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Twenty Metros Join List of Improving Housing Markets Index in December

The number of improving housing markets continued to expand for a fourth consecutive month in December, rising from 30 to 41 on the latest National Association of Home Builders/First American Improving Markets Index (IMI), released today. The December list featured 20 new additions, including several major markets such as Washington, D.C.; San Jose, Calif.; and Toledo, Ohio. Meanwhile, nine smaller markets dropped off the list, primarily due to softer house prices.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months.

New entrants to the list in December include the following:

Ann Arbor, MI
Athens, GA
Boulder, CO
Burlington, VT
Canton, OH
Charleston, WV
Danville, VA
Fort Wayne, IN
Grand Forks, ND
Jackson, MS
Kingsport, TN
Laredo, TX
Lincoln, NE
Muncie, IN
Muskegon, MI
San Jose, CA
Scranton, PA
Toledo, OH
Washington, DC
Winchester, VA

"The increases we continue to see in the number and geographic diversity of improving metros are quite encouraging, and evidence of the fact that all housing markets are dependent on uniquely local factors," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. He noted that as of December, a total of 21 states and the District of Columbia are represented on the improving markets list -- up from14 states represented in November.

"The December IMI results are very much in keeping with the latest government housing data and our own builder surveys, which have shown modest signs of improvement in certain individual markets where employment is gaining and distressed properties are not as numerous," said NAHB Chief Economist David Crowe. "These gradual improvements are now becoming evident not just in small, energy-producing metros that have previously dominated the IMI, but also in several larger markets and areas with more diverse economies."

The nine markets that dropped off the IMI in December include Alexandria, La.; Fairbanks, Alaska; Hinesville, Ga.; Houma, La.; Jonesboro, Ark.; Lima, Ohio; Pine Bluff, Ark.; Sumter, S.C. and Waco, Tex. All but two of these metros fell from the list due to softening house prices. The exceptions to the rule were Jonesboro and Waco, where declines were registered in employment and single-family housing permits, respectively.

The total list of improving housing markets in December, as defined by the IMI, includes the following 41 entries (listed alphabetically by state):

Anchorage, AK
San Jose, CA
Boulder, CO
Fort Collins, CO
Washington, DC
Athens, GA
Davenport, IA
Waterloo, IA
Kankakee, IL
Fort Wayne, IN
Muncie, IN
Monroe, LA
New Orleans, LA
Ann Arbor, MI
Muskegon, MI
Jackson, MS
Fayetteville, NC
Winston-Salem, NC
Bismarck, ND
Grand Forks, ND
Lincoln, NE
Canton, OH
Toledo, OH
Pittsburgh, PA
Scranton, PA
Williamsport, PA
Kingsport, TN
Amarillo, TX
Corpus Christi, TX
Laredo, TX
McAllen, TX
Midland, TX
Odessa, TX
Sherman, TX
Tyler, TX
Danville, VA
Winchester, VA
Burlington, VT
Charleston, WV
Casper, WY
Cheyenne, WY

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Realtors® Applaud Congress for Reinstating FHA Loan Limits

The National Association of Realtors® commends Congress for reinstating the loan limit formula and maximum cap for Federal Housing Administration-insured loans for two years.

“As the nation’s leading advocate for homeownership, we applaud members of Congress for restoring FHA’s previous loan limits, which will help reduce consumer cost burdens, stabilize local housing markets and allow qualified, creditworthy borrowers to access affordable mortgage financing,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile.”

The provision reinstates the FHA loan limits through 2013 at 125 percent of local area median home prices, up to a maximum of $729,750 in the highest cost markets. The floor will remain at $271,050.The loan limits for Fannie Mae- and Freddie Mac-backed mortgages will remain at 115 percent of local area median home prices, up to $625,500.

NAR believes thereinstated loan limit formula and cap change will help make mortgages more affordable and accessible for hard-working, middle-class families throughout the country, not just wealthy individuals or those in costly markets. Nearly two-thirds of buyers who will be helped by the loan limits provision have incomes below $100,000.

“It’s a misconception that only wealthy borrowers benefit from the maximum cost loan limits; middle-class homebuyers living in all areas of the country deserve the same access to affordable mortgage financing and the same opportunity to achieve homeownership that homebuyers enjoy in the most affordable regions of the country,” said Veissi.The legislative action will have an impact even in communities with loan limits well below the maximum cap;the reset last month impacted 669 counties in 42 states and territories, with an average loan limit reduction of more than $68,000.

The bill also provides for a short-term extension of the National Flood Insurance Program through December 16, 2011. NAR strongly urges Congress to use the additional time to complete work on a five-year reauthorization of the program, which ensures access to affordable flood insurance for millions of home and business owners across the country.

A 3.8 Percent “Sales Tax” on Your Home?

Q: Does the new health care law impose a 3.8 percent tax on profits from selling your home?

A: No, with very few exceptions. The first $250,000 in profit from the sale of a personal residence won’t be taxed, or the first $500,000 in the case of a married couple. The tax falls on relatively few — those with high incomes from other sources.

We’ve been flooded with queries about this one ever since the health care bill became law. At the last minute, Democratic lawmakers decided on a new 3.8 percent tax on the net investment income of high-income persons. But the claim that this would amount to a $15,200 tax on the sale of a typical $400,000 home is utterly false.

The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.

We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on "net gain … attributable to the disposition of property." That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is "taken into account in computing taxable income" under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)

The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: "Gross income does not include … excluded gain from the sale of a principal residence."

And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. "Some home sales would see a tax increase under this bill," Ahern told us, "but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple)."

So there you have it. The sort of people who would have to pay the tax might include, for example:

A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
An "empty nester" couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy. However, a typical home sale would not incur any tax. In March, for example, half of all existing homes sold for $170,700 or less, according to the National Association of Realtors. Obviously, none of those sales could possibly generate a $250,000 profit, and so none would be subject to the tax.

Thus, for the vast majority, the 3.8 percent tax won’t apply. The Tax Foundation, in a report released April 15, said the new tax on investment income (including real estate) "will hit approximately the top-earning two percent of families" when it takes effect in 2013.

Footnote: Some of the chain e-mails that claim ordinary home sales will be taxed include a copy of an article written by Paul Guppy, a policy analyst with the conservative Washington Policy Institute (that’s Washington state, not Washington, D.C.). The article appeared March 28 as an op-ed in the Spokane, Wash., Spokesman-Review, and Guppy claimed that "[m]iddle-income people must pay the full tax even if they are ‘rich’ for only one day." That brought a quick rebuttal from Sara Orrange, the government affairs director of the local Realtors association. She wrote a letter to the newspaper calling Guppy’s article "inaccurate" and saying, "Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made." In a news article the next day, business reporter Bert Caldwell confirmed that only "a very few" home sellers would pay the 3.8 percent tax.

The Internal Revenue Service says that to qualify for the $250,000/$500,000 exclusion, a seller must have owned the home and lived there as the seller’s "main home" for at least two years out of the five years prior to the sale.

Sources
Joint Committee on Taxation. "Technical Explanation of the Revenue Provisions of the ‘Reconciliation Act of 2010,’ As Amended, In Combination with the ‘Patient Protection and Affordable Care Act.’" 21 Mar 2010.

Ahern, William. E-mail to FactCheck.org, 22 Apr 2010.

National Association of Realtors. "Existing-Home Sales Rise on Home Buyer Tax Credit and Favorable Market Conditions." Press release. 22 Apr 2010.

Fleenor, Patrick and Gerald Prante. "Health Care Reform: How Much Does It Redistribute Income?" The Tax Foundation. 15 Apr 2010.

Guppy, Paul. "Health Law’s Heavy Impact." Spokesman-Review. 28 Mar 2010.

Orrange, Sara. "Home sales tax clarified." Letter. Spokesman-Review. 1 Apr 2010.

Caldwell, Bert. "Realtors take aim at health care tax claim." Spokesman-Review. 4 Apr 2010.

Veterans Day!

It is with great pride that we in the Coldwell Banker family honor our veterans on this day. Not only is it a chance for us to reflect upon those who have served our great nation in the past, but also an opportunity to express our deepest gratitude to the men and women currently serving in our armed forces in locations around the world.

Our appreciation for the bravery and sacrifices of our service members is constant, yet we pay special tribute on this historic day each year. Veterans Day symbolizes the identity of our country – one founded on courage, determination and an enduring desire for personal freedom.

Whether the veteran you know is a family member, friend, neighbor or co-worker, we encourage you to show them your appreciation for all they have done and continue to do on our behalf.

New-Home Sales Rise 5.7 Percent in September

Sales of newly built, single-family homes rose 5.7 percent to a seasonally adjusted annual rate of 313,000 units in September, according to newly released data from the U.S. Commerce Department. This marks the fastest pace of new-home sales in the past five months.

"Today's report highlights the gradual improvement in housing market conditions that is becoming evident in certain pockets of the country, as consumers who can surmount very restrictive lending standards to qualify for a favorable mortgage rate seize on this opportunity to buy," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "The latest numbers also reveal that first-time buyers are driving the new-homes market right now, as evidenced by the volume of lower-priced, entry-level homes under contract. It's worth noting that these consumers are very dependent upon federal policies and programs that support homeownership, such as the mortgage interest deduction and low-downpayment mortgage options that have been threatened by recent government proposals."

"The improved rate of new-home sales in September is on par with NAHB's forecast for the overall number of sales this year and in keeping with the spotty improvements that our latest builder surveys have highlighted in select markets," said NAHB Chief Economist David Crowe. "While 313,000 is still an exceptionally low rate of new-home sales by historic standards, it is an encouraging sign of an anticipated broader recovery over the course of next year, and builders have helped the situation by keeping their inventories of homes for sale very lean in areas where there is an oversupply of existing units."

Regionally, new-home sales were mixed in September, with gains of 11.2 percent and 9.7 percent registered in the South and West, respectively, and declines of 4.2 percent and 12.2 percent registered in the Northeast and Midwest, respectively.

The inventory of new homes for sale held at an all-time record low of 163,000 units in September. This represents a modest 6.2 -month supply at the current sales pace.

Number of Improving Housing Markets Nearly Doubles in October

The second edition of the National Association of Home Builders/ First American Improving Markets Index (IMI), released today, shows 23 individual housing markets now qualifying as "improving" under the new gauge's parameters. This is nearly double the 12 housing markets that made the list last month.

The index reveals metropolitan areas that have shown improvement for at least six months in housing permits, employment and housing prices. The following metros were listed in October:

•Alexandria, LA
•Amarillo, TX
•Anchorage, AK
•Bismarck, ND
•Casper, WY
•Fairbanks, AK
•Fayetteville, NC
•Houma, LA
•Iowa City, IA
•Jonesboro, AR
•Kankakee, IL
•McAllen, TX
•Midland, TX
•New Orleans, LA
•Odessa, TX
•Pine Bluff, AR
•Pittsburgh, PA
•Sherman, TX
•Sumter, SC
•Waco, TX
•Waterloo, IA
•Wichita Falls, TX
•Winston-Salem, NC
"Both the number and geographic diversity of improving housing markets expanded this month, with Iowa, Illinois and South Carolina all newly represented by one entry or more on the list," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "This is further evidence that, despite the tough conditions that persist in many cities, pockets of improvement are emerging in local housing markets across the country."

"While Pittsburgh and New Orleans remain the two largest improving markets, the October IMI is heavily weighted by smaller cities in which energy and agriculture are the primary economic drivers and where the effects of the recession have been less pronounced," said NAHB Chief Economist David Crowe. "In particular, Texas stands out for its seven entries on the improving markets list."

Bangor, Maine, was the only area to drop off of the improving markets list in October, due to a decline in local building permits.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metro area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.

Please visit www.nahb.org/imi for additional data, tables and a list of 2011 future economic release dates.

Feelin' Hot.. Hot.. Hot!

The summer may be over, but some parts of the economy are just starting to heat up. One economic indicator that has come in hotter lately is inflation. At the end of September, the final reading of GDP in the 2nd Quarter showed inflation at 2.5%, which was up from the previous reading of 2.4%.

That elevated inflation reading was released on the heels of a hot Core Consumer Price Index (CPI), which has risen steadily and jumped to the upper-end of the Fed’s comfort level in the latest release.

Although Fed Chair Ben Bernanke stated a couple weeks ago that inflation has "moderated" of late and should continue to do so, there are still some reasons for concern. For example, we are experiencing an unprecedented amount of stimulus and low rates, which is something never seen before in history.

So why is this significant?

The concept is simple: If inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher.

Once inflation starts to emerge it can manifest rather quickly. Future inflation readings will be closely watched to see if a trend higher is emerging, and last month’s elevated number will certainly heat up the debate surrounding more stimulus, as more money into the system fuels inflation further.

If inflation heats up even more, the Fed will likely back off their "low rates until mid-2013" mandate. Inflation really does change everything, so the markets will continue to follow this story closely.

Home prices post fourth month of gains

U.S. home prices inched up for the fourth month in a row, rising 0.9 percent from June to July, according to the latest Standard & Poor's/Case-Shiller Home Price Indices.

Only two of the 20 metro areas tracked by the Case-Shiller 20-City Composite saw month-to-month price declines: Las Vegas (-0.2 percent) and Phoenix (-0.1 percent). The index showed prices in Las Vegas down 59.3 percent from their August 2006 peak, hitting a new low.

Looking back a year, 18 out of 20 metro areas saw annual price declines, with the price index for Minneapolis falling 9.1 percent, Phoenix down 8.8 percent, and Portland, Ore., dropping 8.4 percent.

Detroit (up 1.2 percent) and Washington D.C. (up 0.3 percent) were the only cities to post annual gains in July, leaving the 20-City Composite down 4.1 percent.

But a dozen other cities -- Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Las Vegas, Miami, Minneapolis, Phoenix, Portland, and Tampa -- posted improvements in annual price declines compared to June.

Standard & Poor's said the report included some "unusually large revisions" across some metro areas. Detroit was the most affected, with additional sales in May and June showing "a much healthier market than previously thought."

Housing Starts Decline, Permits Rise in August

Nationwide housing starts declined 5.0 percent to a seasonally adjusted annual rate of 571,000 units in August, according to figures released by the U.S. Commerce Department today. The decline was primarily on the more volatile multifamily side, with single-family housing production edging down just 1.4 percent. Meanwhile, permits for new construction posted modest gains in both sectors.

"At this point, most builders are only looking to replenish their depleted inventories of new homes for sale, but otherwise holding off on new projects," said National Association of Home Builders (NAHB) Chairman Bob Nielsen, a home builder from Reno, Nev. "While we would like to get more crews back on the job, we need to see solid improvement in consumer demand, greater access to credit for both builders and buyers, and a reduction in the number of foreclosed properties on the market before we can ramp up new production."

"Today's numbers are completely consistent with NAHB's forecast for the quarter, and are in keeping with the anemic economic and job growth we are seeing across most of the country," said NAHB Senior Economist Robert Denk. "That said, we continue to anticipate modest gains in new-home production through the end of this year with greater momentum building into 2013, and some pockets of improvement are already evident in about a dozen metros nationwide."

Single-family housing starts declined 1.4 percent to a seasonally adjusted annual rate of 417,000 units in August, while multifamily production – which tends to display greater volatility on a month to month basis – declined 13.5 percent to a 154,000-unit rate. Regionally, combined starts activity was mixed in August, with the Midwest and West posting gains of 2.6 percent and 2.2 percent, respectively, and the Northeast and South posting declines of 29.1 percent and 3.3 percent, respectively.

Building permits, which can be an indicator of future building activity, rose 3.2 percent to a seasonally adjusted annual rate of 620,000 units in August, their highest level since last December. Single-family permits gained 2.5 percent to 413,000 units, while multifamily permits gained 4.5 percent to 207,000 units.

New index tracks metros with growth in real estate prices, permits and jobs

After enduring what has seemed like an endless string of dismal numbers reports, the housing industry is about to get some good news. Tuesday, the National Association of Home Builders (NAHB) launched the NAHB/First American Improving Markets Index (IMI), dedicated entirely to tracking metropolitan areas that have consistently shown signs of improvement.

To make the list, a metro area must have shown at least six months of improvement from its trough in three areas the NAHB sees as key to determining the pulse of the housing market: housing permits, employment, and home prices.

To be released monthly, the index will draw its data from the Bureau of Labor Statistics for employment growth numbers, house-price appreciation data from Freddie Mac, and single-family permit numbers from the U.S. Census Bureau.

"Housing conditions are local and do not always reflect the national picture," said Bob Nielsen, NAHB chairman, in a release. "We created this new index to shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery."

This month, 12 metro areas made the cut: Alexandria, La.; Anchorage, Alaska.; Bangor, Maine; Bismarck, N.D.; Casper, Wyo.; Fairbanks, Alaska.; Fayetteville, N.C.; Houma, La.; Midland, Texas; New Orleans; Pittsburgh; and Waco, Texas.

"It’s not surprising that many of the states represented are energy-rich areas," observed David Crowe, the NAHB’s chief economist. Still, he points out, "last year at this time, there was not a single market that showed improvement using these criteria."

Is Your Loan Modification Application Stuck?

If you’re on the verge of losing your home, or you know someone who is, then you also know about the long, bureaucratic process involved in applying for a loan modification from a lender. The most common approach is to apply under the new Home Affordability Mortgage Program (HAMP), but lenders also accept modifications from mortgage holders because lenders really don’t want to take the house—they just want their money.
In many cases, however, the approval process takes longer than many homeowners can afford. But one expert believes it doesn’t have to be that way, and that there are solutions for homeowners whose applications seem stuck in the mud.

“Applying for a loan modification can be an extremely stressful process,” says Stephfan Nurse, CEO of Consumer Education—the makers of Mortgage Reduction software designed to help people through the modification process.

“Even if you send in your documents and your lender tells you everything is okay, you may still have a great amount of anxiety because you have no idea what the lender is doing with your file. You may not know what the next step is and how long it takes to move through each step in the process. Your lender may tell you what the next step is, but you may not understand why it will take so long. There are reasons, however, why the process can get stuck, and there are ways to move that process along, if you understand what goes on behind the scenes.”

Nurse’s tips for making the process smoother include:

• Account Numbers – It often happens that when you fax your paperwork to your lender, the lender either says they lost your paperwork or they just didn’t receive it all. This isn’t because they are incompetent. It’s because they receive thousands of faxes each day, and they use an image scanning technology to capture them all and place them in the appropriate file. In that system, a cover sheet that has your account number on it will get placed correctly, but the following sheets that lack your account number can be easily misplaced. The solution is to put your account number on every page of your paperwork, so they have a better chance of placing all your paperwork in your file.

• Complete the Paperwork – When your file gets assigned to a document manager, typically about 30 days after you first applied for the modification, the document manager’s job is to check to make sure all your required documents are ready to be submitted to the negotiator/specialist for review. If you have an incomplete file, even if you’re missing just one single required document, the document manager will note your account as having an incomplete file and move on to the next file to review. At this point, a generic letter is automatically mailed to your home requesting the additional information your file lacks. This letter can take up to two weeks to get to you, and then another two to four weeks before they look at your updated information. The key is to never send an incomplete package to your lender. It can lead to a delay or even a flat out denial.

• Follow Up – Finally, follow up every week with your lender to make sure all the documents they have are up to date. Don’t worry about being a pest. After all, it’s your house on the line if things get stuck in neutral. If you do this consistently, you will avoid getting caught in the delay cycle.

“The process is like any other, and it can be rife with mistakes and bureaucratic snafus,” Nurse adds. “But if you take the steps to reduce the opportunities for error, your application can move through the process much faster and you’ll have a much better chance at being approved.”

Pending Home Sales Slip in July but up Strongly from One Year Ago

Pending home sales declined in July but remain well above year-ago levels, according to the National Association of REALTOES®. All regions show monthly declines except for the West, which continues to show the highest level of sales contract activity.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, says sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he says. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”

The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.

“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” Yun says. “The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market.”

IRS's top 10 tax tips for home sellers

From time to time the IRS releases tips designed to help people with their taxes. Some of these are quite useful.

Last week the agency released "Ten Tax Tips for Individuals Selling Their Home," (IRS Summertime Tax Tip 2011-15).


Here are the IRS's top 10 tax tips for home sellers:

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.


2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).


3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.


4. If you can exclude all of the gain, you do not need to report the sale on your tax return.


5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.


6. You cannot deduct a loss from the sale of your main home.


7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.


8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.


9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.


10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

These tips can be found on the IRS website at http://www.irs.gov/newsroom/content/0,,id=104608,00.html.

TransUnion: Mortgage Delinquencies Plummeted in Second Quarter

The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) decreased for the sixth consecutive quarter, dropping to 5.82 percent at the end of the second quarter in 2011 according to a quarterly analysis of credit-active U.S. consumers by TransUnion.

Although mortgage delinquencies were expected to continue to drop, the Q2 2011 TransUnion data released recently shows mortgage delinquency rates improved on a quarterly basis by 5.98 percent, more than any time since the recession officially ended two years ago.
“While relatively low home prices and high unemployment continue to exert upward pressure on delinquency rates, they are more than offset by the impact of more conservative lending policies reflecting consumers with higher credit scores,” says Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit. “Not only are these consumers less likely to default if house prices continue to edge downward throughout the year, but their willingness to repay their debt obligations in the face of high unemployment rates is greater. It is because of these dynamics that lenders today take a much closer look at the borrower’s income history and overall debt situation than before the recession began in 2007.”

Between the first and second quarters of 2011, 49 states and the District of Columbia experienced declines in their mortgage delinquency rates with Vermont being the only state to experience an increase. On a more granular level, 79 percent of metropolitan areas saw declines in their mortgage delinquency rates in Q2 2011. This is an improvement compared to Q1 2011 when 68 percent of metropolitan statistical areas (MSA) experienced a decline their mortgage delinquency rates. In Q4 2010, only 44 percent of MSAs experienced such a decline.

TransUnion forecasts that mortgage borrower delinquency rates will continue to drift downward for the remainder of 2011, as economic conditions begin to slowly recover and tighter lending standards offset the impact of falling home prices.

“Mortgage delinquencies have shown six straight quarters of improvement and the pace of the improvement seems to be picking up speed. This is encouraging news. However, at their current level, nearly three times the pre-recession ‘norm,’ and the current pace of improvement, we may not see ‘normal’ delinquency rates until the end of 2015,” says Martin.

Normal’ Home Prices Are Stabilizing

Prices of “normal” homes—those that aren’t foreclosures or short sales—are stabilizing and the numbers of future foreclosures are falling. That “sliver of good news for consumer spending” was included in CoreLogic’s July report on housing and market trends.
In May 2011, the firm’s Home Price Index excluding distressed sales only dropped 0.4 percent from a year ago, compared to a decline of 7.4 percent for the all transactions measured by the HPI. Even while including distressed sales, the HPI increased between March and April —the first time in more than six months—and was up again between April and May.

“These increases represent the resumption of seasonality in home prices and are a positive sign for the market. When disaggregating median prices by type of sale for the first complete month of the spring home buying season, it is clear that despite the whipsaw impact of the federal homebuyer tax credit, state homebuyer tax credits and increases in FHA premiums, non-distressed median existing and new prices are back to 2009 levels,” the report said.

Although the distressed sales share remains high, the geographical sources of distress are shifting and becoming more dispersed. As of December 2008, four of the top five largest distressed sales markets were all located in California, and the top five markets averaged a distressed sale share of 68 percent. As of April 2011, only two of the top five markets are in California and, more importantly, the top five average distressed share was 56 percent — a 12 percentage point decline relative to top markets in late 2008.

NAHB Applauds EPA Rejection of Renovation Clearance Testing Requirements

The National Association of Home Builders commends the U.S. Environmental Protection Agency for rejecting a proposal to add third-party clearance testing to the Lead: Renovation, Repair and Painting Rule (RRP).

“We’re pleased that the EPA listened to the concerns of remodelers about the extreme costs the proposed clearance testing would have imposed,” says Bob Peterson, NAHB Remodelers chair and a remodeler from Fort Collins, Colo. “Home owners are saved from spending a great deal of money on lead testing. If remodeling is more affordable, home owners will be able to hire an EPA-certified renovator to keep them safe from lead dust hazards during renovation.”
At NAHB’s request this regulation was selected for review by the EPA under the Presidential Executive Order for Regulatory Review (Improving Regulation and Regulatory Review, 76 FR 3821 issued on Jan. 21) concerning the impact of federal rules on small businesses and job creation.

The lead rule applies to homes built before 1978 and requires renovator training and certification, following lead-safe work practices, containing and cleaning dust, and record keeping.

Under the lead paint rule contractors have been required to wipe down the project area after completing remodeling or renovation work and match the result to an EPA-approved card to determine whether lead paint dust is still present—a process that EPA says is “effective at reducing dust lead levels below the dust-lead hazard standard.”

The proposal would have required contractors to hire EPA-accredited dust samplers to collect several samples after a renovation and send them to an EPA-accredited lab for lead testing. Because of the cost of this as well as the waiting period for test results and the limited number of accredited labs nationwide, professional remodelers were very concerned about home owners’ willingness to undergo the process.

“The EPA has maintained its common sense approach to keeping families safe during renovation,” says Peterson. “Hiring trained professional remodelers to contain dust, use lead-safe work practices, and clean up has been shown to successfully minimize lead hazards and protect individuals from lead exposure.”

Several problems with the rule still remain. The EPA has yet to recognize an efficient, low-cost lead test kit that meets the requirements of the regulation. And last year the agency removed a key consumer choice measure—the opt-out provision—which allowed homeowners with no children or pregnant women in residence to waive the rule’s requirement. In this down economy, consumers are still balking at the extra costs of the rule and often choose to reduce the amount of work done on their homes, hire uncertified contractors, or endanger themselves by attempting the work themselves.

For more information, visit www.nahb.org.

Coldwell Banker Real Estate Issues International Housing Report

Coldwell Banker Real Estate LLC recently released a report on international housing markets, which compares similar four-bedroom, two-bathroom homes in 30 countries and more than 60 markets outside the United States and Canada.

Among the more affluent markets in the report is Neuilly-sur-Seine, France, located just four miles from the center of Paris and is the hometown of Nicolas Sarkozy, the current President of the French Republic. The city also serves as the headquarters for the global edition of The New York Times newspaper and The International Herald Tribune. A continent away in the opposite hemisphere, the tourist city of Salinas, Ecuador, is one of the many markets offering great affordability. It is also known for its proximity to the Pacific Ocean and year-round temperatures averaging 80 degrees Fahrenheit.

“As one of the world’s premier international real estate companies, Coldwell Banker has the pulse on what is happening in various global markets,” says Budge Huskey, president and chief operating officer, Coldwell Banker Real Estate LLC. “Increasingly we have seen that buyers are expanding their horizons when it comes to the number of countries under consideration for their investment.”

In addition to Salinas and Neuilly-sur-Seine, the Coldwell Banker report highlights some of the world’s most prominent cities, full of fun trivia and charming local facts:

• Paris, France, has been ranked as one of the top three European cities of the future by The Financial Times and produces more than one fourth of France’s total gross domestic product.

• Madrid, Spain, is the third largest city in the European Union and is considered the major financial center of Southern Europe.

• Rome is the capital and most populated city of Italy and has been ranked as one of the world’s 15 most important cities.

• Amsterdam is the financial and cultural capital of the Netherlands and home to seven Fortune 500 companies including ING Group and Royal Philips Electronics.

• Dublin houses more than one-quarter of the entire population of Ireland and is ranked 29th in the Global Financial Centres Index.

• Aruba is renowned for its white, sandy beaches, temperate waters and warm climate moderated by the trade winds of the Atlantic Ocean.

• Istanbul is the cultural, economic, and financial center of Turkey and at one time served as the capital of the Roman and Ottoman Empires.

• Mexico City, Mexico, is the country’s most important political, cultural, educational and financial center and boasts one of the world’s fastest growing economies with a gross domestic product expected to double by 2020.

The release of this international data follows the recent Coldwell Banker Home Listing Report, a comprehensive analysis of real estate markets throughout the U.S. and Canada. Additional information on the North American report can be found on the Coldwell Banker Home Listing Report website.

Mortgage Marvel Rate Trends Shows Jump in 30-Year Fixed Rates

Mortgage Marvel Rate Trends™, a daily survey of over 950 lenders, shows 30-year, fixed rates bouncing up 0.15% to 4.78% after setting a new six-month low last week.
With the increase in rates over the past week, 30-year fixed rates are 0.44% lower than the 6-month high of 5.22% achieved on February 10, 2011 and 0.58% above the ever-to-date low of 4.20% reached October 12, 2010.

Fifteen-year fixed rates also jumped, but to a lesser degree than the 30-year fixed, ending the week at 3.93% as compared to last week’s 3.85%. The increase in 5/1 ARM rates matched that of the 30-year fixed rate, jumping 0.16% to end the week at 3.80%. The rates for 30-year, fixed rate jumbo loans (typically loans over $417,000) increased just 0.03% to 5.48% this week from 5.45% last week.

Pending Home Sales Turn Around in May

Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.

Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and Seattle.”

Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”

“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.

Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.

Housing Starts Gain 3.5 Percent in May

Nationwide housing starts rose 3.5 percent to a seasonally adjusted annual pace of 560,000 units in May, according to newly released figures from the U.S. Commerce Department. The gain partially offsets a larger decline that was registered in April.

“While the upward movement registered in today’s report is somewhat good news, housing production continues to bounce along the bottom near historic lows, and is only running at a level necessary to replace dilapidated or destroyed units,” says Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. He also noted that “Amidst this fragile marketplace, the nation’s policymakers should be aware of a recent poll that confirms the strong value that most American voters continue to place on homeownership and housing choice.”

Conducted this May on behalf of NAHB by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C., the poll asked 2,000 likely voters about their attitudes on homeownership and housing policy. It found that the vast majority of current home owners are happy with their decision to own a home and believe that owning their own home is important, while nearly three-quarters of those who do not now own a home consider it a goal of theirs to eventually buy one. Additionally, the poll determined that 73 percent of owners and renters believe the federal government should provide tax incentives to promote homeownership. Details on this poll are available at www.nahb.org/voterpoll.

“Like consumers, builders remain very concerned about the pace of economic growth and are awaiting signs of improvement before moving forward with new projects,” notes NAHB Chief Economist David Crowe. “The relative bright spot in new-home construction is on the multifamily side, where improving demand for rental apartments is spurring gains in that sector. However, access to construction credit remains a limiting factor for new building.”

Single-family housing starts rose 3.7 percent to a seasonally adjusted annual rate of 419,000 units in May—their strongest pace since this January. Multifamily starts rose 2.9 percent to a 141,000-unit rate in May.

Regionally, housing production rose 1.5 percent in the South and 18.1 percent in the West, but declined 3.3 percent in the Northeast and 4.1 percent in the Midwest in May.

Issuance of building permits, which can be an indicator of future building activity, rose 8.7 percent to a seasonally adjusted annual rate of 612,000 units in May. This was the strongest pace since December of 2010. Single-family permits were up 2.5 percent to a 405,000-unit rate, while multifamily permits rose 23.2 percent to 207,000-units—their best pace since October of 2008.

Permit issuance posted double-digit gains in the Northeast and West in May, rising 35.6 percent and 15.1 percent, respectively. The South also posted a gain, of 3.5 percent, while the Midwest registered a 1.1 percent decline.

For more information, please visit www.NARB.org.

Homeownership Dream Deserves Protection

The homeownership rate dropped to 66.4 percent in April 2011, the lowest it’s been since 1998, according to the U.S. Census Bureau. Some would argue this means owning a home is not as important to Americans as it once was—but they’re wrong.

What it really means is that the artificially stimulated level of 69 percent in 2005 wasn’t sustainable. Today’s level is merely a return to a more normal rate.

The dream of homeownership is as strong as ever, and it deserves protection—not more regulatory roadblocks.
Understandably, government leaders are looking at ways to avoid another housing crisis, but prohibitive down payments and elimination of the Mortgage Interest Deduction (MID) are two highly detrimental steps in the wrong direction at the worst time.

Consumer confidence took a considerable hit during the past few years, and its gradual recovery is still very fragile.

An unprecedented number of recent and current homeowners has been rocked by the downturn—and prospective buyers are shaken on the sidelines. But there hasn’t been so much damage that people have abandoned their dream of owning a home.

According to a Pew Research Center study conducted in April, 81 percent of adults surveyed either somewhat agree or strongly agree that buying a home is the best long-term investment a person can make. Of homeowners whose homes have lost value during the downturn, 82 percent still favor owning a home. And 81 percent of renters aspire to own a home in the future.

These survey results are compelling enough, coming straight from consumers. But in case there’s any doubt about whether there’s still an interest in buying, recent home sales and pricing data show that buyer activity is picking up.

In all 54 metro areas tracked, home sales increased by no less than 9 percent from February to March 2011—the third-straight month of gains. And 35 of those markets also experienced price increases. Would we see these results without increased buyer demand? Of course not.

Investor activity has picked up considerably over the past six-plus months, with 22 percent of home sales linked to this influential buyer group. But investing alone can’t be expected to absorb the millions of foreclosed properties yet to be released to the market.

Right now, government leaders should focus on ways to keep qualified buyers motivated. Not everyone will purchase a home, but those who save and prepare should know, absolutely, that it’s attainable.

Don't Believe the Doom on US Housing

Data from the US housing market has not made for nice reading in recent months but one analyst believes the worst could well be over and that if you take a closer look at the data prices are stabilizing.

“The decline is mainly because the mix of homes sold has changed in favor of distressed sales, which typically sell with a 'foreclosure discount.'

Non-distressed properties (sold by voluntary sellers) have already started to stabilize,” said Ajay Rajadhyaksha, the co-head of US fixed income strategy at Barclays Capital said in a research note on Friday.

“As voluntary sales pick up in the summer, the mix of homes should change again in the next few months, in favor of non-distressed sales. As a result, the aggregate index of home prices should stop declining and could even go up,” he added.

As a result Rajadhyaksha dismisses fears that recent drops in prices indicate a double dip for the housing market and predicts national valuations have reached a point where downside risks are limited.

“For investors who look to the home price indices for clues to the macro-economy, we recommend focusing on the index of voluntary sales, since non-distressed borrowers will increasingly determine the true health of the housing market,” he wrote.

“This index has held up reasonably well and suggests that prices are stabilizing. In sum, there are many reasons to worry about the US macroeconomic picture (the recent softening in the labor market, the US fiscal picture, etc.) but the recent drop in US home prices should not be one of them,” said Rajadhyaksha.

REALTORS® Continue to Push Congress for Comprehensive GSE Strategy

The National Association of REALTORS® supports a secondary mortgage market model with some level of government participation that would protect taxpayers and ensure that creditworthy consumers have access to affordable mortgage capital in all markets at all times.
That is the message delivered recently by NAR President Ron Phipps during a Senate Banking, Housing and Urban Affairs Committee hearing.

“As the leading advocate for homeownership, REALTORS® agree that the existing housing finance system failed and that reforms are needed; however, those reforms must be done in a methodical, measured and comprehensive effort based on practical market experience,” says Phipps. “We applaud the committee’s caution as you continue to discuss this very important and complex issue.”

In his testimony, Phipps urges support for comprehensive reform of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, which remain critical to ensuring mortgage liquidity, and expressed concern over recently proposed legislation that takes a piecemeal approach and could increase uncertainty in the housing market, which is still struggling to recover.

To ensure a viable secondary mortgage market going forward, Phipps says that private capital must return to the housing finance market and the government’s involvement needs to be reduced; however, full privatization is not a viable option.

“There are strong negative repercussions for relying solely on private capital to form the foundation of the housing finance system. After the housing downturn, private mortgage capital became nearly nonexistent, and without the GSEs, qualified borrowers would not have had access to the funds required to purchase a home. A government backstop is critical to ensure a continual flow of mortgage liquidity and the long-term viability of the housing market,” Phipps says.

He adds that in a fully private market, financial institutions with FDIC-backed deposits would focus more on optimizing their profits in a noncompetitive banking industry, and potentially fostering new, risky mortgage products that place taxpayers at risk, rather than products that would be in the best interests of consumers and the nation’s economy. That could lead to the end of long-term fixed rate loan products, like the 30-year fixed rate mortgage, and drastically raise the cost of mortgage capital for millions of American consumers.

Phipps also testified about another important issue that will dramatically impact the future of housing finance—the proposed risk retention regulation under the Dodd-Frank Act, which requires lenders that securitize mortgage loans to retain 5% of the credit risk unless the mortgage is a qualified residential mortgage (QRM).

“A poor QRM policy that focuses on high downpayment requirements rather than a variety of traditional safe, well underwritten products will exclude hundreds of thousands of buyers from homeownership, slowing economic recovery and hampering job creation,” says Phipps. “REALTORS® support a reasonable and affordable cash investment coupled with quality credit standards, strong documentation and sound underwriting; but higher downpayments do not have a meaningful impact on default rates.”

He also expressed strong support for making permanent the GSE and FHA mortgage loan limits that are currently in place and set to expire later this year. Phipps said that in today’s real estate market, lowering the loan limits will restrict liquidity and make mortgages more expensive for households nationwide. More than 612 counties in 40 states and the District of Columbia will see an average decline of $50,000 in loan limits in their area.

“REALTORS® look forward to working with Congress and our industry partners to design a secondary mortgage model that will best serve our nation today and into the future,” says Phipps.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

New Home Sales Rise to Four-Month High in April

New U.S. single-family home sales rose unexpectedly in April to notch their second straight month of gains and prices increased, according to a government report on Tuesday that offered some hope for the stagnant housing market.

The Commerce Department said sales increased 7.3 percent to a seasonally adjusted 323,000 unit annual rate, the highest level since December, from a slightly upwardly revised 301,000-unit pace in March.

Economists polled by Reuters had forecast new home sales unchanged at a previously reported 300,000-unit rate. All four regions recorded gains in sales, with the West reporting a 15.1 percent rise.

However, compared to April last year sales were down 23.1 percent.

"It suggests maybe we're beginning to see some signs of stabilization in housing, but it's too early to say we've bottomed out," said Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis, Missouri.

While the report cast a positive light on the housing market, it did little to change perceptions the economy remained mired in a soft patch.

Data ranging so far ranging from retail sales to industrial production have painted a picture of an economy struggling to regain momentum as the second quarter started, with employment only the bright spot.

Manufacturing activity in the central Atlantic region paused in May, after expanding during the previous seven months, according to the Richmond Fed's latest survey, released on Tuesday.

The government is expected to report on Thursday that the economy grew at an annual 2.1 percent rate in the first quarter, according to a Reuters survey, rather than the 1.8 percent pace it estimated last month.

Lots of Homes for Sale

"There's still a tremendous overhang in the housing market, and while new home sales are starting to percolate, that doesn't change the fact that we still have such huge inventory," said Michael Yoshikami, chief investment strategist at YCMNET Advisors in Walnut Creek, California.

An oversupply of used houses and a relentless wave of foreclosed properties are curbing the market for new homes, even as builders are keeping lean inventories.

There were a record low 175,000 new homes available for sale last month, down 2.8 percent from the prior month.

Data last week showed a steep drop in new home construction in April and a dip in sales of previously owned homes.

The Commerce Department report the median sales price for a new home rose 1.6 percent last month to $217,900. Compared with April last year, the median price increased 4.6 percent.

At April's sales pace, the supply of new homes on the market dropped to 6.5 months' worth, the lowest since April last year, from 7.2 months' worth in March.

Spring Breathes Life into Prices

A seasonal uptick in both median prices and inventory has appeared in most metropolitan areas across the country, contradicting earlier price reports, according to Altos Research’s 20-city Composite trends data in April. Price increases are apparent in 24 of the 26 tracked markets, and inventory increases are apparent in 23 of the 26 tracked markets.

The week-over-week median prices have been increasing for a few months now, and the 90-day rolling average is now reflecting the same trend.

“The historical view tells us a seasonal increase in activity is expected at this time of year. Regardless of what’s happening in the economy as a whole, we see a seasonal spike in both median prices and inventory when the country starts to thaw from the winter months,” says the Altos report.

Altos’ national index median price rose to $440,194 in April, up 1.82 percent from $432,307 in March. The leaders in the price increase category were in “Sunshine States”—San Francisco (4.87 percent), San Jose (4.32 percent), Phoenix (3.30 percent), Denver (3.23 percent), and DC (3.04 percent).

Austin, Boston, Philadelphia, San Francisco, and Washington D.C. all showed double-digit inventory increases and Boston posted the biggest inventory increase at 19.18 percent. The 7-day and 90-day averages are both trending upwards for median prices and inventory. The 7-day trends are always the first indication of a shifting market and should be watched closely.

Prices were flat in New York, Philadelphia, Portland, Salt Lake City, Seattle, and Tampa. Las Vegas and New York were the only markets showing a decrease in inventory, and the decreases were modest (-1.05 percent and -0.26 percent, respectively). Compared to the big price drops over the past six months, this is welcome news for sellers.

The Altos Research Real-Time Housing Report provides up-to-the-minute data relative to housing market conditions in major markets around the nation. The Altos report uses metrics associated with active residential property listings to deliver real-time information

During a Tornado, Run, Don’t Gawk!!

One video circulating in cyberspace—shot by a 12-year-old boy with his cell phone in the back seat of his vehicle—shows a tornado closing in on a family driving in North Carolina last month —right up until the tornado hits them.
Another shows a tornado closing in on a Walgreens in Wilson, N.C., shot by a man in the parking lot who seems oblivious to the danger he is in until the last second.

“Hang on—I love you,” he tells his wife as the tornado bears down on him, as if finally realizing he may be moments from death.

The videos startled officials at the National Weather Service. In response, they’ve issued a fresh round of tornado safety tips to counter bad information—or simple ignorance—when it comes to tornado safety.

People seem to be “just clueless” about what to do if a tornado threatens, says Dick Elder, meteorologist-in-charge of the NWS’ Wichita branch.

In response to the tornado outbreaks in the South last month, Elder says “we are saddened and humbled by the number of people who have been killed and injured.”

More than 300 tornadoes recently touched down in six states, killing at least 344 people.

“I am saddened and frustrated at the growing number of lost lives from the recent tornado outbreaks,” says Charlene Miller, assistant director of emergency management for Butler County. “As public servants, we can only go so far. There is a level of personal responsibility that each and every one of us are accountable for.”

Eleven of the tornadoes that touched down were rated EF-4 or EF-5 on the Enhanced Fujita Tornado Scale.

Tornadoes in those categories can be killers even if people take all the proper steps to protect themselves, weather officials note. But far too often, they say, videos showed people doing absolutely the wrong thing as violent weather struck.

“You would look at that and go, ‘My goodness, they’re pretty stupid,’ ” Elder says.

More and more, he comments, the desire to capture a dramatic storm on video seems to be trumping common sense and safety.

Yet others may simply have forgotten what to do. That’s why weather officials are relaying the safety information.

“It’s always a good reminder to tell people where to go to save themselves,” Elder says, commenting that he is still troubled by the video of former Wichita television reporter Gregg Jarrett and his cameraman taking shelter from the weakened Andover tornado under a highway overpass on the Kansas Turnpike in 1991.

The clip recently surfaced on Fox News, where Jarrett works. In the piece, an “expert” on tornado safety says using an overpass for shelter is a good idea—even though weather officials have stated for years that an overpass can be a lethal place to be if a tornado approaches.

“I hate seeing that, because then people will start thinking, ‘Maybe that’s what we should do,’ ” Elder says. Three people were killed in May 1999 in Oklahoma when they took shelter under overpasses during a significant tornado outbreak. The overpasses become wind tunnels and debris collectors as a tornado nears, authorities have noted, making them particularly dangerous.

Tornado Safety

Here are ways you can protect yourself and your family if a tornado threatens:

• Before the storm:
- Develop a plan of action
- Have frequent drills
- Have a NOAA weather radio with a warning alarm tone
- Listen to weather information
- If planning a trip outdoors, listen to forecasts

• In homes or small buildings:
- Go to the basement or an interior room on the lowest floor (i.e., closet or bathroom). Upper floors are unsafe
- Wrap yourself in overcoats or blankets to protect yourself from flying debris

• In schools, hospitals, factories or shopping centers:
- Go to interior rooms and halls on the lowest floor. Stay away from glass-enclosed places or areas with wide-span roofs such as auditoriums and warehouses
- Crouch down and cover your head. Don’t take shelter in halls that open to the south or the west. Centrally located stairwells are another good shelter

• In mobile homes:
- Abandon them immediately and go to a designated shelter or ditch. Most fatalities occur in mobile homes or vehicles.

• In automobiles:
- If possible, get out and go to a sturdy structure or ditch
- If there isn’t time, buckle your seat belt and get below window level of your vehicle

For more information visit www.kansas.com.

Bin Laden's hiding place: a $1 million compound

Unquestionably, the most interesting piece of real estate on the entire planet today is the "mansion" compound where Osama bin Laden was found.

As the New York Times reported, "It was hardly the spartan cave in the mountains that many had envisioned as bin Laden's hiding place. Rather, it was a mansion on the outskirts of the town's center, set on an imposing hilltop and ringed by 12-foot-high concrete walls topped with barbed wire.

"The property was valued at $1 million, but it had neither a telephone nor an Internet connection," the Times wrote. "American officials believed that the compound, built in 2005, was designed for the specific purpose of hiding bin Laden."

The Los Angeles Times has published a graphic showing property details, as well as satellite images from before and after the compound was built.

The Associated Press reported that a doctor, Qazi Mahfooz Ul Haq, sold the land in 2005 where the compound was built, and The Telegraph reports that the contractor who allegedly built the complex, named in reports as Gul Muhammad, has been arrested near Abbottabad, Pakistan.

The man listed as the buyer of the property may have been killed in the U.S. raid, AP also reported. There is a photo of the compound, and a Guardian article discusses bin Laden's family background in building and architecture.

http://www.telegraph.co.uk/news/picturegalleries/worldnews/8491858/Osama-bin-Laden-the-compound-in-Abbottabad-Pakistan-where-the-al-Qaeda-leader-lived.html

Pending Home Sales Rise Again

March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors®. The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4 percent below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.

The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, says home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he notes. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

The PHSI in the Northeast fell 3.2 percent to 63.4 in March and is 18.4 percent below March 2010. In the Midwest the index rose 3.0 percent in March to 83.5 but is 16.6 percent below where it was a year ago. Pending home sales in the South jumped 10.3 percent to an index of 110.2, but are 10.5 percent below March 2010. In the West, the index increased 3.1 percent to 103.7 but is 4.1 percent below a year ago.

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun says.

“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun adds.

Slow Home Movement Focuses on Building Homes That Work for Occupants

John Brown believes a home should ease the stress in life, not contribute to it.

Brown is the founder of the slow home movement, a philosophy of home design that emphasizes livability and sustainability. It’s about building a home that works for the occupants, not one that’s intended to impress.
The concept was inspired by the slow food movement, with its focus on healthful, sustainable ways of producing and preparing food, explained Brown, an architect, real estate broker and architecture professor in Calgary, Alberta. “You can think of the typical cookie-cutter house as being like fast food”—often supersized and designed to satisfy our craving for beauty, he said. It’s a house that’s designed to seduce us into buying by feeding our fantasies of a more glamorous life, he said, not one that’s necessarily easy to live in or easy on the environment.

A slow home, on the other hand, is reasonably sized and carefully designed to support its occupants. It might have an entry where family members can easily take off their boots, stash their keys and store their backpacks, for example. It might have a living space that encourages people to talk or read, not just watch television or surf the Internet. It’s energy efficient, filled with natural light and designed for easy flow among rooms and access to the outside. “It doesn’t have to be fancy. It doesn’t have to be expensive. It just has to be easy to live in,” Brown said.

Brown and his partners design these types of houses through their firm, Housebrand, and they encourage others to do the same through the educational outreach they call Slow Home Studio (http://www.slowhomestudio.com). Brown and his partner Matthew North have also written a book on the subject, What’s Wrong With This House? Fast Houses, Slow Homes and How to Tell the Difference.

Architect Hallie Bowie has long been guided by a similar philosophy in designing home additions and renovations through her Akron company, New Leaf Home Design. But before learning of the slow home movement recently, she never had a name for it, she said.

Bowie sees the movement as a marriage between green building and the “not-so-big-house” idea, a concept championed by architect Sarah Susanka in a series of popular home-design books.

At its heart, a slow home is really about good design, she said. “It seems to me the slow home has a real values kind of focus,” Bowie said. Its design grows from the occupants’ emphasis on the quality of time they spend with family and friends, not on the quantity of their possessions or their desire to impress people.

A slow home takes different forms for different people. A family who wants less emphasis on television, for example, might create a viewing area that’s separate from the great room, Bowie said. A family who wants to interact more with neighbors might have a front porch.

Brown said slow homes eliminate the little annoyances that tend to make our already harried lives more stressful—annoyances such as entries without closets, bathrooms that open directly to living areas or laundry rooms so close to the back door that people are constantly tripping over laundry baskets when they enter. He likens those kinds of poorly designed elements to an ill-fitting pair of shoes. They just make it harder to get through the day.

Author Shannon Honeybloom also sees a slow home as being a means of providing nurture. To her, the slow home movement involves determining how you want to live or raise children and then creating an environment that supports those goals, a concept she outlines in her book Making a Family Home. “I think the reality of life these days it that life is really fast-paced,” she said. She advocates creating a way of life and a home that put less emphasis on instant information and entertainment and more on encouraging interaction, imagination and learning.

Honeybloom’s concept of a slow home, then, might include elements such as a comfortable reading chair, a backyard garden where the family can spend time together, a computer located somewhere other than where the children usually play and a step stool in the bathroom that enables little ones to wash their own hands or brush their own teeth. Even something as simple as putting a TV in a cabinet, where it’s not always beckoning you to turn it on, can help slow the pace, she said.

Most average homes designed before 1950 are slow by design, Brown said. They’re often simple, “but they work.” But like the food industry, he said, the housing industry started turning out houses—or “products,” as he calls them—designed for short-term sale rather than long-term livability. Dazzling features and square footage sold houses, not abundant natural light, access to the outdoors or a location in a walkable neighborhood.

Ideally, Brown said, a slow home would be designed that way from the start by an architect who takes into consideration the occupants’ interests, needs and habits.

Nevertheless, he said it’s possible to “slow” an existing home. Something as simple as rearranging the furniture can make your home a better fit, he said. Bigger changes can be made over time.

The slow home movement isn’t “a touchy-feely new-age thing,” Brown said, but rather a way of helping consumers get homes that better serve their needs. “We as consumers can make a difference. It’s about an individual sense of empowerment.”

Existing-Home Sales Rise in March 2011

Sales of existing-home sales rose in March 2011, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7% to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3% below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.

Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain—primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”

NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February; the rate was 4.97% in March 2010.

Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago—before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.

“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.

A parallel NAR practitioner survey shows first-time buyers purchased 33% of homes in March, compared with 34% of homes in February; they were 44% in March 2010.

All-cash sales were at a record market share of 35% in March, up from 33% in February; they were 27% in March 2010. Investors accounted for 22% of sales activity in March, up from 19% in February; they were 19% in March 2010. The balance of sales were to repeat buyers.

The national median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Distressed homes—typically sold at discounts in the vicinity of 20%—accounted for a 40% marketshare in March, up from 39% in February and 35% in March 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said some renters are looking to homeownership as a hedge against inflation. “The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” he said. “As buyers gain more financial security, the advantages of homeownership become more obvious. Rents will continue to trend up, especially in comparison with a fixed-rate loan which provides financial stability and gradual accumulation of equity over time.”

Total housing inventory at the end of March rose 1.5% to 3.55 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, compared with a 8.5-month supply in February.

Housing Starts Rise 7.2 Percent in March

Nationwide housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units in March from an upwardly revised number in the previous month, the U.S. Commerce Department reported today. Coming on the heels of disappointing declines in February, this gain was represented in both the single- and multifamily sectors, and was mirrored by substantial improvements in building permit issuance for the same period.

"While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."

"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB Chief Economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."

Gains in new-home production were seen across the board in March, with upward movement registered in both the single- and multifamily sectors as well as three out of four regions. On the single-family side, a 7.7 percent gain to a seasonally adjusted annual rate of 422,000 units partially offset a big decline in the previous month. Multifamily starts also gained back a portion of the ground they lost earlier, with a 5.8 percent increase to 127,000 units.

Regionally, housing starts posted double-digit gains of 32.3 percent in the Midwest and 27.6 percent in the West, as well as a 5.4 percent gain in the Northeast. The South was the only region to post a decline in housing starts in March, of 3.3 percent.

Meanwhile, issuance of building permits, which can be an indicator of future building activity, rose by an impressive 11.2 percent to a seasonally adjusted annual rate of 594,000 units, more than offsetting the previous month's decline. Single-family permits rose 5.7 percent to 405,000 units, while multifamily permits rose 25.2 percent to 189,000 units.

The Northeast was the only region to not post a gain in building permits this March, remaining unchanged from the previous month. Meanwhile, the Midwest posted a 6.9 percent gain, the South, a 6.3 percent gain, and the West, a 37.1 percent gain.

Buyer’s Market Spurs Confidence in Young Professionals and Affluent Homeowners

As the cold temperatures become a distant memory, and the spring selling season gains momentum, consumers have come to agree on one thing—now’s a good time to get off the fence and into the real estate market. This is the overall theme in the latest American Express Spending and Saving Tracker survey, a monthly survey that tracks the spending and saving habits of consumers in order to get an indication of what’s happening in the market. “This month’s Spending and Saving Tracker provided an up-to-date look at various consumer trends and gave us the opportunity to assess how consumers are feeling about the current market in addition to gauging homeowner confidence,” says Leah Gerstner, vice president of public affairs at American Express.
“This month’s survey points to the fact that consumers overwhelmingly feel that we are in the midst of a buyer’s market,” she adds. The data also points to the fact that a seller’s market is at least a year away, which is certainly positive news. While homeowners aren’t necessarily willing to settle for less than the asking price when selling their home, two of the biggest areas of interest in the latest survey deal with homeowners including home improvement projects on their to-do list, as well as the willingness to include concessions to get their home sold.

Home Improvements
“In looking at the results of our latest Spending and Saving Tracker survey, our thinking was that if consumers overwhelmingly view today’s market as a buyer’s market—which they do—they are likely to have plans to put more money into their home,” adds Gerstner. In fact, the survey found that about 64 percent of homeowners currently have home improvement projects on their to-do list for 2011. While the plans are in place, the amount that homeowners are budgeting to spend has gone down quite a bit from last year. “Homeowners are looking for better ways to stretch their dollars, and many are looking toward energy-efficient home improvements that will pay off in the long run.” The survey shows that among homeowners who are looking to go green, the most common items homeowners would spend their money on include energy-efficient windows and doors, insulation, roofing, heating and cooling systems as well as alternative energy systems.

Concessions
Another finding that stood out in the latest survey had to do with whether or not sellers were willing to make concessions to get their homes sold, especially in today’s market. While 44 percent of sellers were willing to give away appliances during a sale—the biggest concession among young professionals and affluent homeowners—another 28 percent said they would take care of requested repairs in order to get their home sold. “While a large majority of sellers are willing to make concessions to get their home off the market, the willingness to make concessions is down among young professionals when compared with the 2010 survey,” says Gerstner. “This is an important finding as it shows that young professionals are more confident in their ability to sell their homes today.”

“Homeowner confidence in today’s market has increased compared to last year,” says Gerstner. “In fact, the survey shows that the confidence level is pretty evenly split—42 percent of homeowners are confident they will get their asking price in today’s market, while 47 percent of homeowners aren’t that confident.” Even though home values continue to be on the low side, young professionals and affluent homeowners are seemingly more confident in today’s market.

Update on First Time Homebuyer Credit and Tax Refunds

The IRS recently released information on processing issues that are impacting a small percentage of tax returns involving repayment of the First Time Homebuyer Credit (FTHB), primarily involving 2008 home purchases. While most of these returns are processing normally, the IRS recognizes the hardship caused by delayed refunds, and it has assigned additional staff and resources to address the issues promptly.
It is important to note that taxpayer returns claiming a home purchase in 2010 are not affected, and those returns are being processed as are the vast majority of other homebuyer returns.

Here’s an update on the source of the processing issues:

1. Married Filing Joint taxpayers who received the FTHB credit on a 2008 purchase

There seems to be an identified processing issue primarily impacting refunds for married couples filing joint returns this year who received the First Time Homebuyer credit on their 2008 tax return. This credit was an interest-free loan, and must be paid back beginning this year under the provisions of the law.

This issue, related to Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, primarily impacts Married Filing Jointly taxpayers who filed their tax returns this year before Feb. 22. The IRS is working aggressively to manually process tax returns for this group of taxpayers. It expects most, if not all, of these refunds to be available by April 5, and others the following week. (The date assumes that there are no other issues with their return, and that their refunds are not subject to any offsets for unpaid federal taxes or other debts.)

2. Taxpayers who received the FTHB credit and are now reporting the sale or disposition of their home

3. Taxpayers who received the FTHB credit and are attempting to pay back more than the amount required (typically $500)

These two issues require changes to IRS’ core tax processing systems. The IRS is actively working on the development and testing of the required changes that will allow these impacted tax returns to be processed and appropriate refunds issued. The IRS does not currently have a definitive date for when these changes will be complete, although it will be in April.

What should taxpayers do?

The IRS understands that taxpayers affected by this issue are anxious to get the status of their refund. For those who have already filed, no action is necessary. They can check “Where’s My Refund” at www.IRS.gov for updates. Because the IRS is already aware of this issue and is taking corrective action, there is no need to call.

For those who have not yet filed and are making a repayment of a First Time Homebuyer Credit this year, there is a simple step taxpayers can take to help speed processing. Couples filing a joint return for tax year 2010 who received the credit on their jointly filed 2008 tax return should file two 5405 forms, one for each taxpayer. For couples filing a joint return for 2010 but who had a different filing status in 2008 and only one spouse received the credit, the IRS recommends filing one Form 5405 for the taxpayer who received the credit.

For more information visit www.IRS.gov.

New Statistics on Rent-Buy Ratio

Deutsche Bank released a study showing that renting a home costs U.S. households more than paying a mortgage for the first time in at least two decades. The rent-buy ratio, or rent as a percentage of after-tax mortgage payments, is based on figures that Deutsche Bank compiled from NAR and the REIS information service. Rent amounted to 100.2% of home-loan costs in last year's fourth quarter, the highest level since calculations began in 1991.

Looks like it is a good time to buy!

New-Home Sales Rise Sharply in December

Sales of newly built, single-family homes rose 17.5 percent to a seasonally adjusted annual rate of 329,000 units in December, according to newly released figures from the U.S. Commerce Department. The big gain, though largely tied to an unexpectedly strong showing in the West, was a welcome boost at the end of a year that had the lowest total number of new-home sales on record (321,000) since the government began keeping track in 1963.

"After six very tough months, the housing market ended the year on an upbeat, with signs of stabilization beginning to take hold in many markets," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "That said, the nationwide inventory of new homes for sale is now at its thinnest level in more than 40 years. This is a sign that many builders still cannot obtain the credit they need to meet anticipated improvements in buyer demand in 2011."

"I read today's report as a promising sign that the new-home sales market is re-starting its long journey to a more normal pace after the lull that began in May," said NAHB Chief Economist David Crowe. "However, the very low inventory of new homes available for sale is concerning, because it means that the critical lack of acquisition, development and construction financing continues to pose a tremendous obstacle to medium- and small-sized builders across the country, thereby slowing the arrival of a true recovery and the jobs that could generate."

The majority of the increase in new-home sales this December was recorded in the West, which posted a remarkable 71.9 percent gain that could end up being somewhat revised in subsequent months. But gains of 3.2 percent and 1.8 percent were also recorded in the Midwest and South, respectively. The Northeast posted a 5.0 percent decline in new-home sales this December.

Acknowledging that sales in the West may have gotten a boost from contracts being signed ahead of costly building code changes going into effect in some states this January, Crowe noted that issuance of building permits was also up substantially in that region at the end of the year.

The inventory of new homes for sale fell to 191,000 units in December, the lowest number since January of 1968. This amounts to a historically slim 6.9-month supply at the current sales rate.

Research Shows Changing Market, Evolving Buyer Preferences for the 55+ Housing Market

A joint study by the 50+ Housing Council of the National Association of Home Builders (NAHB) and the MetLife Mature Market Institute shows the recession has made 55+ buyers more practical when selecting a new home. Design considerations have become less important, and financial concerns have become more prominent, according to the study.

Previous studies from these two organizations found that most 55+ buyers depended on home sale proceeds to finance a new purchase. The most recent data shows that option diminished during the economic downturn.
The study, “Housing Trends Update for the 55+ Market,” explores recently released housing data from the Census Bureau’s 2009 American Housing Survey (AHS) on the 55+ demographic. The report focuses especially on households living in active adult communities, either age-qualified active adult communities where at least one resident must be age 55+, other non-age-qualified 55+ owner-occupied communities (not explicitly restricted to 55+ households but nevertheless occupied primarily by people age 55+), or age-restricted rental communities.

“By the year 2020, as Baby Boomers move into this age bracket, almost 45 percent of all U.S. households will include someone at least 55 years old,” said David Crowe, NAHB’s chief economist. “The number of those households seeking housing better suited to their changing needs will therefore rise dramatically.”

Crowe noted that about 54,000 housing starts are projected in 55+ communities this year, a 30% rise from estimated 2010 levels, but still relatively modest production. Starts in 55+ communities are projected to increase another 46% to roughly 79,000 housing units in 2012.

In 2009, only 55% of new age-qualified active adult home buyers reported that their down payment came from a previous home sale, significantly down from 100% of respondents in 2005 and 92% in 2007. In 2005 and 2007, no active adult community buyers reported having to tap cash or savings for a down payment. In 2009, 45% of the average buyer’s down payment came from cash or savings.

Further analysis reveals other interesting developments. While median prices for new 55+ homes remain lower than 2005’s peak, a look at average home prices shows a big difference between buyers in age-qualified active adult communities and other 55+ community buyers. Average prices for 55+ homes dropped in 2007 and partially rebounded in 2009. But prices for age-qualified communities more than bounced back; they set a record with an average price of $319,000. Buyers in that group were more affluent, with average incomes of more than $80,000 a year. Twenty-seven percent reported earning $100,000 or more compared to fewer than 5% of such buyers in 2001.

“Most 55+ consumers—those who chose to move and those who stay in their homes—report that they are happy with their homes and communities,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “But those who did move to an age-qualified community—about 3%—reported the greatest satisfaction, rating their homes and communities at nine on a one-to-ten scale.”

The desire to be near family and friends is the mature mover’s overwhelming motivation, the report noted. The design, amenities and appearance of the residence and the community remain important, but less so than before the recession. Buyers who fall into the 55+ age range that are moving into rental homes, both multi-family and single-family, cited a desire for less expensive housing as second in importance to living near friends and family.

Those who are able to buy are getting much more for less. In 2009, more than half of 55+ buyers said they were moving into better homes, but fewer than half reported that their new homes cost more than the old ones.

“Proximity to work” was more important than in the past for those relocating to age-qualified, active adult communities—12% in 2009 versus 2% in 2001—underscoring the trend toward delayed retirement in this age group. There was also a reported increase in the share of 55+ single-family homeowners who say they work at home—which may be a trend noteworthy to home designers.

A small, but growing share of older households is taking advantage of the ability to convert some of their home equity into a reverse mortgage or home equity conversion mortgage. They tend to be older, single-person households with lower household income and longer housing tenure. Those with reverse or home equity conversion mortgages represented more than 241,000 households in 2009, a 54% increase since 2007.

Housing Moving to Higher Ground in 2011

Housing will see gradual improvements in activity this year as the nation’s economy and job market continue to move to higher ground, establishing momentum that will produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders’ Show in Orlando on Jan. 12.

"This year’s spring selling season will be better than last year’s," said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s tax credits for home buyers.

Crowe forecasted 575,000 single-family home starts in 2011, a 21 percent climb over an estimated 475,000 units started in 2010, which in turn showed a 7 percent gain from the 442,000 homes started in 2009.

Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16 percent this year to 133,000 units, with a further 53 percent increase in 2012 to 203,000 units.

Builders’ access to the credit they need to start new homes remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association.

More encouraging is a rebound in the confidence of consumers, who mid-2010 "froze in place, faced with a lot of uncertainty," he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income.

The U.S. economy will receive a boost from the massive tax package enacted at the end of last year, he said, including more income going into the pockets of wage earners thanks to a one-year 2 percent reduction in Social Security taxes. This will contribute to the gross domestic product strengthening from the 2.5 percent range to 3.5 percent to 3.8 percent by year’s end.

New-home sales, Crowe projected, "will struggle" but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.

The housing recovery will start up slowly this year, he said, because it will be driven by the relatively low housing production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks of housing activity such as California and Florida, on the other hand, will not be among the states whose housing markets recover the fastest.

In addition to stimulative fiscal and monetary policy, Freddie Mac Chief Economist Frank Nothaft said that housing affordability and demographic trends will help support growing housing demand.

Citing research from the Harvard Joint Center for Housing Studies, Nothaft said that households should be growing at an average annual rate of 1.2 million to 1.5 million over the next five to 10 years, suggesting the need for a sharp increase in housing production; half of the 500,000 to 600,000 starts of the past two years were needed just to replace the number of homes being removed from the housing stock.

While there will continue to be supply overhangs in some important large markets, by and large the housing price slump should bottom out by the middle of this year, he said, and price increases are already occurring in some local areas. That should attract prospective buyers who have been procrastinating until they see prices hit bottom.

"Potential buyers who have resources to buy but want to buy at the bottom are likely to start coming into the market in the springtime," he said, which for fence sitters will be "the time to come into the market."

Fixed-rate mortgages will move up from their current 4.75 percent to the 5.75 percent range by the end of this year, he forecasted. This will push total single-family mortgage originations down about 30 percent below the 2010 level as refinancings fall sharply in the face of rising mortgage rates.

While a 20 percent increase in housing production in 2011 is good news for housing, to put things in perspective, Nothaft said that this gain is from an extremely low level, with single-family production declining about 80 percent from peak to trough.