Loosening Credit Will Help Bring an End to Housing Slowdown

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

IS IT THE RIGHT TIME?

6 tips for selling in today's market

Buying after relocating may not be best financial move

By Dian Hymer, Monday, February 13, 2012.

Inman News®

For-sale-sign image via Shutterstock.com.

Some homeowners have been waiting for years for a better housing market and a good time to sell. Is it better to wait a few more years and see if you can realize a higher sale price, or sell now and move on with your life?
The motivation for selling is a key factor. Are you commuting to work several hours a day and the commute is killing you? Are your children grown and your home is now too big, in addition to being a burden to maintain? Is your home too small? Have you taken a job out of the area? Can you no longer afford to own your home? Or do you no longer want to pay the price it costs to own your home?
These are all good reasons for considering making a move. Not only do current market conditions enter into the equation, but making a move like this is usually more complicated than it was the first time you bought a home.
HOUSE HUNTING TIP: First, you need to find out the probable sale price of your home and access the state of the current home-sale market in your area. You also need to know what you can do to maximize the salability of your home. Then you should consider where you'll live next and how much that will cost.

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If you don't already have one, find an experienced real estate agent who specializes in your area. Friends whose opinion you trust are the best source of agent referrals. Meet with your agent at your home and ask for a comparative market analysis. This will give you information about what homes like yours have been selling for in the current market.
You'll also want to know how long you can expect it to take to sell your home. How many homes like yours have sold recently? Are homes like yours in high demand? Or, is it located in a less desirable area that could mean a longer marketing time and, perhaps, a lower price than you were expecting?
Ask your agent to walk through your home with you and point out what should be done to make your home marketable. Homes that sell today are priced right for the market and are in move-in condition.
You want to make cost-effective improvements. If the kitchen and bathrooms are outdated, consider a cosmetic redo. Update paint, hardware, light fixtures and floor coverings, if necessary. Don't do a complete remodel unless you plan to stay in your home for years; otherwise, you won't recoup your investment.
Deciding where to move -- and when -- can be difficult. Some buyers can afford to buy a new home before selling, and prefer to make the move that way. Most repeat buyers can't afford to buy first. Others who can won't buy first due to market uncertainty and the stress of owning two homes at once.
The most prudent approach to making a move from one home to another is to sell first and rent if necessary until you find the right home to buy. By selling first, you will know exactly how much money you have to apply to a new home. Today's housing market is volatile. A dip in the market could shave tens of thousands of dollars, or more, off your selling price.
The other benefit of renting before buying is that you're under no pressure to buy the first listing you see. Interest rates are low and are expected to stay low through 2012. Prices are also low and aren't expected to move up much for the next several years.
THE CLOSING: This gives you time to find the home that will suit you for the long term.

Winter Fun!

Don’t Hibernate. Decorate!

Posted By susanne On February 12, 2012 @ 1:02 pm In Today's Home Spun Wisdom | No Comments

^[1]Perk up your winter with one of these do-it-yourself projects for easy-to-update surfaces, including interior doors, walls and mirrors.

Could there be an end in sight?

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

By: Krista Franks 01/24/2012

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

©2012 DS News. All Rights Reserved.

WHAT BUYERS ARE LOOKING FOR!

Sellers: Don't overdo it on home improvements

Know which projects are worth the cost, effort
By Dian Hymer
Inman News®

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Homeowners who are thinking about selling this year should be aware of what today's buyers are looking for in a home. It will affect what you should do to get your home ready for sale, and how you should price it.
A survey by the National Association of REALTORS® in 2011 found that buyers favor walkable neighborhoods that are close to shops, restaurants and local businesses over neighborhoods that require more driving between home, work and recreation.
According to the survey, 77 percent of the respondents said they would look for pedestrian-friendly neighborhoods. Improvement in public transportation was favored over building new roads.
Most buyers (80 percent) still prefer to live in a single-family, detached home as long as it doesn't require a longer commute. Although space is important to most buyers, 59 percent said they would accept a smaller home if it cut 20 minutes off the commute time.
Does this mean your chances of selling are slim if you don't have a high Walk Score? No, but proximity to a popular commercial area usually brings a higher price.
In Oakland, Calif., this is evident if you compare homes in the Rockridge area with homes in the Oakland Hills. The housing recession has hit the entire area, but Rockridge prices have dropped less than home prices in the Oakland Hills.
One Rockridge home recently sold for $20,000 more than it did in 2005, and the house had not been substantially changed. From this location you can walk to trendy shops and cafes as well as to BART, the region's rapid transit system. By rail, it's a mere 20 minutes to the financial district in San Francisco.
HOUSE HUNTING TIP: Proper pricing is the key factor affecting the salability of your home in today's market. Make sure you're comparing apple to apples when you evaluate the probable selling price of your home.
The home-sale business is all about location. If you live in a neighborhood where you have to drive to get to work, school or recreation, you can't expect to sell for the same price as a comparable home that's in a desirable, walkable location.
You can't change the location of your home, but you can appeal to today's buyers who are typically looking for a home that is in good condition that they can move right into without doing any major work.
A common refrain heard from sellers is that there's no point in painting or changing worn carpet -- buyers will surely want to do something different. In some cases, this may be so, but many buyers don't have extra cash to pay for extensive home improvements. They may ultimately change the color scheme, but don't make them worry about making the house livable when they buy.
It's a good idea to consult with your real estate agent before you make fix-up improvements. Review your list of preparation-for-sale projects and get your agent's feedback before starting any work.
Sometimes, sellers think projects need to be done that are really not essential in successfully marketing the home. For instance, your yard may be in poor condition, but this doesn't mean that you should have it re-landscaped. This is the kind of improvement you'd do for yourself if you were planning to stay in the house for years. A cosmetic redo will usually suffice.
Get your agent's or stager's input on colors, light fixtures, carpeting, etc., so that you can ensure a positive response to your efforts. Also, watch your costs. You don't need to do a top-of-the-line paint job or use the most expensive granite for your countertops in order to sell. In fact, it will eat into your proceeds from the sale.
THE CLOSING: Stick to cost-effective, tasteful improvements for maximum appeal at a reasonable cost.