MARKET TRENDS: How to get the best price in a slowing market

Reports across the country suggest that real estate in most areas of the country is no longer appreciating at the rates seen in the past few years. In fact, the National Association of Realtors reports that nationwide August existing home prices were actually down 1.7 percent from a year None of this is terrible or awful unless you bought last year and must now sell. Those who have owned for a few years are well ahead in most communities.
Consider that in 2000, according to the National Association of Realtors, the typical existing home sold for $111,800 versus $225,000 in August.
So, what's the best approach to selling in today's market? Consider these five core points.

1. Buyers are scarce relative to home supply.

While sellers have called the shots for the past few years, that's no longer the case in most markets. No problem -- adjust. Make your home the most attractive, best priced property in the neighborhood.
While pre-market prep could have been ignored in the recent past, today you have to paint, clean-up and repair before offering a home for sale. An MLS photo that shows a home with a lousy roof is evidence of a property that likely will not sell quickly or at full price.

2. Remember that cash is still an issue.

While home prices may have slipped a touch, real estate continues to be hugely expensive for most buyers, especially first-timers who lack equity from a prior sale. Rather than reducing prices, offer to pay for buyer closing costs, thus lowering out-of-pocket purchaser cash requirements.

3. Choose the right broker.

When comparing local brokers, look for such markers as recent success in your neighborhood, a high level of local activity and professional education.
In a slow market picking the right listing broker becomes especially important. Why? Because a broker with a strong local history is known and respected: If he or she offers a property at a given price that value is likely to be accepted as at least within the realm of reason.
As an example, last year we sold a property that was unlike virtually all nearby properties in

EMPTY NESTERS: Empty nesters carve out ‘boomer caves’

Those looking to get away without leaving home are creating rooms to watch movies, sip wine, or otherwise relax.

Preparing to renovate their new Back Bay condo, Bill and Lisa Vanderweil were sure about one thing: They wanted one cozy “getaway” room where they could relax, watch TV, read, or just talk.

So they converted one of the three bedrooms into a cross between a small entertainment room and an old-fashioned den, complete with wood paneling, big-screen TV, wet bar with a small sink and refrigerator, large chenille couch, club chairs, and other items to give the room a relaxed feel.

“This is the spot where I just want to hang out,” said Bill Vanderweil, 67, managing principal at Vanderweil Engineers LLP. “The room is so much fun,” added his wife, Lisa Vanderweil, 52. “We love going in there and watching Pats games and movies.”

Empty nesters such as the Vanderweils are carving out special spaces within, or outside, their homes — favorite spots to call their own or intimate spaces they can share with family and friends.

Call them “boomer caves,” such “getaway” spaces come in all sizes, shapes, and varieties — movie rooms, wine-tasting alcoves, intimate patios for alfresco dining, gardening sheds, basement exercise rooms with saunas, studies for work and pleasure, free-flowing kitchen-into-living-room spaces.

“We’re doing a lot of our work for empty nesters and others over 50,” said Greg Childs, business development manager for Concord’s Gallagher Home Builders Inc., which handled the Vanderweils’ recent condo renovation. “People are less formal than they used to be. They want more intimate and yet communal spaces, for themselves and family.”
Whether it’s the perfect reading nook or a casual place to enjoy a glass of wine and good conversation, here are some of the more popular indoor and outdoor caves that people are creating for themselves.

Yoon S. Byun/Globe Staff

The room features wood paneling and club chairs to make it a “spot where I just want to hang out,” Bill Vanderweil said.

Indoor caves

Movie/entertainment rooms. They’re classic — and come in many different sizes and styles and prices. Paul Apkarian, owner of Paul Apkarian Architects Inc. in Westborough, said movie rooms ­— also known as “home theaters” or just plan “entertainment rooms” — remain the most popular dream of people trying to create that ultimate comfy, escape room. Depending on how extravagant people want to get with the electronics and furniture, the

ENERGY EFFICIENCY: Programmable thermostats can save you money

Models can seve you money.

 Programmable thermostats can trim about $180 a year from your energy bills by automatically reducing heating and cooling needs when you’re away or asleep. Sounds simple, but not necessarily. While some of the 30 models Consumer Reports tested were easy to set and use, others were so complicated that you might give up in frustration and end up spending more, not less.

That’s pretty much what was happening across the country, which is why you won’t find the Energy Star on any thermostats. The program stopped certifying them in 2009 mostly because they were hard to use. New standards that factor in ease of use are being developed.

But you don’t have to wait. Consumer Reports’ testers rated ease of use based on how simple each thermostat was to set up and make routine adjustments to before reading the manual and then, if needed, with the manual. Most thermostats can keep rooms close to the chosen temperature, and all the thermostats rated have basic pre-programmed settings. Here’s what else Consumer Reports’ testing found:

Displays and prompts improve. 
The top three models have colorful interactive touchscreen displays that were especially easy to use and see. You can zip through the prompts on the top-rated Venstar ColorTouch, $170. The Honeywell Prestige $250, and the Ecobee, $300, let you program them using prompts or by answering questions about your daily habits. And if you get stuck at work, you can adjust the Ecobee’s settings, using your computer or smartphone, to turn the heat on later.

Smarter isn’t always better. 
The Nest, $250, is a learning thermostat. It continually senses whether you are at home and

SELLING YOUR HOME: There’s No Such Thing As A Bad Real Estate Market For Sellers And Here’s Why

There’s really no such thing as a bad real estate market for sellers; it’s bad marketing with incorrect pricing and terms.

When I first heard that statement, my eyes rolled.

Now, if you’re anything like me, your first reaction is words I can’t write here; but I’ve learned and seen this to be true. Many of us, homeowners and real estate agents like, have been waiting year after year for the market to get better and go back to where it was in the hey day. You know, those days where the house was not a long-term investment anymore but a short-term get rich quick scheme.

We have been pricing and talking in the mindset of loss and giving the home away…Really?
What I have seen and learned is that every time homeowners come to terms with selling in today’s market and then pricing (and marketing) to win for today’s market; THEY DO.
They partner with a real estate agent team that knows 3 things:

1. How to Market – which is more than just adding it all over the internet and posting a sign for an open house
2. How to price
3. How to negotiate the best terms

I have seen this in the homes that have sold at or before the average days on the market and either at their price or above for a regular sale or in short sales that complete.

When I first heard the saying, “there’s really no such thing as a bad real estate market for sellers; it’s bad marketing with incorrect pricing and terms.” I thought, yes, those homeowners are getting their price but it’s not the price they wanted. They wanted the price they were supposed to get a few years ago; but they adjusted and understood today’s realities. Now there is such a thing as the right price and the wrong marketing; I’m not

MARKET TRENDS: Sales of U.S. Existing Houses Probably Held Near Two-Year High

Sales of previously owned U.S. homes probably held in October near a two-year high, indicating the recovery in residential real estate is being sustained by cheap borrowing costs, economists said a report may show today. 

Purchases held at a 4.75 million annual rate last month, according to the median forecast of 64 economists surveyed by Bloomberg. In August, demand reached a 4.83 million rate, the most since May 2010. Homebuilder confidence probably held at a six-year high in November, another report may show.

 

A consultant organizes pamphlets for an open house tour in Redondo Beach, California. Photographer: Patrick T. Fallon/Bloomberg

5:27

 

Nov. 16 (Bloomberg) -- Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors, discusses the U.S. economy and the outlook for a resolution to the so-called U.S. fiscal cliff. He speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg) 

Propelled by the lowest mortgage rates on record, cheaper properties and improved consumer sentiment, housing is one of the economy’s sources of strength. The pace of October sales underscores what Federal Reserve Chairman Ben S. Bernanke called “signs of improvement” in a market still hampered by strict bank-lending standards. 

“You’ve got low mortgage rates, you’ve got gradual improvement in the labor market, and you have very low inventories,” said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a subsidiary of the largest U.S. mortgage lender. “Housing is positioned to move significantly higher over the next year.”
The report from the National Association of Realtors is due at 10 a.m. in Washington. Bloomberg survey estimates ranged from 4.55 million to 5.05 million. 

The average rate on a 30-year, fixed mortgage declined to 3.34 percent last week, the lowest in data going back to 1972, according to McLean, Virginia-based Freddie Mac.

Homebuilder Sentiment

A gauge of homebuilder sentiment held at 41 in November after six consecutive increases, a 10 a.m. report from the National Association of Home Builders/Wells Fargo is projected to show today. Readings lower than 50 mean more respondents said conditions were poor.
The Standard & Poor’s Supercomposite Homebuilding Index has advanced 70 percent since the end of last year, outpacing the 8.1 percent gain in the broader S&P 500. 

“Continued weakness in housing -- reflected in falling prices, low rates of new construction, and historic levels of foreclosure -- has proved a powerful headwind to recovery,” Bernanke said last week. “It is encouraging, therefore, that we are seeing signs of improvement in the housing market in most parts of the country.” 

The Fed chairman is pressing on with record easing including a plan to buy $40 billion a month of mortgage-backed securities, in a bid to spur growth and reduce a 7.9 percent unemployment rate.

Last Recession

He has resorted to unorthodox policies six years after home prices started a plunge that knocked the economy into the longest recession since the Great Depression.
While tighter credit standards after a collapse in the subprime mortgage market were appropriate, “it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery,” Bernanke said. 

Some members of the Federal Open Market Committee said monthly mortgage bond purchases by the central bank may “reinforce the nascent recovery in the housing market,” according to minutes of the Oct. 23-24 meeting released Nov. 14. 

Existing-home sales have improved after reaching a low of a 3.39 million annual rate in July 2010. In the buildup to the subprime lending collapse and recession, purchases reached a peak of 7.25 million in September 2005.

Storm Sandy

Construction and home repair companies may get a lift from clean-up activity after superstorm Sandy, which swept up the Atlantic coast and left a path of destruction in the New Jersey and New York. The storm may provide a boost similar to that provided by Hurricane Irene, which added about $360 million in sales last year, Home Depot Inc. (HD) executives said on a Nov. 13 earnings call. 

“The property damage, as we understand it, related to Irene was about $16 billion; the property damage for Sandy is about $20 billion, so it would suggest possibly higher sales, but it’s impossible for us to know right now,” said Carol Tome, the Atlanta-based company’s chief financial officer. 

http://www.bloomberg.com/news/2012-11-19/sales-of-u-s-existing-houses-probably-held-near-two-year-high.html

SELLING YOUR HOME: Why Waiting Until Spring to Sell May NOT Make Sense

We have been happy to report that house prices have increased over the last several months. However, we have also warned that month-over-month prices since 2009 have softened in the fall and winter. We are beginning to see that situation repeat itself in 2012.

CoreLogic, in their latest House Price Index revealed that prices increased by 5% over last year. Yet, prices actually dropped .3% month-over-month (m-o-m). Analytics firm FNC, in their latest Residential Price Index, reported that prices increased 2.3% over the last year but prices remained unchanged m-o-m.

What Does This Mean for Sellers?

Sellers should be excited about the headlines showing price appreciation across the country for the first time in a long time. However, if you want to sell your home in the next 6-8 months realize that there is a better chance that prices will soften than appreciate during

ECONOMIC NEWS: Spain's banks see bad debts hit new high

Problem loans at Spain's banks hit a new all-time high in September, as the collapse of the country's property bubble continued to hurt the economy.

Bad debts, mostly loans to home buyers and property developers, reached 182bn euros ($233bn; £146bn) or 10.7% of bank assets, according to central bank data.

Spain's government announced a two-year suspension of evictions for the most vulnerable people last week.

Meanwhile, industrial orders fell sharply in Italy, separate data showed.

Total orders in September fell 12.8% from a year ago, and a seasonally-adjusted 4% from August, according to the Italian statistical office.

The data suggests that Italy's recession may be deepening again, after appearing to stabilise over the summer.

Repossession victims The latest Spanish bank data continues a trend that set in during 2008, with the bursting of the country's property bubble.

The banking system's questionable loans were equivalent to 17.4% of Spain's annual economic output in September, up from 17.0% in August, and 1.5% at the end of 2007.

An estimated 350,000 families have been evicted from their homes since Spain's property

MORTGAGE & FINANCE: Mortgage Rates Fall to Record Lows With 30-Year at 3.34%

U.S. mortgage rates declined to record lows, dropping borrowing costs after applications for refinancing rose for the first time in six weeks.

The average rate for a 30-year fixed mortgage dropped to an all-time low of 3.34 percent in the week ended today from 3.4 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate slipped to 2.65 percent, also a record, from 2.69 percent.


Mortgage rates at record lows have made refinancing more appealing and have helped the housing market recover by making purchases more affordable. Home prices are rising, in part because reduced interest rates help buyers afford more expensive properties, said Patrick Newport, an economist at IHS Global Insight in Lexington, Massachusetts.

Low rates “are playing an important role in stabilizing prices,” Newport said in a telephone interview yesterday. “They also help refinancing and it means you can manage to cut down on your mortgage payments, and one thing you can do is spend money. You can use that money to buy Christmas gifts.”

The Mortgage Bankers Association’s index of home-loan applications climbed 12.6 percent in the week ended Nov. 9. The refinancing gauge jumped 13.1 percent, while the purchase gauge rose 11 percent. Applications rebounded in East Coast states after dropping two

MARKET TRENDS: Home sales up 2% nationally

NEW YORK (CNNMoney) -- The pace of sales for previously owned homes rose in October, despite the devastation of Superstorm Sandy, in the latest sign of improvement for the long-battered housing market. 

Existing home sales rose to an annual rate of 4.79 million, seasonally adjusted, reported the National Association of Realtors on Monday. That's up 2.1% from September, when the revised annual rate of existing home sales was 4.69 million. And it's an increase of 11% year-over-year, when the annual rate was 4.32 million. 

That was also stronger than the forecast from analysts at Briefing.com, which called for an annual rate of 4.7 million existing home sales in October.
The National Association of Realtors said that sales had gone up nationwide, "even with some regional impact from Hurricane Sandy," the deadly storm that caused massive disruptions in the Northeast at the end of October.
Lawrence Yun, the association's chief economist, said the market is being driven by "growing demand with limited inventory" but it could run into strong headwinds from Sandy going forward.
"We expect an impact on Northeastern home sales in the coming months ... in storm-impacted regions," he said.


Home buyers are being lured by low mortgage rates. Last week, mortgage rates dropped again, pushing 15-year and 30-year fixed-rated loans to record lows.
Also, the National Association of Realtors said last week that the median down payment has sunk to 9% for home buyers this year, its lowest level since 2009.
Meanwhile, home prices have been inching up. The average home price in 20 major cities

U.S. homebuilder sentiment rose for a seventh consecutive month in November and hit its highest level in over six years as demand for new homes increased due to a shrinking supply of distressed and foreclosed inventory, the National Association of Home Builders said on Monday.

The NAHB/Wells Fargo Housing Market index rose to 46 from 41 the month before, the group said in a statement. Economists polled by Reuters had predicted the index would remain unchanged at 41. The index was at its highest level since May 2006.
However, the gauge remained below 50, showing that the housing market was still some way off full recovery. Readings below 50 mean more builders view market conditions as poor than favorable. The index has not been above 50 since April 2006.

Still, the measure has made strong progress over the last year, helping to cement optimism in the sector. In November last year it stood at just 19. Housing led the financial crisis of 2008-09 and has been one of the biggest overhangs in the economic recovery.

"Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said NAHB Chairman Barry Rutenberg in a statement.

"In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take

NEWS: Fleeing Taxes, France's Rich Are Putting Their Homes on the Market

PARIS — The tax changes slated for the 2013 budget by President François Hollande’s Socialist government are having an effect on the Paris luxury property market before they have even passed into law.

Quite a few of France’s most wealthy already have moved abroad to avoid the country’s stiff inheritance and wealth taxes. Now, real estate agents say, the younger, working wealthy also are on the move, unhappy at the prospect of being taxed at 75 percent on income of more than €1 million, or $1.27 million, and a capital gains tax of more than 60 percent on stocks, bonds and company sales, although protests have produced exceptions for investors and new business start ups.

“In the last eight months since the measures were revealed, over 400 new residences, each worth above €1 million, have come on the market as French entrepreneurs and investors leave France,” said Charles-Marie Gottras, president of Daniel Féau, a high-end French real estate broker.

“We are seeing the kind of luxurious, high-quality properties that one used to see once a year or every six months now arrive on the market every week,” he said.

The increased selection has altered the dynamics in a market that has long been characterized by high demand but little supply. Buyers now know they can negotiate, Mr. Gottras said, adding: “Prices have stabilized and even gone down a little.” Some agents say there has been a 3 to 5 percent decline in top-end values.

As Alexander Kraft, chairman and chief executive of Sotheby’s International Realty France, pointed out, “The fiscal changes are geared toward the seriously wealthy. The increase in numbers of residences for sale is not that significant, about 10 percent up, but in value it is very big. We are talking about exceptional properties starting at €10 million to more than 20 to €25 million.”

“To give you an example, in the past six weeks alone, we have sold three properties for €20 million each,” Mr. Kraft said. “Even we don’t usually sell those in a matter of weeks.”

Some of these trophy holdings normally would not even appear on the open market, he said: “They would instead be carefully sold to friends or family members.”

In the Sotheby’s portfolio, a Haussmann-style, 19th-century mansion in the 16th arrondissement reflects the kind of rarefied home now on the market. “The 1,000-square-meter living space has been completely restored in exquisite taste with beautiful

INSURANCE: Getting the most from your insurance after a storm

There is a sort of honeymoon period after a big storm, when insurance executives appear on the local news offering reassuring words. That period is about to end.

When this many people have extensive damage to their most significant asset, billions of dollars are at stake for the companies that have the power to make them whole. So there is no reason for policyholders to be anything but wary until their own check clears.

Here are the some things to watch out for:

INDEPENDENT ADJUSTERS Many people with damaged homes have started to meet with representatives to estimate repair costs. They may have introduced themselves as ‘‘independent adjusters,’’ but this is a misnomer. They represent the insurance company and are not neutral.


“These guys have a lot of work to do, and it’s a thankless job,’’ said Matthew Tennenbaum, who used to be an independent adjuster but now works for policyholders as a ‘‘public’’ adjuster in Cherry Hill, N.J. But Tennenbaum worries about their thoroughness.

“They’re going to see 10 properties a day and they’re quickly writing estimates,’’ he said.

The good news here is that these are not the people who make the final call on your claim. But many policyholders assume that their word is the final word.

WIND VERSUS FLOOD Homeowner’s insurance generally does not cover floods.

People without coverage but lots of damage from the storm surge might do one of a couple of things. A few stubborn ones will sue, arguing that if the wind drove the storm surge then it’s not really a flood. The Federal Emergency Management Agency may also offer some assistance.

Others may try to prove that wind damage, which is generally covered, was responsible for the loss.

REPLACE AND REPAIR After most storms of this size, prices rise. There may be a shortage

BOSTON HOUSING NEWS: State may not qualify for post-Sandy federal aid

Massachusetts homes and businesses were probably not hit hard enough by Hurricane Sandy to qualify for additional federal disaster aid, a state official said Friday.

Though many Bay State homes sustained damage from falling trees and flooding — and hundreds of thousands temporarily lost power — the uninsured damage total probably fell short of federal requirements for President Obama to sign a “major disaster declaration” for the state. There is no precise damage threshold for states to qualify for such a declaration, but they must paint a picture of extensive damage.

“We literally would have to come up with hundreds of homes that were uninhabitable,” said Peter Judge, spokesman for the Massachusetts Emergency Management Agency.

It’s still possible, Judge said, that the state could qualify for federal assistance to repave roads and repair other storm-ravaged government property. State government agencies would need to identify at least $9 million in damage to public infrastructure from the storm.


The Massachusetts Emergency Management Agency has received preliminary reports of significant damage on Nantucket and Martha’s Vineyard, but state inspectors are still surveying it.

The federal government has issued “major disaster declarations” for parts of New Jersey, New York, Rhode Island, and Connecticut.

Eqecat, a California firm that creates computer models to calculate the risk from storms, estimated that 84 percent of the $10 billion to $20 billion in insured losses from Sandy occurred

CREDIT: Credit Scores of Potential Homebuyers Are Improving

There have been numerous improvements in the economy and the housing market, specifically in the last few years, and that isreflected in the type of credit ratings carried by potential homebuyers nationwide through the end of last year.

With the slowly improving economy and jobs numbers, many consumers are now finding themselves in better financial shape than they were just a few years ago, and as a consequence, some are now mulling big financial decisions such as a return to the housing market, according to a report from the Federal Reserve Bank of Atlanta based on information in the Home Mortgage Disclosure Act database. In fact, through the end of 2011, the median credit score of a potential borrower who filed a home loan application was up 40 points from the end of 2006, more or less when the housing bubble burst. Further, that was the highest point observed in the past 12 years.

Interestingly, this comes at the same time as borrowers seemed to be more honest about their financial standing, the report said. Prior to the housing meltdown, it was not uncommon for borrowers to intentionally inflate and misrepresent their actual incomes -- and for banks to sign off on loan applications nonetheless. This was a major reason for the real estate crisis in the first place, as borrowers were granted home loans they couldn't afford (often with banks knowing full well that this was the case), then eventually defaulted and were foreclosed upon.

"Comparing home-purchase borrower incomes reported in the HDMA data with income reported by homebuyers in household surveys suggests that incomes on mortgage applications were likely significantly overstated during the peak of the housing boom," the Fed researchers said. "In more recent years, there is no evidence of overstated incomes."

However, despite the improvements, many consumers also faced a continued problem obtaining approval for their loan applications, the report said. Though consumers' median rating improved, the rate at which they were turned down for mortgages did not, holding steady from the 23 percent observed in 2010. Altogether, there were only 7.1 million mortgages approved last year, down 10 percent from 2010 and the lowest since 1995′s 6.2 million.

Consumers who are interested in buying a home may want to make sure their credit standing is as good as it possibly can be before applying, as many lenders say they will keep restrictions tight for some time.
http://realestate.aol.com/blog/2012/11/09/credit-scores-for-homebuyers-are-improving/

NEWS: Dealing With Delayed Closings After Hurricane Sandy

THE extensive power failures that have paralyzed the region in the wake of Hurricane Sandy have understandably delayed closings in mortgage deals that had otherwise been buttoned up. But lenders are adding to the logistical bottleneck by requiring that properties in affected areas be reinspected for damage.

“If you are in a FEMA-declared disaster area or emergency area,” said Jason Auerbach, a divisional manager for First Choice Loan Services, of Morganville, N.J., “banks are requiring an inspection of the home to affirm whether there was damage done. They are reinspecting properties to make sure it’s still a functional property that can be lived in.”

FEMA has declared disaster areas in much of coastal New York, New Jersey and Connecticut. However, even properties outside these areas may still be subject to another inspection because of agreements with the investors who bought closed loans, noted Joshua Weinberg, the senior vice president for compliance of First Choice.

For properties in areas that didn’t suffer extensive storm damage, the inspection may constitute no more than a drive-by. The delay in such cases may be no more than a few days.

Both buyer and seller may also be required to sign a form attesting that they agree the property suffered no storm-related damage. Regardless, buyers should do a thorough walk-through well before the day of closing, advises Scott Penner, a real estate lawyer in Milford, Conn.

“What we don’t want to have the day of the closing is that they go into the property and see

NEWS: housing market set to continue strong into 2013

The housing market recovery should continue through the coming years, assuming there are no further limitations on the availability of mortgage credit or a "fiscal cliff," according to forecast presentations at a residential forum here at the 2012 Realtors^®Conference and Expo.

Lawrence Yun , chief economist of the National Association of Realtors^®, said the housing market clearly turned around in 2012. "Existing-home sales, new-home sales and housing starts are all recording notable gains this year in contrast with suppressed activity in the previous four years, and all of the major home price measures are showing sustained increases," he said.

"Disruption from Sandy likely will be temporary, notably in New Jersey and New York, but the market is likely to pick up speed within a few months with the need to build new homes in damaged areas," Yun added.

Yun sees no threatening signs for inflation in 2013, but projects it to be in the range of 4 to 6 percent by 2015. "The huge federal budget deficit is likely to push up borrowing costs and raise inflation well above 2 percent," he said.

Rising rents, quantitative easing (the printing of money), federal spending outpacing revenue, and a national debt equal to roughly 10 percent of Gross Domestic Product are all raising inflationary pressures.

Mortgage interest rates are forecast to gradually rise and to average 4.0 percent next year, and 4.6 percent in 2014 from the inflationary pressure.

With rising demand and an ongoing decline in housing inventory, Yun expects meaningfully higher home prices. The national median existing-home price should rise 6.0 percent to $176,100 for all of 2012, and increase another 5.1 percent next year to $185,200; comparable gains are seen in 2014.

"Real estate will be a hedge against inflation, with values rising 15 percent cumulatively over

TAXES: Homeowner Tax Break Set To Expire

The clock is ticking on a tax break that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25 percent tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for forgiven amounts in short sales and principal reductions.

Related: How a Short Sale or Foreclosure Affects Your Credit

"People trying to do short sales are freaked out about it," said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. "They're telling me they'll do whatever it takes to close by the end of the year."

Should the tax break expire, a large number of mortgage borrowers could be affected. More than 50,000 homeowners go through foreclosure each month. Meanwhile, the number of short sales has tripled over the past three years to a rate of about half a million a year. And, under the terms of the $25 billion foreclosure abuse settlement, roughly 1 million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years.

"If there ever was a no-brainer in housing policy, this would be it," said Jaret Seiberg, a policy analyst for Guggenheim Securities.

Yet, Seiberg is skeptical the exemption will get extended. Now that the election is over, he thinks Congress will be heading into a "lame duck" session, and very little legislation will move forward through the end of the year.

Related: Are Short Sales Worth the Trouble?

In addition, the cost of the exemption could make it a point of contention, he said. The office

MARKET TRENDS: Real Estate Forecast 2013: The Housing Market

The housing market will improve moderately in 2013, but nobody will mistake this for a boom. The gains in activity and prices will be a welcome relief, but will leave many homeowners still underwater.

The usual way of discussing housing problems is misleading. Foreclosures, short sales, shadow inventory, upside-down mortgages are all symptoms. The fundamental problem that we have is an excess supply of housing units.
The normal housing vacancy rate for owned property (single family houses and condos not in the rental market) is around 1.5 percent nationally. Our high was three percent, but we are now down to 2.1 percent.  Rental properties are normally about seven to eight percent vacant. (Local norms may be higher or lower.) We reached a peak of 11 percent rental vacancy a few years ago, but have improved to 8.6 percent in the latest observation.  Despite recent gains, we still have too many houses for the current level of demand.

(Data note: these data are a little soft. They do not exactly match vacancy information from other sources, such as the decennial census. They should be taken as a general magnitude, not high fidelity information.)

The improvement we’ve seen recently results from a simple phenomenon: construction of new fewer housing units has been less than the growth of demand. Last year total units (single family houses plus the number of apartment units) ran just over 600,000. This year we’ll probably build about 750,000 units. At the peak of construction in 2005 there were 2.5 million units built. We need about 1.5 million new units per year to accommodate population growth, the desire for vacation homes as well as demolition of old units. That, too, is a soft number. The true annual need may be 1.4 million or 1.6 million, but it was never 2.5 million nor 0.6 million.

Our recent underbuilding has been the greatest aid to housing recovery. It did not act as fast

NEWS: Right away, housing challenges for Obama

Now that Congress remains divided after the election -- Republicans retained control of the U.S. House of Representatives and Democrats retained control of the U.S. Senate -- whether lawmakers can come to an agreement over the coming weeks remains a question.

1. The "fiscal cliff": The fiscal cliff is a series of tax increases and spending cuts that will go into effect unless U.S. lawmakers come up with an alternative plan to reduce the federal deficit by $1.2 trillion as required by the Budget Control Act of 2011. The spending cuts, known as "sequestrations," would automatically go into effect on Jan. 2 and be split evenly between defense spending and domestic spending.
The credit rating agency Standard & Poor's has said there's a 20 to 25 percent chance the U.S. economy will go into a double-dip recession should Congress fail to reach an agreement avoiding the fiscal cliff. S&P's deputy chief economist, Beth Ann Bovino, warned that such a scenario would cause home prices, currently at a bottom of 31 percent below their mid-2006 peak, to tumble to a record low of 40 percent below peak.
In a report released in September, the Obama administration called sequestration "bad policy" that "would be deeply destructive to national security, domestic investments, and core government functions." The president has put forward two deficit reduction proposals that included both spending cuts and revenue increases, but has run into opposition from some members of Congress who oppose tax increases and want to reduce the deficit solely through spending cuts, the report said. 

Given that Congress remains divided after the election -- Republicans retained control of the U.S. House of Representatives and Democrats retained control of the U.S. Senate -- whether lawmakers can come to an agreement over the coming weeks remains a question.

2. The mortgage interest deduction (MID): Revamping the mortgage interest deduction is one of the solutions proposed to head off the fiscal cliff and could be part of a broader plan to streamline the tax code by eliminating some loopholes and deductions. Some experts have said the MID, which costs the government about $90 billion a year, is unlikely to survive in its present form, though what would take its place, if anything, is unclear.
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Two years ago, a bipartisan deficit reduction commission recommended scaling back the MID, which is currently capped at mortgages worth up to $1 million for both principal and second homes and home equity debt up to $100,000. The deduction is available only to taxpayers who itemize.

The commission, often referred to as Simpson-Bowles, proposed turning the deduction into a 12 percent nonrefundable tax credit available to all taxpayers, capping eligibility to mortgages worth up to $500,000, and eliminating the deduction on interest from second homes and home equity debt.

The National Association of Realtors, which has consistently defended the mortgage interest deduction in its current form, was highly critical of the recommendation, claiming any changes to the MID could depreciate home prices by up to 15 percent, and promising to "remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest."

3. Mortgage debt forgiveness: Another homeowner tax break may be on the table in fiscal negotiations: the Mortgage Debt Relief Act of 2007, which is set to expire at the end of this

MARKET TRENDS: NAR: Home Prices, Demand Rise as Low Rates Bring Buyers Off the Sidelines

The median price of a single family home in the U.S. rose to $186,100 in the third quarter of 2012, 7.6 percent over the median price of $173,000 one year earlier.  According to the National Association of Realtors® (NAR) this was the strongest year-over-year price increase since the first quarter of 2006 when the median price rose 9.4 percent and follows a strong bump of 7.2 percent in the second quarter of 2012.

The increases in home prices are also growing more broad-based.  In the second quarter 110 of the 149 metropolitan statistical areas (MSAs) covered by NAR had increases, in the third quarter increases were seen in 120 MSAs and three of the four regions.   

Median prices for condominiums and cooperatives in the 54 MSAs covered by that portion of the NAR survey rose 7.7 percent on an annual basis to $180,800.  Thirty-three of the areas had increases and 21 declines.

Lawrence Yun, NAR chief economist, said the growth in home prices gets down to supply and demand.  "Housing inventories have been gradually trending down from a record set in the summer of 2007," he said.  "Earlier this year, a broad equilibrium began to develop in most areas between home buyers and sellers, which led to a sustained upturn in home prices.  We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to increase supply to meet the needs of our growing population and households." 

NAR said some of the price gain resulted from a smaller share of distressed home sales in

SELLING YOUR HOME: 6 Tips for Selling Your Home This Fall

Fall is second only to spring as the busiest time of the year for home sales -- and Idaho Realtor Gail Hartnett sees this autumn as an especially good time to have your property on the market.

"Inventory is low, so if you have your house on the market, and it is priced well, it's going to sell," says Hartnett, a National Association of Realtors regional vice president and an agent with Keller Williams Realty Boise.

Home sales in Idaho and many other U.S. locales are rebounding this fall as low prices, improved consumer confidence and rock-bottom mortgage rates bring buyers out. At the same time, many would-be sellers are either too discouraged to put homes on the market or are waiting for prices to rise, creating a shortage of available homes in much of the country.

Add in the fact that many people travel to their hometowns for Thanksgiving, football games and the like, and Hartnett believes it's a bad idea to keep your property off of the market this fall.

"People who've been thinking of moving back home will look at some houses when they come for a visit, and finding the perfect place will push them into action," she says. "But if your place isn't on the market, they won't see it."

Houses that boast green grass and lush gardens in the spring, though, look a lot less inviting during the fall.

Here are six things Hartnett recommends all would-be sellers do this autumn to adjust for that and get a home moving:

1. Give your home a cozy smell.

Fall brings back childhood memories of hayrides and Thanksgiving dinners for many, and Hartnett recommends maximizing your place's "homey" feeling this time of year.

The Realtor always has spiced cider, fresh-baked cookies or other warm and friendly fare cooking up during showings and open houses at properties she's listing.

"We take some big old pots and dump cider in them, then warm it up and the whole house smells good," Hartnett says. "It's just a warm, homey smell that makes people feel good when they enter."

She places cider and cookies ready for serving in a strategically out-of-the-way place visitors reach only after touring the house. That way Hartnett has a chance to "pitch" the house to buyers while they snack.

2. Rake up the leaves.

You don't have to remove every single leaf as soon as it falls in your home's yard, but you have to keep the property's exterior looking tidy and well-maintained.

"Leaves actually look nice as long as they have some color to them," Harnett says. "But you need to make sure that your walkways are swept clear for safety purposes."

3. Use seasonal decorations.

Homes in most parts of the country lack the blooming flowers and grass that make their yards

HOME INSURANCE: What's Covered, What Isn't

Looking to know more about home insurance in the wake of Hurricane Sandy? Republished here is one of AOL Real Estate's best guides to understanding a homeowners policy. 
Many homeowners are baffled by trying to figure out the maze that is home insurance. Take Stephanie and Eric Jones, who for 15 years paid too much because they weren't clear on which coverage they needed and which they didn't.

Their local insurance company wasn't very responsive to the Jones' inquiries about how they could lower their rates. When the couple decided to change agencies, inspectors were sent to their property, and they uncovered roof issues. One agency was adamant that a new, $10,000 roof was needed, while another said that a simple $400 repair would be enough. It was then that they learned how different home insurance agencies could be.

"The Jones' would have definitely benefited from doing some research into the types of policies available to consumers," says Eric Sharfstein, claims director with National Underwriters Insurance. "It's easy to just say yes to everything, thinking that's the best course of action and, sadly, that leads to wasted money." Having too little coverage isn't ideal either, he says, because you may end up paying out of pocket for damage to your home.

To help, here's a comprehensive list of what homeowner's insurance covers and what it doesn't:


Differences Between Home insurance and Fire Insurance:

Dwelling fire policies are less expensive, but coverages are more limited. The more-comprehensive dwelling form is the DP-3. Dwelling fire policies are most often used by

HOME PRODUCTS: Picking the right space heater

Various models can deliver warmth, but not necessarily savings

The best space heaters can quickly heat you and an average size room for as little as $40. Electric heaters tested by Consumer Reports include an array of safety features that reduce the risk of fire.

But that doesn’t mean all heaters are risk-free.

Many of the models tested got hot enough to cause the equivalent of a bad sunburn within a second of contact.

Almost all the hot spots are small and relatively hard to reach, though the one on the Sunbeam SQH310, $50, covers 112 square inches. There’s also a hot metal bar at the top that’s tempting to grab as a handle. The Sunbeam didn’t get hot enough to pose a fire risk, but it singed one of the terry-cloth lab towels used in the magazine’s fire-safety tests.


Consumer Reports tested 18 space heaters. Here are the details:

Dyson wins, but not in value. The fastest space heaters brought Consumer Reports’ 200-square-foot test chamber from a chilly 63° F to a comfy 70° F in 15 minutes or less. Consumer Reports also used a test dummy with heat sensors to see how quickly models would heat you and others if you were directly in front of them. Speedier spot heating helped Dyson’s AM04, $400, edge out the other top performers. But the Holmes HFH436, $40, did virtually as well and includes a start-up timer for preheating cold rooms.

Larger models offer mostly style. Paying more for the top-scoring larger space heaters buys a fancier wood casing. The $400 Heat Surge HT-XL has a fake-flame display and a cabinet the company touts as Amish-built. But like most heaters tested, its working parts hail from China. The Duraflame 10HM4126-0107, $230, performed similarly and trades the fake flames and Amish cachet for friendlier controls and a much lower price. But neither of those heaters performed better than the best smaller models.

Three were slow to heat. Larger heaters can also be slower at heating. Leisurely room and spot heating dinged the Soleus Air HM2-15R-32, $80, Consumer Reports tested and put the DeLonghi RD0715, $75, and wall-mounted Eco-Heater NA40045, $95, at the bottom of the ratings.

How to choose

Here’s what else to consider while shopping:

Choose the right type. Look for fast spot heating if you care more about quickly heating one or

BOSTON HOUSING NEWS: Sales surge for condos in Boston’s core areas

Boston’s robust downtown condominium market is getting hotter, with sales up more than 25 percent in the third quarter and the median selling price near a peak level, according to figures scheduled to be released Thursday.

The report by LINK, a Boston data-tracking company, says condo sales in 12 core areas of the city totaled 1,043 between July and September, a 26.3 percent increase compared with the same period last year.

The median price swelled to $486,000, or 6.17 percent more than during the third quarter of 2011 and the second-highest median ever — after the second quarter of this year, when the price hit $511,000, LINK said.

The downtown market suffered only slight price drops during the housing downturn, especially compared with values statewide.


As defined by LINK, the downtown Boston market encompasses 12 neighborhoods, including the Back Bay, Beacon Hill, Fenway, the North End, the South End, and South Boston.

Jamaica Plain, Allston, Dorchester, and Mattapan are excluded from the tabulations.

The surge in downtown sales is being fueled by low interest rates and rising consumer confidence, real estate specialists say. Prices are escalating mostly because there are relatively few condos available, increasing competition among prospective buyers.

Long-term, however, the market’s growth could be limited if inventory continues to fall short of