been increasing in nearly every major market tracked by the Institute for Luxury Home Marketing, and inventories are at a seasonal low.

Perhaps as a result of strong prices, sellers are not responding as they normally do in the winter by cutting prices to generate interest among buyers. In fact, fewer are reducing prices today than when days on market were lower last summer.

The percentage of homes on the market that have lowered their asking price at least once over the past 90-day period has fallen 10 percentage points since the end of the summer, from 31.4 percent of properties to 24.4 percent. This statistic illustrates how many listed properties may be behind the “price curve” –listed at a price above what the market is willing to pay for similar properties.

Even in strong seller’s markets, the percent price decreased will be 10-12 percent, so some repricing of individual properties is common in any market. In weaker markets, this value begins rise into the teens, 20 percent, 30 percent, and higher. Percent price decreased is an insightful gauge of demand levels in the residential housing market.

The National Association of REALTORS® reported that sales of luxury homes spiked in the final months of 2012 as high-end homeowners rushed to take advantage of lower tax rates before January 1. Many sellers wanted to cash in on their homes before a widely expected capital gains hike — to 20 percent from 15 percent — that was part of the fiscal cliff budget deal. According to the National Association of REALTORS® (NAR), sales of homes valued at $1 million or more spiked 51percent in November compared with a year earlier.

For more information, visit www.realestateeconomywatch.com