As any good Realtor will tell you, price moves a home. But sometimes Realtors (as well as sellers) are afraid to take their own advice. As housing evaluations have dropped around the country, listing prices have been slow to follow. To get the job done, and your home sold, a price reduction might be in order. However, nothing beats pricing a home correctly from the start. Even with price reductions, you may never fully catch up the the market. No groundhog has popped its head up to officially declare the housing decline over.
Here is a slide show of cities leading the country in price reductions.
Zero percent kitchen: n. a kitchen remodeled at the height of the real estate and credit bubble, between 2001 and 2006, featuring high-end details such as granite or Corian countertops; designer cabinets; stainless steel appliances and upgraded flooring (e.g. hardwood or travertine tile). Improvements were paid for with zero percent financing programs originated at home improvement stores.
When the dust finally settles from the collapse of the housing and credit markets, one indelible mark will remain: the zero percent kitchen. Prior to the run on home prices in the early 2000’s, and easy access to credit, solid-surface countertops, stainless steel appliances, and hardwood floors were appointments once reserved for high-end homeowners. With the advent of zero percent financing by such superstores as The Home Depot and Lowe’s Home Improvement, these upgrades became easier to attain for middle class America. Of course, this came at a cost to consumers. After six moths to one year, interest rates under these credit programs skyrocketed to nearly 30% on unpaid balances.
With short sales, foreclosures and other distressed sales on the rise, today’s homebuyer has a greater opportunity to purchase an entry level home with a zero percent kitchen. Although the return on investment is not as high as it once was for these improvements, it can give a home a big edge in the market place when competing with properties that still have the builder’s standard kitchen.
If you are a buyer looking at foreclosures, and the homes you like lack a zero percent kitchen, don’t worry. The FHA 203k rehab loan may still afford you the opportunity of having your dream kitchen.
And don’t get us started on the zero-percent bathroom.
DHW: Do you think the ‘zero percent kitchen’ will stand the test of time?
Did you know: The term ‘zero percent kitchen,’ originated on desperatehousewise.com
The Capital published an intriguing article addressing the potential side-effects of expanding the housing tax credits beyond first time homebuyers. The article raises some fair questions with regard to existing homes needing to be liquidated so that current homeowners can take advantage of the housing tax credits now afforded to them. The Capital article focuses on housing inventory in D.C. and its surrounding area. However, this potential side-effect could present itself in other parts of the country.
DHW asks: Do you think expanding the housing tax credits beyond first time homebuyers will increase housing inventories?
Lawrence Yun, chief economist for the National Association of Realtors, predicted on Friday that home prices will rise in 2010. If his prediction holds true, home prices will see their first increase in four years.
Yun pointed to the current price-income ratio of 2.4 as evidence of pent-up demand in the market. The price-income ratio accelerated from a norm of 2.6 in 1984-2001 to 3.3 in 2005. This means the price-income ratio has dipped below its pre-bubble rate.
The housing tax credit extension is also seen as a contributing factor to rising homes prices next year.
DHW asks: Do you think home prices will rise in 2010?
U.S. foreclosures sank for a third consecutive month in October, down 3% from the previous month. However, many feel this trend will not continue. Foreclosure notices were curtailed in many states due to temporary, legislative intervention. CNBC reported Nevada foreclosures “dropped 26 percent from the previous month because of new legislation requiring mediation before initiating foreclosure proceedings.” Illinois had similar legislation, but foreclosure notices skyrocketed there 56% in October from the previous month.
The Miami Herald reported the Federal Housing Administration (FHA) is temporarily relaxing underwriting guidelines for some condominium communities. The changes are intended to increase condo sales and put occupants in otherwise vacant units.
DHW asks: Do you agree with the FHA’s decision to relax condo underwriting guidelines?
Last week, CitiMortgage suggested in a USA Today article that 1 in 5 homeowners currently in default of their mortgage are doing so strategically or voluntarily. They cite Sharon Sakson as one of these ’strategic defaults.’ Ms Sakson was laid off as a television writer and producer. After losing her job, she ‘burned through her savings to pay her mortgage.’ Burned through her savings. Ms Sakson is possibly the worst strategist I know. She strategically lost her job then voluntarily burned through her savings to make her mortgage payments. She eventually ‘walked away’ from her New Jersey home.
Clearly, we’re made to think Sakson and others who ‘walk away’ from their homes are bad people. How CitiMortgage and other lenders can get away with this type of character assassination is beyond belief. Even more unbelievable, USA Today refuses to call lenders out on this practice.
Readers should also note the USA Today article is not entirely accurate with regard to the seven-year wait period. If the foreclosed property is a primary residence, a borrower may be eligible for a new mortgage in five years.
DHW asks: USA Today’s decision to ‘blame the victim’ struck a nerve with a lot of folks at DesperateHouseWise. Have you had to walk away from your home?
After dropping land and land deals like a bad habit, builders are scrambling to rebuild their lot inventories. The AP reports that builders are venturing back into once distressed areas that now appear to be stabilizing, selecting ‘choice’ lots to restore the inventories they developed or sold off to investors.
DHW asks: Do you think rebuilding land inventory now is a wise move for builders?
DesperateHouseWise.com added a new page to its site. Modification Center offers helpful information for homeowners seeking a loan modification or refinance. Find information about Making Home Affordable and local foreclosure prevention events. You can even find a free, HUD-approved housing counselor.
DHW also added Housing Tax Credits. This page provides in-depth information regarding the recent extension and additions to the housing tax credits.
DHW asks: Have you applied for a loan modification? How was your experience?