Real Estate News


By Christina Mlynski

• June 25, 2013 • 8:36am

The housing sector seems on the mend with home prices continually rising upward.

Prices inched upward 0.7% on a seasonally adjusted basis from March to April, according to the Federal Housing Finance Agency.

From April 2012 to April 2013, home prices also rose 7.4%.

"With this morning's very favorable Case-Shiller report, the housing sector shows continued improvement although from a low base," explained analysts for Econoday.

They added, "The Federal Reserve's quantitative easing program clearly is having positive impact in the housing sector. However, short supply of houses on the market also is contributing to the rise in prices."

However, the index is well below pre-crisis levels, down 11.7% and roughly the same as the January 2005 index level.

Nonetheless, it is important to note that home prices have increased over the past 15 months.

Regionally, the April home price gain was led by the Pacific region, increasing 17.1% month-over-month. The weakest region was New England, down 0.2% from the prior month.

The FHFA’s home price index is calculated using monthly home sales price information released by Fannie Mae and Freddie Mac.


 One of the most important things real estate practitioners give consumers is positivity. Here are a few ways you can keep yourself in the right mindset and bring positive energy to your interactions with clients.

May 2013 | By Jeff Shore

Consider this question: What is the single most important thing you bring to your consumers? Is it a deep understanding of your marketplace? Or perhaps the ability to guide customers through a process that’s often difficult? How about compassion and empathetically connecting with consumers on a deep level?

All are important, of course, but I believe that the single most important element we bring to clients and customers is positive energy.

To a visitor who is weary from the process or laden with fear from uncertainty, positive energy is like a warm fire on a cold day. Get the buyer in a positive frame of mind and the transaction becomes more enjoyable and — ultimately — more successful for both parties.

Put this into real-life perspective for a moment. Let’s say a couple goes to your brokerage. They pull up to the place, and as they’re getting out of the car, they’re saying things like, “Now let’s get this straight — we’re just looking and we have several other stops, right? We’re not giving in to the first salesperson.” Or worse: “That last guy was a creep. Let’s just tell this guy to back off, and we’ll look around on our own.” Will your well-rehearsed product demonstration save the day here?

In reality, even your very deep compassion will be meaningless if you cannot break down the pre-existing defenses. Top sales professionals make a concerted effort in favor of positive energy — regardless of the demeanor or personality of the customer.

Here’s the rub: You can only give out what you have inside. You need to be radiating positive energy all day long. Protecting this is critical to your success.

Each day we experience negative energy via unhappy customers, irritating coworkers, uncertain economics, and a media that loves bad news. This negativity is infectious. And when we are infected, we infect those around us. When unchecked, we become carriers of a negative virus, and an already negative customer adopts that same demeanor.

Let’s consider a few simple ideas for feeding yourself positive energy consistently:

Don’t start your day negative: Controlling what we allow into our minds is always important, but let me suggest that it’s critically important when it comes to starting your day. Consider what you hear on the average cable news network in the morning — rabid reactions to the latest economic indicators, pundits lambasting the latest partisan political ploy, and dire weather and environmental reports. Now, I consider myself a well-informed individual, and I intend to stay that way. At the same time, that kind of noise does nothing to improve my disposition when I need to be “on.” Like mom used to say, “If you can’t find something nice to say (or listen to), then don’t say (or listen to) anything at all!”

Use your drive time wisely: Audio books, podcasts, and training seminars can help you maintain a positive mind-set during your daily drive. Not that every moment of your life needs to be filled with some form of cerebral stimulation: Perhaps pumping yourself up with music gets your energy flowing. Or you might use a quiet drive to decompress from home life and transition into being “on.” There are no right answers here; the point is to reflectively consider how best to use this time for your own benefit.

Look for mental snacks throughout the day: Find time and ways to recharge yourself during your long day. Do you subscribe to an e-mail newsletter? Take a few minutes to digest it. Working long stretches alone? Call up a colleague to find out what’s hot in their world. Text your son or daughter to offer an encouraging word or to find out what’s going on. We’re in a world driven by external forces, but you’re responsible for operating at peak performance and you know what it takes to maintain that.

Deep breaths and stretching: Okay, I admit it. I’m not really much of a yoga guy. But I’ve tried it, and I know that the principles work. Now, I’m not suggesting that you bust out a Downward Facing Tree pose in the office. But, at an appropriate place and time, stretching allows more blood to flow to our muscles, improving circulation, while deep breaths bring more oxygen to our brains. Remember: Your body is a dynamic organism that requires intentional care and maintenance to operate at their best.

Establish a “default” positive-energy activity: File this under “what gets me centered.” For you, this may be exercise, prayer, meditation, music … again, whatever gets you consistently centered within yourself. This is your “go-to” activity when you feel that positive energy waning in your world. Work to create energy-building activities throughout your day. And, know for yourself, when all else fails, that you have a tried-and-true mechanism for regaining focus and positive energy to get you back on track.

Beyond all of these strategies and activities, however, it’s worth noting that maintaining a positive attitude in life is really a choice. It is your choice. Life may throw you a curveball or you might find yourself in a rut, but that choice always comes back to you.

Daily Real Estate News | Monday, June 10, 2013

Home prices are rising rapidly in many markets, but Pacific Coast Builders Confidence attendees name two main factors that should quell fears of a new bubble.

“The ultimate reality check is affordability,” Ara Hovnanian, chief executive of homebuilding giant K. Hovnanian Enterprises, told The Wall Street Journal.

Home prices soared during the housing boom, making homes less affordable for families earning the median income. The National Association of REALTORS®’ affordability index fell to 107.6 in 2006—often considered the height of the housing bubble. But following the housing crash, housing affordability rose (the higher the index, the greater the affordability). In 2008, the index climbed to 137.8, and reached a high of 193.2 in 2012, according to NAR.

Based on median income figures and median prices, the average American family earns “nearly twice as much as it needs to afford a reasonable home and not break the bank on monthly payments,” The Wall Street Journal reports.

“If mortgage rates went up 270 basis points [or 2.7 percentage points], affordability would fall to about 138—one of the highest affordability rates of all time,” Hovnanian says.

Another reason why many builders say they aren’t concerned the market is heading for another housing bubble: Home construction is still near record lows. Home building is only about half of what is considered healthy for the sector.

“We’re coming from such depressed levels that we’re not even back to what’s normal,” says Jonathan Jaffe, chief operating officer of Lennar Corp., the third largest homebuilder in the U.S. “We’ve got a long way to go before I think you can talk about excess, or about a bubble, or before rising interest rates will affect that fundamental demand.”

Source: “Builders Sniff at the ‘Bubble’ Talk,” The Wall Street Journal (June 7, 2013) 


By Chris Isidore @CNNMoneyJune 20, 2013: 12:36 PM ET

Home prices have jumped to levels last seen just before the 2008 meltdown.


Home sales and prices continued to climb in May, raising the prospect of a new housing bubble unless there is a significant increase in home building.

"The home price growth is too fast, and only additional supply from new homebuilding can moderate future price growth," said Lawrence Yun, the chief economist for the National Association of Realtors. He said there needs to be a 50% increase in home building.

The median home price jumped 8% from the previous month to $208,000, according to NAR. While month-to-month price swings are not unusual, the year-over-year rise is now 15%, and prices are at levels last seen in the summer of 2008, just before the bursting of the housing bubble.

May marked the 15th straight month of annual price increases, the first time that happened since May 2006.

Related: Home prices post biggest gain in 7 years

Home prices have been driven higher partly by a drop in foreclosures. Only 18% of home sales in the month were so-called distressed sales, which typically sell at a discount to market prices. A year ago 25% of sales were distressed sales.

Overall sales rose 4% from April and 13% from a year earlier to an annual rate of 5.18 million homes in the month.

Related: Venezuela money fuels Miami housing boom

There are differences between this run-up in prices and the housing bubble that preceded the financial crisis, said Gary Thomas, the Realtors' president.

"The boom period was marked by easy credit and overbuilding, but today we have tight mortgage credit and widespread shortages of homes for sale," he said. The improved housing market and mortgage rates still near record lows, despite a recent rise in rates, is pulling buyers back in the market faster than it's prompting sellers to put homes on the market. Buyer traffic 29% above a year ago, but the supply of homes for sale is actually down 10%.

That's caused homes to sell much more quickly -- only 41 days on the market on average in May, about a month faster than a year ago, with nearly half the homes being sold in less than a month.

The warnings about prices rising too fast were a stark change from the Realtors' position during the heyday of the housing bubble, when the statement from officials generally cheered the steady rise in prices.

By Les Christie @CNNMoneyJune 6, 2013: 10:19 AM ET


Say goodbye to ultra-low mortgage rates.

In the past month, rates have been on the rise and they are expected to continue to climb.

This week, the average rate on a 30-year fixed-rate mortgage jumped another 10 percentage points to 3.91% and are up from 3.3% in early May, according to mortgage giant Freddie Mac. Meanwhile, those seeking a 15-year loan received an average rate of 3.03%, up from 2.56% -- a record low.

"It's unlikely that rates will ever be that low again," said Doug Duncan, Fannie Mae's chief economist.

Those who didn't take advantage of record-low rates have missed the boat -- at least for now. Here are three reasons why.

Related: Best deals on real estate

The Fed is going to stop bolstering the housing market. The Fed has kept rates at rock-bottom levels by buying up to $85 billion a month of Treasury bonds and mortgage-backed securities. That has enabled lenders to sell mortgage loans at low interest rates and recoup their money immediately -- plus profits.

"Up until recently, expectations were that the Fed would begin to taper purchases of mortgage-backed securities (MBS) and Treasury bonds late in 2013, but that timeframe appears to have moved to September, possibly sooner," said Keith Gumbinger, vice president of, a mortgage information company.

Related: McMansions are making a comeback

If the Fed stops purchasing the securities, private investors will have to pick up the slack. For investors to do that, the loans will have offer a better payoff. And that would mean raising rates for borrowers, said Duncan.

The economy is no longer reeling. During the recession, the Fed lowered its short-term interest rate to near zero in order to stimulate the economy. But now conditions have improved considerably since the economy emerged from recession four years ago. As the economic revival gains traction, it is creating a tailwind for interest rate increases, according to Gumbinger.

Low rates happen when the economy is in distress. But now, the market believes the economy is getting stronger, said Wendy Cutrefelli, a vice president in the Mortgage Banking Division of Bank of the West.

Quiz: How much do you know about mortgages?

Job gains have picked up lately, averaging about 202,000 a month over the past six months.

That hiring is advancing rather than retreating is good news for the economy and any positive future reports are expected to push rates higher, according to Gumbinger. Even mediocre news might not cause any meaningful decline in rates.

3.3% rates are unprecedented. "The 30-year [mortgage rate] hit a 37-year low in 2003 at 5.23%," said Gumbinger. "That was the previous low-watermark prior to this financial crisis and it's likely we will move closer to that mark as we grind forward."

Any return to normal conditions, therefore, will likely be accompanied by higher mortgage rates.

Even if they go up a percentage point or two, however, mortgages will still be relatively low. Historically, 30-year loans are usually 5.5% or higher.

For clues to the direction of mortgage rates, look at the daily movements in 10-year Treasury bond yields. Mortgage rates track Treasury yields with the difference between them holding fairly constant.

These days, Treasury bonds have been on a jumpy uphill climb, with the 10-year hitting 2.21% on May 31, its highest closing since April 2012. On Thursday, the yield was about 2.10%. Since the interest rate on a 30-year is usually 1.7 to 2 percentage points higher, it indicates that mortgages should be at between 3.82% and 4.12% this week.

By Lauren Lyster | Daily Ticker

Yields on the benchmark 10-year U.S. Treasury note hit 2.27% at one point Tuesday, the highest level in more than a year. It was part of a global bond selloff tied to investor disappointment that the Bank of Japan held off on taking new measures to stimulate the economy and support markets. But it’s a continuation of a trend we’ve seen recently, with the interest rate on 10-year U.S. government bonds rising above 2% in recent weeks.

Related: Bill Gross: All Assets Are Risky, But I’m Buying Treasuries

So what impact does this have on markets, the economy and on ordinary Americans? Peter Tchir of TF Market Advisors, a New York research, asset management, and consulting firm, puts it quite simply in a recent note: “Rising Rates are Bad.”

Tchir notes they are particularly bad when it comes to one of the bright spots for the U.S. economy: housing.

“This whole housing recovery that we’ve seen over the past year has been at much lower rates, so we’re very concerned,” Tchir, who has traded over $1 trillion of fixed income products during his career, tells The Daily Ticker in the accompanying video.

Rates for a 30-year fixed mortgage tend to track the 10-year Treasury rate very closely. The national average 30-year fixed mortgage rate has risen from 3.52 percent to 4.1 percent in the last five weeks, according to

The recent increase adds $100 onto the monthly mortgage payment for the typical, $245,000 house, according to Tchir. Although rates remain very low based on historical standards, he thinks this is significant headwind for potential buyers who have been on the fence. And he counts a lot of people in that category given the lack of growth in high paying jobs during the economic recovery. Tchir points out much of the job growth post-recession has come from lower paying, service-oriented industries or in temporary services.

Indeed, according to Fed Governer Sarah Raskin, as reported by the Los Angeles Times, a little more than half of the job gains since the recovery from the financial crisis have been in lower-wage occupations such as retail sales and restaurant work. That’s even though these jobs represented about one-fifth of the jobs lost as a result of the recession.

Related: Is the Largest Private Employer Mooching Off Taxpayers to Keep Wages Low?

As for housing, mortgage applications (particularly for refinancing) have dropped in recent weeks. Tchir thinks we could see a real slowdown exacerbated if and when the Federal Reserve begins to taper its bond-buying program, which would remove support for housing.

Related: “This Is Not a Normal Housing Market”: Economist Michelle Meyer

Tchir thinks the central bank will begin pulling back on bond purchases due to growing concerns that monetary policy is “screwing up the markets,” though Fed officials may attribute tapering to an improving economy. He thinks an announcement is coming soon, but check out the video above to hear his prediction of when.

Real Estate News  Jun 7, 2013
By Sarah Kinbar

The rebounding new home market has fueled a change in attitudes about what we want from our homes when we build them from the ground up.

After enduring a real estate decline, as the market improves, we value our homes that much more. Most of us are thinking through the details of what we want in our homes with a greater sense of clarity about how we really live in our spaces. Our focus is much less on size and has instead turned toward making the most of every room.

The chef is on display: Kitchens are now designed for a crowd

If all your hours spent watching the Food Network have left you feeling like you’re a burgeoning chef in need of a kitchen fit for one of television’s celebrated chefs, you’re not alone.

The more sumptuous the kitchen we see in that home magazine, and the more educated we become about domestic skills — gourmet cooking being a favorite practice to take up — the more we desire the tools to support our developing abilities.

For kitchens, we want to go beyond the gas range and custom storage for all possible ingredients. Admit it: The serious home chef cooks, in part, to be seen cooking. So, a kitchen island with seating for one’s audience — whether the fans are family or guests — is a must. You’ll want top-notch lighting, too, to better see you and your edible creations.

Keep an eye out for trends from annual idea homes and dream homes from HGTV, Southern Living, Coastal Living and other media

In tracking trends for our feature on some of this year’s leading design homes, kitchens designed for a crowd made appearances in several top idea homes or dream homes.

Look no further than the 2012 Sunset Idea House (“Breezehouse”), the Southern Living Idea Home or Coastal Living’s Ultimate Beach House for kitchens designed for gathering.

That’s a good lesson, by the way: If you spot a trend in one of these major show homes, look for it to show up in real life soon after. Major show homes and idea homes don’t just reflect our preferences; they help drive the market.

The rise of the supremely outfitted home

In 2013, we predict a distinct rise in supremely outfitted homes. Anne Robert, a London-based style maven at, calls this the “uber trend.”

“A home’s value will be measured on its ability to be as good, if not better, than relevant spaces out in the market,” says Roberts. “Ideally, you want a kitchen good enough for a chef, a gym equipped like your local gym, a bathroom that echoes a spa. You want your home office to be as well connected as you are at work.”

It’s all happening in the home gym

Take the gym: Innovations in home gyms have exploded in the past few years, with svelte new fitness equipment from manufacturers like TechnoGym leading the way.

For those of us who prefer to sweat and strain in private, a home gym is a must. No longer is this reserved for professional athletes and trainers. The well-equipped home gym is within reach for those of us who have a room to dedicate (or even part of a room, thanks to the latest modular fitness equipment).

We no longer have to worry about how our gym equipment will look sharing space in a home office, because sophisticated fitness machines designed specifically for home use are so beautiful that they outshine their commercial counterparts.

The TechnoGym Kinesis Personal Vision is a perfect example of gorgeous modern technology. When not in use, it folds up to disguise itself as a full-length mirror.

Time for a shower? Take it outdoors

In 2013, when you’re done working out, you may clean up indoors in a master bath that features a curbless and stall-less shower, a modern luxury like one you’d find in a European boutique hotel.

Or, if you really want to get out ahead of the trend, you’ll relax in an outdoor spa, like the Sundance Spas Select Series, an eco-friendly line that operates efficiently without forgoing the comfort-inducing features that the company’s hot tubs are known for.

Privacy is key for outdoor spas. Landscape designers have met this need by incorporating hedges, potted plants, seating and foot-friendly surfaces known as hardscape to walk on. None of this is an afterthought; landscapers are fashioning deliberate outdoor rooms that cater to the needs of home spa enthusiasts. Which leads us to … the outdoor shower.

The growing popularity of outdoor bathing is due to adaptations in product and landscape designs that establish privacy. “Our parents and grandparents didn’t think we’d ever see three bathrooms in a single family home,” says Robert. “But that’s expected now, and soon, outdoor bathrooms will be expected, too.”

Robert should know. She’s a regular at design-oriented trade shows that set trends for the international market, as well as for the U.S., so she is uniquely positioned to spot trends in home design as they’re on the ascent. What else does she see happening in our homes next year? Pick up your smartphone to find out.

Have your iPhone call my outdoor fireplace

Now more than ever, gardens are outdoor living spaces. The trend for outdoor space to meet and merge with indoor space is here to stay.

If the intersection of indoors and outdoors is where the action is, it becomes clear that you do need an outdoor fireplace that you can control from your iPhone.

Not techie enough for you? Vondom’s Faz outdoor lounger, coming to market in 2013, features a moveable sun shade and built-in, iPod-compatible audio system.

While you’re at it, have your smart phone call my house, too

The infusion of technology we’re seeing outdoors also applies to the whole house.

Now, due to major advancements in home-automation technology, you can control your home by voice from anywhere. Just ask Siri, Apple’s automated assistant — she’ll explain the matter for you. Android phones and tablets like the iPad round out the tool kit we can increasingly use to call and control our homes from afar.

We’re lucky. Home automation’s early adopters ferreted out the kinks, and new systems coming to market in 2013 are so easy to use, everyone will want one.

Wondering if you set your alarm when you left home today? Call your security system and tell it to activate. With systems like HAL (Home Automated Living), which works through your PC, you can also enjoy having your emails read aloud and the stock market checked for you.

In 2013, systems like these will become more fluid, allowing for an easy transition that’s inviting to those of us who weren’t early adopters in home automation. The ability of such systems to accurately monitor home energy use will allow you to focus your conservation efforts based on real data.

Name that tune

And it’s not just your home’s lighting, cooling and security systems you can call and connect with. What’s that song you wanted to hear? Say it out loud, and your digital music center responds on command.

Want to hear Springsteen in the living room while your teenage daughter blasts Taylor Swift in her bedroom? Not a problem — the automated system can handle it.

Want to cue up a video in your home’s movie database? Call home. Get the picture?

As you can see, it all starts with a phone call. In our article on home automation, a top home-automation expert notes wryly that we’re all walking around with a $600 remote control in our pocket all day long. It’s called a smartphone. Look for it to be used often and in increasingly novel ways in 2013.

Green is mainstream

Notice that we’re not calling out eco-friendly building and living as a separate trend?

That’s because green is now a given. Builders and home owners alike have seen the benefits of an environmentally-conscious approach to development and lifestyle, so those improvements can be found as part and parcel to the trends noted in our coverage.

For more developments in home design, visit the NewHomeSource Resource Center often, as we’ll post trend reports regularly.

Real Estate News      Jun 6, 2013

By: Neal J. Leitereg

As they have over the past month, mortgage rates continued to climb this week, a trend that is expected to continue.

The average rate on a 30-year fixed mortgage loan saw a significant increase for the second straight week, according to the latest survey by mortgage buyer Freddie Mac. After jumping 10 percentage points a week ago, the 30-year fixed saw another 10-point spike, climbing to 3.91% up from 3.81% a week ago. That is the highest the average on a 30-year fixed has been since 2012.

The average rate on a 15-year fixed mortgage loan is also on the rise. Previously at 2.98% a week ago, 15-year fixed-rate loans climbed to 3.03%. It is now nearly 50 percentage points higher than it was at the start of May, when a historic low of 2.56% was achieved.

Many analysts see a correlation between the rise in rates and a growing belief that the Federal Reserve will cut back on its bond-buying program. The Feds’ bond-buying program has been an important factor in keeping long-term mortgage rates near record lows, and the belief that the Feds may curve the program is what some, including Freddie Mac vice president and chief economist Frank Nothaft, point to as the cause for the recent spike.

“Continuing market concerns that the Federal Reserve may slow its bond purchases amid a strengthening economy added upward pressure on mortgage rates this week,” Nothaft said in a release.

“In its June 5th regional economic conditions report, known as the Beige Book, the Federal Reserve noted that overall economic activity increased at a modest to moderate pace over April and May in all its districts except for Dallas which indicated strong economic growth. In addition, pending home sales rose in April to its fastest pace since April 2010 and May’s consumer sentiment was revised upwards to its highest reading since July 2007.”

Additionally, the average rate on a five-year adjustable-rate mortgage also climbed, jumping from 2.66% to 2.74% week over week. The average rate on a one-year adjustable-rate loan increased slightly to 2.58%, up from 2.54% a week ago.

Whether rates continue their upward trend could depend on tomorrow’s Employment report, which details key employment figures like the unemployment rate and amount of jobs added or lost over the past month. Mortgage expert Al Bowman predicts that a positive Employment report could be what finally pushes mortgage rates down:

Analysts are expecting to see that the unemployment rate remained unchanged at 7.5% in May while approximately 159,000 jobs were added to the economy. A higher than expected unemployment rate and a much smaller number than the 159,000 new payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates tomorrow. However, stronger than expected numbers may lead to another spike in mortgage rates, so proceed cautiously if still floating an interest rate. Look for it to be an active morning in the financial and mortgage markets.

Looking ahead, some see a decline in rates on the horizon. In the latest Mortgage Rate Trend Index by, 82% of the mortgage experts polled believe rates will either stay the same or trend downward over the next week. “What happens to rates next week will depend on Friday’s employment report,” says senior mortgage reporter Polyana da Costa. “If the employment numbers for May are more of the same, rates may not move much, but if they are worse than expected, rates could fall.”


The Trulia app on Google Glass can show images and provide information about homes for sale.

5:36 p.m. | Updated to add that Zillow is also planning apps for Glass.

Walk down a street wearing Google Glass, and you can see alerts about nearby houses on the market.

The alerts are courtesy of Trulia, the real estate site, which this week introduced an app for Google Glass. It is one of only a handful of apps available for the Internet-connected glasses, and is an example of how software developers are experimenting with the new device.

Trulia’s app sends alerts for houses that the service thinks users want to see, whether because of criteria they have previously given Trulia or because of the types of houses in which they have shown interest. On Google Glass, people can scroll through photographs, get walking directions to a house, hear a description, save a listing to an account and call or e-mail a real estate agent.

Like Yelp or Google Maps, real estate sites like Trulia are an example of services that are often more helpful on mobile devices than on computers, because people use them to learn more about their current location. More than half of weekend traffic and a majority of leads for real estate agents come from mobile devices, according to Trulia.

But the app raises the question of whether people want to see the information pushed to a screen in front of their eyes.

“The model is different,” said Jeff McConathy, vice president for engineering for consumer services at Trulia, who built the Glass app during two weekends. “When a person engages with a phone, they express intent. With Glass, you have to be very careful that you’re not being intrusive.”

He said that the Trulia app for Glass shows “tiny tidbits so as not to overwhelm,” and that it works well on the format because it is reliant on location and photos.

Zillow, another real estate site, is also preparing apps for Glass. Users will be able to see information on when a house was last sold, compare that with its current estimated price and see photos, said Rich Barton, Zillow’s co-founder. Like Trulia, the Glass apps will connect customers with real estate agents, which is one way both companies make money.

Building apps for Glass, known as Glassware, is a still a gamble for developers. No one wants to miss out on the next big thing, but there is no guarantee that Glass is it.

Mr. McConathy said that building the app felt like the early days of experimenting with building iPhone apps, but that he was not yet convinced that Glass is the form of the future. He has been wearing it for a few weeks and said he used it mostly to read the time, which is on the home screen, or to read text messages while he is riding his motorcycle.

Only a couple thousand people who have signed up with Google have Glass, and there is not yet a public app store. Only people who own the device have full access to the tools to build apps and the ability to download new ones, and only after Google approves the apps.

Quentin Hardy contributed to this post.

Real Estate News Jun 7, 2013    By: Sam DeBord


Most consumers can quickly recite a few of the ubiquitous pitches used in the real estate industry.

“It’s a great time to buy!”
“Now is the time to sell!”
“This is the chance of a lifetime!”

The real estate business is about sales, and although these lines may lack creativity or specificity, they are all true at certain points in time. Even if the generic nature of the pitch seems to show a lack of effort, most of these statements are viewed as a forgivable part of a sales-based business.

One sales pitch that we heard during the last real estate bubble, however, seems to draw more pointed ire than others. As home prices rocketed upward in the early 2000s, some real estate industry sales pitches shifted to drawing out a consumer’s fears as opposed to aspirations:

“Buy now or be priced out forever!”

This was the cry of many companies who projected never-ending home appreciation. The price of real estate was said to be outpacing gains in income and, since it would always continue at that pace, only those who owned a home and shared in those equity gains would be able to keep up with the market.

Of course, we all know what happened next. In the past 5 to 7 years, before our current recovery, we saw markets across the country take 20 to 50 percent hits in real estate values. Nearly every home became an affordable home. Many folks who bought a home out of fear were rightly upset when they ended up underwater by six figures.

No matter the cause or the blame for the downturn, the clear lesson to many was to make a real estate purchase decision based on fact, not on emotion. Of course that’s easier said than done when buying your first home for your family. Still, there are poignant reminders every day that refocus consumers on making rational buying decisions–short sales and foreclosures in our local markets.

The Fear Pitch Makes a Comeback

Interestingly, the much-maligned sales pitch is returning to our newly-recovering markets today. Real estate values are still down from their peak, and most analysts don’t see overvaluations at current prices. The new “priced out forever” pitch focuses much more on consumers’ buying power.

Historical data on home prices made it clear that we were heading into a bubble the last time around. Many just chose to ignore it. Home prices were on an unprecedented rise, and it was far out of line with historical peaks and valleys of the real estate market.

Home buyers today, wary of a repeated downturn should be focused on two things:

1. Are home prices likely to sustain their current values or appreciate?
2. Can I afford a home in this community long-term?

Today’s market looks much different than it did during the bubble. While we’ve seen an increase in prices during the recent recovery, the overall recovery is modest. Some areas are seeing greater gains than others, but these are often the cities that took the largest hits during the downturn. In general, our current market seems to be in a relatively healthy growth pattern. Adjusted for inflation, there appears to be slow, sustainable appreciation across the country.

Another indicator of the reliability of home prices is the relative value of buying vs. renting. Homes have a basic value as a place to live. Buying a home certainly has many additional benefits that consumers value which don’t apply to renting. However, there is a limit to that premium, and when we see renting becoming far cheaper than buying, we often see a downturn on the way.

It’s fairly clear that our current market points to well-priced, if not underpriced, real estate values. When buying becomes less expensive than renting in terms of monthly costs, it’s usually a sign that markets are undervalued and are ripe for investment.

Of course, interest rates have much to do with this affordability. Price decreases during the downturn certainly helped affordability somewhat. The dramatic drop in interest rates, however, has created more affordability than any other factor.

“Buy Now Or Lose Your Buying Power Forever?”

This is where the rubber of the new fear pitch meets the road. For cash buyers, these affordability concerns are not an issue. For home buyers who are financing the majority of their purchase, however, today’s ultra-low interest rates have created a yin and yang effect. Mortgages are cheaper than ever, but every increase of 0.25% has a far greater drag on their buying power than it ever has before.

A quick explanation of buying power: when mortgage rates are floating around 8% (the historical average), a market increase of 1 percent in rate would increase a buyer’s mortgage payment by 12.5 percent. That’s 12.5 percent more cost for the same loan, a significant strain on buying power, but not overwhelming. At today’s rates of 4 percent, a market increase of 1% would increase the mortgage payment by 25 percent, doubling the reduction in buying power. This is a major shift in what the buyer can afford.

Remember that 8% interest rates on 30-year mortgages are the norm. We’ve gotten used to cheap financing, but history points to a very strong likelihood that rates will turn upward soon. As a home buyer’s buying power is reduced by 10-25 percent annually, and home prices simultaneously appreciate, that buyer’s ability to purchase is weakened quickly and significantly.

Emotional Pitches Aside, Data Points To Buying Now

So, for the home buyer who is financing a purchase, could you actually be “priced out forever”? That probably depends on your local community’s real estate and job markets. There are certainly areas where incomes adjust to meet housing prices, and vice versa. At the same time, there are always communities that become “the next big thing” and rise in value far faster than their nearby surroundings.

Without a doubt, there will be consumers who don’t buy a home today in a certain community and realize years from now that they missed out. Current interest rates offer an opportunity to finance a home in a way that, in all likelihood, will not be available in the near future.

Rather than being priced out forever, we’ll probably just see many consumers who missed the opportunity of a lifetime. As overused as that statement may be, historical interest rate data points to it being highly likely. Buyers who can lock in long-term financing at today’s prices and today’s interest rates will be sitting on much more lucrative investments than if they were to wait until after rates rise.

Most home buyers won’t be priced out forever if they don’t buy in the current market. That being said, a few years from now there will be a large portion of them looking at the current cost of financing and kicking themselves for not buying earlier.

Sam DeBord is a Realtor® and Managing Broker at Coldwell Banker Danforth & Associates

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