Locaton, Location, Location!

This  4 bedroom Fairway Homes Colonial represents tremendous value with renovated/custom kitchen and baths, hardwood floors, first floor den/office, full basement, 2-car garage, Andersen windows, Pella patio door, custom oak staircase, built-in cabinets, newer roof, newer steam washer and dryer, newer central AC and furnace, large fenced yard backing to golf course and located on cul-de-sac. Close to shopping, highways, parks, major hospitals, Rutgers, restaurants and nightlife.   This Franklin Township home is move-in ready and a must see!  For a virtual tour: www.youtube.com/watch?v=EYmob1FPOZI

Priced at $474,000

Agent: Michael Adams, e-Pro

Keller Williams Cornerstone, 2230 Route 2230, Belle Meade, NJ 08502   Office: 908.359.0893                   Cell: 908.583.0409

MLS#2857674  MLS#116365

David Burrows provides a great analogy between medica care and getting a diagnosis of one's financial health when it comes tp purchasing a home...Not Knowing is Not Better! Thanks for the post, David.

What is becoming the new normal

Banks have become very conservative when lending mortgage money today. With the current foreclosure challenges in the country, we can't really blame them. The requirements now necessary to qualify for mortgages have gotten much more stringent and it seems will get even more stringent as we move forward. The banks want to make sure the prospective buyer has the ability to repay the loan. However, this does not just involve the borrower buying the property.

The second way a bank can protect their investment in the mortgage is to make sure that the collateral backing that mortgage is secure. That is where the appraisal comes in. The bank wants to make sure that, should the buyer not be able to make their payments, the house they will be forced to take back will sell for an amount at least equal to the balance left on the mortgage. For that reason, the banks seem to be getting more conservative with appraisals also.

This past week, the National Association of Realtors (NAR) released their Existing Homes Sales Report. In that report, they said:

"11 percent of Realtors® report a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10 percent had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal."

One out of four real estate transactions was either cancelled (11%) or renegotiated to a lower sales price (14%) because of a low appraisal!!

Bottom Line

Every house now has to be sold twice: first, to a potential purchaser and then to the bank appraiser. And, it seems that the second sale may be the more difficult of the two. Sit with a local real estate professional and make sure you put together a plan for both sales.

Correct pricing of the property, initially, becomes one of the most effective ways to reduce the likelihood of a low appraisal negatively impacting the transaction.  

Source: The KCM Crew with permission

http://postlets.com/res/5558583

If you plan on moving anytime in 2011, you should strongly consider selling your house now rather than waiting. Here are five reasons why:

1.) This is when your house will get the most exposure 

The spring, and particularly the month of May, is when most buyers enter the real estate market. This surge of buyers dramatically increases the exposure for your house . The best chance of getting quality offers (perhaps even multiple offers) is RIGHT NOW!

2.) Foreclosures and short sales will increase in about 90 days

The good news is that the number of people paying their mortgage on time is increasing. This will lead to less distressed property sales later this year and throughout 2012. The not-so-good news is that there is still a large inventory of existing foreclosures and short sales that will still be coming to market.

As an example, LPS reported in their latest Mortgage Monitor that:

• There are still twice as many loans going 90+ days delinquent as are starting foreclosure
• There are almost three times the number of foreclosure starts as there are foreclosure sales
• Distressed property inventory levels are almost 45 times the rate of monthly foreclosure sales 

This means that there is a backlog of properties which will start coming to the market in about 90 days as banks clear up their paperwork challenges. These properties sell at dramatic discounts. They will be your competition. Both Fannie Mae and Freddie Mac have recently discussed the magnitude of this challenge.

3.) Interest rates have risen over the last six months

Interest rates have stabilized recently. However, in the last six months, interest rates have climbed over 1/2%. Every time the rates increase 1/4%, approximately 250,000 buyers are eliminated from qualifying for a mortgage. In an environment of volatile rates, waiting could mean that there will be fewer buyers eligible to purchase your house. It also could mean that you will pay a higher rate on the next home you buy.

4.) Qualifying for a mortgage is about to get even more difficult

Besides increasing rates, there are other factors that will hinder a buyer's ability to qualify for a mortgage as we move forward. Lending standards have been getting tighter over the last year. And as the government debates the new proposed guidelines (QRM), banks are gearing up for even more stringent standards.

Morgan Stanley recently stated:

"Recent developments in issues such as GSE reform, Dodd-Frank securitization rules, and foreclosure settlement issues suggest a tighter and more expensive environment for mortgage credit." 

This may impact any potential purchaser for your property and may also impact your next purchase.

5.) It's time to get on with your life 

Probably the most important reason to sell is so you can get on with your life. You placed your home on the market for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you decided to move in the first place. Are these reasons still important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.

Bottom Line 

If you plan to sell this year, the reasons above prove that selling now makes more sense than waiting to later in the year. Sit with a real estate professional in your area today to fully understand your best option.

Source:KCM Crew with permission

The Standards & Poors Case-Shiller report was released earlier today. The S & P Case-Shiller index, tracks the value of residential real estate in 20 metropolitan regions across the United States.  The methodology, developed by Karl E. Case, an economics professor at Wellesley College, and Robert J. Shiller, an economics professor at Yale, collects data monthly on sales of existing single-family houses.

According to the report, housing prices peaked during the spring of 2006 then begain a 36-month decline. This was followed by a 13-month national increase which generated a 5% gain in prices. The current index is 139.27 which is just above the first low (in housing prices) of 139.26 which occurred April 2009. Economist are saying the rebound in home prices, which ended last June, was artificially inflated by gvernment initatives; in addition to a decreased supply of foreclosed properties.  Nationwide, distressed properties now account for more than 30% of sales with a discount of approximately 34% off conventional sales.

It is anticipated conditions will begin to improve once the economy recovery gains traction and job growth improves. What this means for sellers is that in today's market, pricing must be ahead of it, in order to attract offers. Properties that offer a perceived value are selling! For home buyers, home prices are near the bottom of 2009 along with low mortgage interest rates. Depending upon your particular circumstances, this could be the ideal time to buy.  

FHA Mortgages Are Now More Expensive

FHA loans are guaranteed by the federal government. Should a home owner default on her monthly payments, the U.S. Department of Housing and Urban (HUD) development has committed to paying the lender a percentage of the default on the debtor's behalf. Part of the payments made on an FHA loan is based on a monthly insurance fee, otherwise known as a mortgage insurance premium (MIP). The second increase in MIP since October 2010 took effect on Monday 18, 2011. The upfront MIP remained unchaged at 1%.

What this means is on a $200,000 loan the monthly payment inceased by $42. This is in addition to a previous increase of $58 per month last October.  Why the increase? According to David H. Stevens, FHA Commissioner, capital reseves have been below 2% for the previous two accounting periods. Raising the the premiums will allow the FHA to increase revenues.

This news coupled with the last six month's upward mortgage rate trends with rates at 4.75% today opposed to 4% Otober 8, 2010.  This should have buyers and sellers who are sitting on the fence to jump squarely into the market, with both feet. 

Heare are four great financial reasons why you should not wait before taking the plunge into homeownership.

Interest Rates are Increasing  

Interest rates have increased almost 3/4 of a point in the last six months. Most experts expect rates to continue to increase through the year. Interest rates along with price determine the overall cost of a home. Even with prices softening, if interest rates rise, it may be less expensive to buy now rather than wait.

The 30-Year Mortgage May Disappear

There has been much debate regarding government's role in providing support for homeownership. There are several experts who believe If Fannie Mae and Freddie Mac's roles are eliminated, or even limited, it may be the end to the 30-year mortgage. This concern is addressed in MSN Real Estate's  Is it curtains for the 30-year mortgage?

QRM Requirements Could Be Much More Stringent

Here are proposed changes to the requirements for a ‘qualified residential mortgage':

• Certain mortgage types would be eliminated
• You would need to put a minimum of 20% down
• You would need a minimum 690 FICO score
• The ratios of income to both the mortgage payment and overall debt would become much more conservative (28% and 36%)

There would be loans available to purchasers who don't qualify under the new rules. However, they will probably be more expensive to the buyer (both in rate and costs).

Rents Are Expected to Increase

The supply of available rentalsis decreasing and the demand is increasing. That will lead to an increase in rental costs throughout the year. The Wall Street Journal this week quoted a report by Reis, Inc:

"Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace."

Bottom Line

You may be waiting on the sidelines to see if prices will continue to depreciate before you purchase a home. The mortgage expense is a major piece in the overall financial picture of homeownership. Make sure you consider it when timing your decision.

Reposted with permisssion: The KCM Crew

What happened in our marketplace - March  

According to the Garden State MLS, the month of March, 2011 ended with 30 Franklin Township single family residences sold.  Franklin Township sale prices ranged between $134,000 and $619,900.  The average** selling price for the month was $262,678.  Average days on the market (DOM) for March was 120. The list price to sold price ratio averaged 95%.    The month ended with 438 active listings on the market ranging in price from $95,000 to $1,250,000.  The month of January ended with 94 Franklin Township residential properties under contract.  

That's what is happening in the Somerset, NJ marketplace now, April 11, 2011.  

If you have a question about a specific property in town, or housing stats for surrounding areas, please don't hesitate to contact me.   **An average price is calculated by adding up all the values in a distribution and then dividing the sum by the total number of values contained in that distribution. To find a median value, one takes all of the values in the distribution, sorts in ascending order, lines them up and finds the middle value.  

Source: Garden State MLS, L.L.C. **Info. deemed RELIABLE but not GUARANTEED - ALL Room Sizes are Approx.**  The links will expire 60 days from 4/11/011. 

Each day we attempt to give truthful insight on the current housing market. If we report what is perceived as negative news, some in the real estate community come down on us hard. However, when we explain that we think now is a great time to buy, we get an avalanche of feedback from the general public attacking us for being nothing more than puppets for real estate agents across the country. Today, we don't want you to listen to what we think about the opportunities that exist for buyers in this market. Instead, we want to report on what some members of the investment community are saying.

The Wall Street Journal

Jim Woods wrote an article earlier this year for Market Watch, part of the Wall Street Journal's digital network. Its title: Why your best investment is a house. Mr. Woods compared the investment potential of real estate against other asset classes such as stocks and precious metals. Here was his conclusion.

One reason your best investment right now could be a home has to do with the relative upside of getting in on an asset class while it's at the bottom versus buying into other asset classes that could be near a top. Consider for a moment the tremendous upside we've seen in stocks, precious metals and agricultural commodities over the past 12 months...

If you're a long-term investor looking to put money to work, now is not really the best time to get into any of these three asset classes. However, with home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today...

Mr. Woods went on to talk about the financing portion of the purchase:

Yes, mortgage rates still are near historical lows, but if we see these rates rise, then the cost of a new home could climb significantly. So, now could really be the best time to pull the trigger on that home purchase - and it could also be your best investment right now.

Fortune Magazine

Shawn Tully, senior editor at large for Fortune penned an article last week which was titled: Real estate: It's time to buy again. In the article, Mr. Tully explained:

Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

Let's state it simply and forcibly: Housing is back. Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction ... The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.

Bottom Line

Neither of the two media sources mentioned above has ever been accused of cuddling up to the National Association of Realtors. However, both have come to the same conclusion. It's time to buy real estate. Perhaps we should listen to them.

Source: The KCM Crew