A Housing Market to Embrace

There is an old saying - "Opportunities are never missed.  Someone will take the one you miss."  Today's housing market might just be an opportunity you should examine before you believe the national media headlines.

While sales of existing homes are off from their high, last year was still the fifth best year on record for existing-home sales.  As for prices, the national median existing-home price remains within 2 percent of the all-time high set in 2006.

The biggest enemies of today's housing market and the economy in general are pessimism and uncertainty.  Statistics clearly suggest a sizable pent-up demand in the marketplace.  Yet home sales have remained soft.  Why?  Lack of buyer confidence.

The lack of buyer confidence not only impacts homeowners and the housing industry, but could easily spread to the economy.  Any further weakening in the housing market and its related housing wealth impact could slow the economy into a no growth zone.

So what can we do to bolster confidence?  Look at the facts.  Over the past two years:

·        Average wages have risen by 8 percent

·        4.3 million jobs have been added

·        Total household net worth (assets minus liability) was more than $6 trillion higher in 2007 than 2005 (despite some losses in housing equity)

·        Nearly 2 million new households were formed

This all suggests that there are many more people with jobs at higher wages and with higher wealth accumulation.  However, the rising inventory of homes on the market and slower sales indicate that these potential buyers are uncertain and may be sitting on the fence.

Over time, homeownership has proven to be a good long-term investment.  A look at today's market fundamentals makes a very good case for buying a home if your life and family conditions warrant it. 

I encourage fence-sitters to get into the market and look around. I think you'll be pleasantly surprised at what you find.

There are many low-cost, sound mortgage products today - from prime conforming loans to those insured by the Federal Housing Administration.  The economic stimulus package recently signed into law by the president will also help expand the availability of affordable and safer home financing options.

The package increases the loan limits on FHA-insured loans, as well as those purchased by Fannie Mae and Freddie Mac. Higher FHA loan limits will help an additional 138,000 Americans purchase homes and allow nearly 200,000 owners to refinance and potentially keep their home, according to research from the National Association of Realtors^®.

In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will help as many as 500,000 people refinance their loans and could help reduce foreclosures by as much as 210,000. On top of that, more than 300,000 additional home sales could be generated. 

In the end, these higher loan limits alone can be expected to reduce housing inventories and strengthen home prices by two to three percentage points, according to NAR.

Consult the Government Affairs section of Realtor.org --  http://www.realtor.org/gapublic.nsf/pages/economic_stimulus  -- for specifics on the economic stimulus package, including a chart of the new loan limits by metro area]

So join the fight against irrational pessimism - take a look at your local housing market and think, just think, of the possibilities.

They Buy to Own!

A desire to own a home of their own and to establish a household are the reasons homeowners most often cite for purchasing a home, according to a recent consumer survey.

Thirty-three percent of all buyers, and a whopping 70 percent of first-time buyers, express these as prime motivators in their quest for a home purchase, according to the National Association of Realtors^® 2007 Profile of Home Buyers and Sellers.

A wish for a larger home, a job-related move, a change in family situation, a desire for a home in a better area and an interest in being closer to jobs, relatives, school or transit are also high on the list of reasons for purchasing a home.

Interestingly enough, taking advantage of perfect market conditions was not mentioned - not this year, not last year - not in NAR's 26-year history of surveying buyers and sellers.

The bottom line is that housing is a good long-term investment with both financial and non-financial rewards.  While the financial gains have been significant for most owners, it's the social and personal benefits that really influence consumers to buy a home.

Most people buy homes to become homeowners, to live in those homes, and to be part of the communities in which those homes are located. People don't just buy a house or a condo - they buy a home.

Reasons for a home purchase vary quite substantially among different age groups. Three-quarters of home buyers between ages 18 and 24 report purchasing a home because they want to own a home of their own or establish a household. In fact, for all buyers 64 or younger, this is the most frequently cited primary reason for purchasing a home.

Home buyers 65 years and older reported that their primary reason for purchasing a home was to downsize to a smaller home (19 percent), retire (18 percent) or to be closer to family, friends, and relatives (18 percent).

For the most part speculators have left the housing market, leaving serious buyers with a wide variety of inventory to choose from.

Because market conditions vary by location and because there are many factors to consider in finding the right home and the right financing, it's important for consumers to work with a real estate professional as they consider one of the most significant transactions of a lifetime.

By the end of 2007, one of every 16 Americans will have purchased a home.  Those who hang on to their home for five to 10 years can expect a healthy return on their investment in addition to the priceless benefits of living in a home of their own.

NAR's 2007 Profile of Home Buyers and Sellers is available for sale at www.realtor.org/store.

Opportunities in the Housing Market

There is an old saying - "Opportunities are never missed.  Someone will take the one you miss."  Today's housing market might just be an opportunity you should examine before you believe the national media headlines.

While sales of existing homes are off from their high, last year was still the fifth best year on record for existing-home sales.  As for prices, the national median existing-home price remains within 2 percent of the all-time high set in 2006.

The biggest enemies of today's housing market and the economy in general are pessimism and uncertainty.  Statistics clearly suggest a sizable pent-up demand in the marketplace.  Yet home sales have remained soft.  Why?  Lack of buyer confidence.

The lack of buyer confidence not only impacts homeowners and the housing industry, but could easily spread to the economy.  Any further weakening in the housing market and its related housing wealth impact could slow the economy into a "no growth zone.

So what can we do to bolster confidence? 

Over the past two years:

·        Average wages have risen by 8 percent

·        4.3 million jobs have been added

·        Total household net worth (assets minus liability) was more than $6 trillion higher in 2007 than 2005 (despite some losses in housing equity)

·        Nearly 2 million new households were formed

This all suggests that there are many more people with jobs at higher wages and with higher wealth accumulation.  However, the rising inventory of homes on the market and slower sales indicate that these potential buyers are uncertain and may be sitting on the fence.

Over time, homeownership has proven to be a good long-term investment.  A look at today's market fundamentals makes a very good case for buying a home if your life and family conditions warrant it. 

I encourage fence-sitters to get into the market and look around. I think you'll be pleasantly surprised at what you find.

There are many low-cost, sound mortgage products today - from prime conforming loans to those insured by the Federal Housing Administration.  The economic stimulus package recently signed into law by the president will also help expand the availability of affordable and safer home financing options.

The package increases the loan limits on FHA-insured loans, as well as those purchased by Fannie Mae and Freddie Mac. Higher FHA loan limits will help an additional 138,000 Americans purchase homes and allow nearly 200,000 owners to refinance and potentially keep their home, according to research from the National Association of Realtors^®.

In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will help as many as 500,000 people refinance their loans and could help reduce foreclosures by as much as 210,000. On top of that, more than 300,000 additional home sales could be generated. 

In the end, these higher loan limits alone can be expected to reduce housing inventories and strengthen home prices by two to three percentage points, according to NAR.

Consult the Government Affairs section of Realtor.org --  http://www.realtor.org/gapublic.nsf/pages/economic_stimulus  -- for specifics on the economic stimulus package, including a chart of the new loan limits by metro area.

So join the fight against irrational pessimism - take a look at your local housing market and think, just think, of the possibilities.

Avoid Foreclosure – Help is Available

Realtors build communities in part by expanding homeownership opportunities and getting people into homes of their own. Those are noble goals, but helping homeowners stay in their homes is also important to sustain those communities.
 
In this marketplace of rising mortgage delinquencies and foreclosures, that goal can be challenging, to say the least.

Over the past few years, lenders invented new types of mortgages to help families buy their first home and refinance their existing mortgage.  Many of those mortgages helped families without cash for a down payment, or with less-than-perfect credit, qualify for loans known as "subprime" loans.

Subprime loans have a higher interest rate and higher costs, such as prepayment penalties.  In recent years, a very popular, widely available mortgage product was the hybrid adjustable-rate mortgage (ARM).  Hybrid ARMs have an initial period with a lower interest rate ("teaser rate") followed by significant increases over the remainder of the loan. 

A growing number of borrowers with hybrid ARMs and other nontraditional forms of loans are seeing monthly payments jump beyond their means. With overall credit markets tightening, refinancing can be difficult but there is hope.

When monthly payments become too much, the first thing to do is to speak up. You need to seek the help of professionals, whether they are financial counselors, often available through local nonprofit counseling centers, or your lender.

While many people believe that telling a lender about financial difficulties will only hasten a move to foreclosure, borrowers should remember that lenders do not like to foreclose on mortgages.  Taking possession of your house, maintaining it and then attempting to sell it will nearly always be a losing financial proposition for your bank.  Therefore, talk with your lender sooner rather than later to try to arrange new repayment terms.

Realtors can provide assistance to troubled borrowers by explaining sources of help and referring them to counseling.  If your lender is not willing to restructure your loan, Realtors can refer you to other responsible lenders in your area.  Some elderly borrowers have even found solutions to their mortgage difficulties through reverse mortgages and other creative, but responsible, tools.

Above all, beware of consumer scams often advertised as "We Buy Houses for Cash," or similar slogans that sound too good to be true, because they are.

Project HOPE NOW is a voluntary alliance of major lenders who have agreed in principle to assist qualified homeowners who are on the verge of default due to resetting adjustable-rate mortgages.  The national toll free number is 888-995-HOPE to reach a counselor for advice and further referral.

The National Association of Realtors Web site also has several important consumer brochures that can be downloaded free of charge. In addition to information specifically aimed at borrowers facing trouble in making repayments, other brochures offer advice on avoiding predatory loans and obtaining traditional mortgages.  All the brochures are available at www.REALTOR.org/subprime.

Remember, the worst thing you can do if you're having trouble making your monthly mortgage payment is to remain silent.  Help may be available; you just have to ask for it.

 

Coat Drive

 

Greater Philadelphia Cares

12^th Annual Winter Coat Drive

A warm coat is a necessity that is often taken for granted.  Not, however, by the many people who don't have one.  Join Greater Philadelphia Cares in there 12^th Annual Winter Coat Drive as we spread warmth around the city.  Please drop off any coats between now and January 21^st to our office and earn a chance for a Holiday Gift Basket.  Greater Philadelphia Cares and so does DiGennaro Real Estate!

It's a Great Time To Buy Real Estate!

1. Selection, selection, selection. There are about 2,400 resale homes on the market in South Philadelphia. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped considerably. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a great selection of homes. There are lots of options in this market.
   
   
2. No Bidding Wars. In 2005 we had one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.
   
   
3. You can make an offer. A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.
   
   
4. Patience is tolerated. In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer.  Today a buyer can take their time. Look at several homes and think about your decision for a few hours if not a few days.
   
   
5. Due diligence is welcomed. In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
   
   
6. Repair requests are welcomed. After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
   
   
7. Few, if any investors. It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.
   
   
8. Location, location, location. Today's buyers can find homes in the neighborhood they desire. In the past buyers where forced to find affordable homes in areas they initially where not looking in. In this market, reasonably priced homes are within walking distance to schools, mass transit lines, and relatives.
   
   
9. Real Financing is available. The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!

All About South Philly

South Philadelphia is the section of Philadelphia bounded by South Street to the north, the Delaware River to the east and south, and the Schuylkill River to the west. South Philadelphia is coterminus with the zip codes 19145, 19146, 19147, and 19148.

As of the 2000 Census, the population was 162,683. It is an area rich in immigrant culture, the home to many Italian-American and Irish-American families who settled in the area starting in the late 19th century. Many residents have lived in the neighborhood for decades, and the lovingly maintained homes bring an air of dignity and stability to many blocks.

On many of the corners you can find a pizzeria or a family-owned variety store. Some parts of South Philadelphia are generally considered great neighborhoods in which to raise a family.

 South Philadelphia is one of the most expansive neighborhoods of Philadelphia and one that, in reality, is made up of many smaller neighborhoods bearing such names as Grays Ferry, East Oregon, Hawthorne, Marconi Plaza, Packer Park, Passyunk, Pennsport, Point Breeze, Queens Village, Tasker and many more.

The area is most famous for its depiction in Sylvester Stallone's 1976 film Rocky which included numerous scenes filmed on location along the waterfront, in the Italian Market, in the row homes and along the numerous narrow streets and street corners of South Philadelphia.

South Philadelphia is also home to the best cheesesteak shops in the city, the Philadelphia Sports Complex, where all major sports teams play, as well as the former Philadelphia Navy Yard.

Full Market Valuation Is Coming

The Board of Revision of Taxes is prepared to roll out the Full Market Valuation system for assessing real estate taxes in the city of Philadelphia.  The expected date for citizens to receive the new tax bill might be in 2010, with notices being sent out in 2009. 

A lot of work needs to be done first.  For one thing homestead exemptions and a cap and deferral plan, limiting tax increases to no more than 10 percent per year must be passed by City Council and signed by the mayor, thus limiting the "damage" of the new tax bill.

Full Market Valuations have been in the works since 2003 when the city's Tax Reform Commission sharply criticized the current assessment system, noting that it hurts the city's working-class homeowners. 

"Lower-priced properties are typically assessed at higher fractions of their value than higher priced properties. Thus, the assessment system results in a higher tax burden [in percentage terms] upon poorer households than upon more affluent households," the study asserted.

But by late 2006, the BRT decided to delay implementation of the system until after the 2007 election cycle.

More to come.

Dog Days of Summer

It was a long hot summer and we are still getting warm weather???

Anyway the Fed has cute the prime rate, mortgage interest rates are down, inventory of existing homes hasn't been this high in over 4 years, prices are coming down and jobs/employment is strong in our area.  So why are people not buying a home????

 I don't know, could it be a lack of confidence in the economy? 

Maybe someone out there can give me some insight.

Real Estate Forecast:

Existing home sales feel 2.6% in April to an annual rate of 5.99 million compared to expectations for a rate of 6.12 million.  Existing home sales remain 10.7% lower than year ago levels.  The inventory of homes for sale shot 10.4% higher to 4.2 million properties which represents an 8.4 month's supply at the current sales pace which has pushed the days on market higher.  Prices fell slightly with median prices dropping 0.8% and the average price down 0.3% over the last year.    The correction taking place is expected to extend through the rest of this year as tighter credit standards weigh on demand and super high inventory levels weigh on prices.   It probably will be, ironically enough a substantial drop in home prices that will help restore demand and put the recovery in place.

Sincerely,

Frank Jacovini, ePRO, GRI
Broker/Owner
DiGennaro Real Estate
2514 S. Broad St.
Philadelphia, PA 19145
215-755-6700 or 267-295-7743