Fiserv Predicts Home Prices to Drop Another 4.9% in Year Ahead
07/29/2010 By: Carrie Bay
Despite recent increases in a number of the industry’s home price measurements, and even an uptick in the company’s own index of residential property prices, Fiserv Inc. says the gains will be short-lived. The Wisconsin-based information technology firm is forecasting home prices to fall by nearly 5 percent more over the next 12 months.
According to the Fiserv Case-Shiller Indexes, which covers trend data in 384 U.S. markets, single-family home prices in the United States rose 2 percent in the first quarter of 2010 compared to a year earlier, Fiserv reported Thursday.
It was the first year-over-year gain recorded by the company since 2006, but Fiserv says the national numbers mask the broad declines seen in most markets. Home prices were actually lower in 303 of the 384 metro areas included in the Q1 study.
Fiserv expects home prices nationally to fall by another 4.9 percent in the year ahead, as unemployment remains high, mortgage rates rise, and markets such as Florida,
Arizona, and Nevada add even more distressed properties to their inventories.
“The stabilization of residential real estate markets will take many years as buyers and sellers try to find price levels that clear large inventories of vacant homes from the market,†said David Stiff, Fiserv’s chief economist.
“Consequently, we expect to see prices bounce up and down around their lows for the next two to three years, especially in markets that experienced the largest home prices bubbles,†Stiff continued. “This will result in alternating bouts of optimism and pessimism regarding the housing market recovery… [and] will make it difficult to know exactly when the housing market has reached its bottom.â€
Steep home price declines are expected to continue in markets that have been hurt most by the housing crisis. From the first quarter of 2010 through the first quarter of 2011, Fiserv projects average home prices in Nevada to drop another 11.1 percent. In Arizona the company predicts a decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
According to the Fiserv Case-Shiller Indexes, at the end of the first quarter 2010, the median U.S. home price was $166,000. The median monthly mortgage payment fell slightly to 13 percent of median family income.
The S&P/Case-Shiller Home Price Indices released earlier this week showed that prices were up 1.2 percent in May compared to April, and were 4.6 higher than May 2009. But Standard & Poor’s put forth the same prognosis as Fiserv, that the gains were making only a temporary showing.
From: http://www.dsnews.com/articles/fiserv-predicts-home-prices-to-drop-another-49-in-year-ahead-2010-07-29
Friday, July 30, 2010
Tuesday, July 27, 2010
Home Prices Tumble in Most Distressed Property Categories in June
Home Prices Tumble in Most Distressed Property Categories in June
07/26/2010 By: Carrie Bay
A drop in homebuyer activity following the contract deadline for the federal tax credit incentive helped trigger a noticeable decline in home prices between May and June, according to an industry study released Monday by the research firm Campbell Surveys.
The company’s latest market analysis found that home prices fell in three out of four property categories last month. Average prices tumbled by 6.8 percent for move-in ready foreclosed properties, 6.3 percent for short sales, and 4.6 percent for non-distressed properties. In contrast, prices for damaged foreclosed properties increased by 5.9 percent on average in June.
“These price declines are related to decreased homebuyer demand surrounding the end of the tax credit,†noted Thomas Popik, research director for Campbell Surveys. “Some housing market analysts had expected demand to remain strong through the end of June, but in retrospect it’s clear that the peak of first-time homebuyer activity occurred three months earlier, in March.â€
The first-time buyer share of home purchase transactions was 42 percent in June, according to the survey – well below the 48 percent level reported in March. This reflected the fact that first-time homebuyers were given a federal tax break of up to $8,000 for buying a primary residence, provided they were under contract by April 30.
One Florida-based real estate agent responding to the survey commented, “Prices are dropping…same house that had 2 showings a day in April with hopes of a closing by June at $139,000 now gets a showing of just one a week if we are lucky and at $129,000.â€
Another agent located in Ohio said, “Buyers just plan on deducting the $8,000 off what they are going to offer now. So, now prices are dropping to compensate for the credit not being available.â€
The survey results suggest that home prices are likely to continue their decline in the months of July and August.
Real estate agents were asked in the June survey, “With the end of the homebuyer tax credit, do you notice prices for contracts signed in June going up, down, or staying flat?†Agents responding “down†outnumbered those responding “up†by a ratio of 10 to 1.
“Contracts signed in June will be closing in July and August,†Popik explained. “That’s why we know prices for closed transactions will continue their decline. But this won’t be reflected in the publicly-released price indexes until October or November.â€
Campbell’s monthly real estate survey is conducted in conjunction with Inside Mortgage Finance and queries more than 3,000 real estate agents nationwide to provide a snapshot of home sales and mortgage usage patterns.
From: http://ping.fm/iPGtD
07/26/2010 By: Carrie Bay
A drop in homebuyer activity following the contract deadline for the federal tax credit incentive helped trigger a noticeable decline in home prices between May and June, according to an industry study released Monday by the research firm Campbell Surveys.
The company’s latest market analysis found that home prices fell in three out of four property categories last month. Average prices tumbled by 6.8 percent for move-in ready foreclosed properties, 6.3 percent for short sales, and 4.6 percent for non-distressed properties. In contrast, prices for damaged foreclosed properties increased by 5.9 percent on average in June.
“These price declines are related to decreased homebuyer demand surrounding the end of the tax credit,†noted Thomas Popik, research director for Campbell Surveys. “Some housing market analysts had expected demand to remain strong through the end of June, but in retrospect it’s clear that the peak of first-time homebuyer activity occurred three months earlier, in March.â€
The first-time buyer share of home purchase transactions was 42 percent in June, according to the survey – well below the 48 percent level reported in March. This reflected the fact that first-time homebuyers were given a federal tax break of up to $8,000 for buying a primary residence, provided they were under contract by April 30.
One Florida-based real estate agent responding to the survey commented, “Prices are dropping…same house that had 2 showings a day in April with hopes of a closing by June at $139,000 now gets a showing of just one a week if we are lucky and at $129,000.â€
Another agent located in Ohio said, “Buyers just plan on deducting the $8,000 off what they are going to offer now. So, now prices are dropping to compensate for the credit not being available.â€
The survey results suggest that home prices are likely to continue their decline in the months of July and August.
Real estate agents were asked in the June survey, “With the end of the homebuyer tax credit, do you notice prices for contracts signed in June going up, down, or staying flat?†Agents responding “down†outnumbered those responding “up†by a ratio of 10 to 1.
“Contracts signed in June will be closing in July and August,†Popik explained. “That’s why we know prices for closed transactions will continue their decline. But this won’t be reflected in the publicly-released price indexes until October or November.â€
Campbell’s monthly real estate survey is conducted in conjunction with Inside Mortgage Finance and queries more than 3,000 real estate agents nationwide to provide a snapshot of home sales and mortgage usage patterns.
From: http://ping.fm/iPGtD
Tuesday, July 13, 2010
HUD taking a closer look at added realty fees - washingtonpost.com
HUD taking a closer look at added realty fees
Kenneth R. Harney
Saturday, March 20, 2010
Does it matter whether a real estate agent charges you a flat commission rate -- say 6 percent -- or quotes you a flat rate but adds hundreds of dollars labeled an "admin" or administrative fee?
A top federal housing official says it might matter a lot, especially when minimal or no separate services are performed to justify charges beyond the regular commission.
Helen R. Kanovsky, general counsel at the Department of Housing and Urban Development, clarified the government's position on controversial add-on fees in a recent letter to industry lawyers. During the past several years, many brokerage companies began adding fees onto their commissions to generate higher revenue. The fees came with a variety of names -- "processing" and "ABC" among others -- and were charged to sellers and buyers, payable at closing.
But a U.S. District Court decision last year threw the industry into an uproar when a judge concluded that add-on fees violate federal law when there are no specific services performed to justify the extra cost. Though the decision directly affected only an estimated 30,000 transactions by one brokerage firm based in Alabama, the National Association of Realtors and other industry groups urged brokers and agents to reexamine their approach to pricing.
HUD, the agency that oversees federal consumer protections in real estate settlements across the country, never issued detailed guidance to the industry following the court decision on what's legal -- and what's not -- until Kanovsky's letter. Here's what she said, in essence: Federal law does not govern how much realty brokers can charge their customers. But it does govern how brokers and agents disclose their compensation to consumers.
Commissions may be quoted "using a flat fee, a percentage of the sales price, or a combination" of the two. The revised HUD-1 settlement sheet in use nationwide since Jan. 1 has lines where the commission charges and splits can be listed. However, Kanovsky warned that if the total charges "exceed the amount of the commission for listing and selling the home that are reflected in the real estate broker's or agent's listing agreement," then HUD has the legal power to review the extra charge "to determine whether additional services were provided" to justify the add-on.
If little or no services are performed, HUD would treat this as a violation of the Real Estate Settlement Procedures Act, subject to significant penalties. Kanovsky also warned about fees charged when there is no contract or agreement permitting the agent or broker to impose those charges. For example, if a listing broker charged the buyer an administrative fee of $250 but there was no contractual language sanctioning the charge, HUD might treat that add-on as an illegal fee.
What's the likely practical effect of HUD's clarifications? According to Steve Murray, a consultant to real estate brokers and editor of Real Trends, an industry journal, many of the largest firms tightened up their procedures on commission rates and fees in the wake of last year's district court decision.
But some smaller and midsize firms "probably haven't gotten the word yet," Murray says, and are still quoting fees in ways that could -- if consumers filed complaints with HUD -- put agents and brokers in legal jeopardy. Still other firms have agents who tack on and pocket their own extra fees on top of the broker's commission and administrative fees -- a practice that Murray considers vulnerable to legal challenge.
Brokers who quote admin fees on top of their commissions insist that they constitute an integral part of their compensation package and are fully justified by the work provided to clients. Chris Heller of Heller Real Estate Group in Encinitas, Calif., says his standard charge is 6 percent plus a $695 "transaction" or admin fee.
The fee pays for the work of the "administrative people" who assist on all transactions, according to Heller. Only two out of 10 clients even ask about the charge or its purpose, he said, "and maybe one out of 10 takes issue with it."
Northern Virginia broker Frank Borges Llosa, who runs Frankly Realty, is critical of add-on fees, calling them "sneaky" and "bogus." He says he welcomes HUD's clarification on the issue, and believes that when all compensation is quoted as "the commission, it's a lot clearer" to consumers, and "it's more open to negotiation" upfront.
Bottom line: Ask about all compensation and fees in any transaction. If you're asked to pay fees you've never heard of, or that come with vague justifications, don't roll over. Just say no.
From: http://ping.fm/GoPp1
Kenneth R. Harney
Saturday, March 20, 2010
Does it matter whether a real estate agent charges you a flat commission rate -- say 6 percent -- or quotes you a flat rate but adds hundreds of dollars labeled an "admin" or administrative fee?
A top federal housing official says it might matter a lot, especially when minimal or no separate services are performed to justify charges beyond the regular commission.
Helen R. Kanovsky, general counsel at the Department of Housing and Urban Development, clarified the government's position on controversial add-on fees in a recent letter to industry lawyers. During the past several years, many brokerage companies began adding fees onto their commissions to generate higher revenue. The fees came with a variety of names -- "processing" and "ABC" among others -- and were charged to sellers and buyers, payable at closing.
But a U.S. District Court decision last year threw the industry into an uproar when a judge concluded that add-on fees violate federal law when there are no specific services performed to justify the extra cost. Though the decision directly affected only an estimated 30,000 transactions by one brokerage firm based in Alabama, the National Association of Realtors and other industry groups urged brokers and agents to reexamine their approach to pricing.
HUD, the agency that oversees federal consumer protections in real estate settlements across the country, never issued detailed guidance to the industry following the court decision on what's legal -- and what's not -- until Kanovsky's letter. Here's what she said, in essence: Federal law does not govern how much realty brokers can charge their customers. But it does govern how brokers and agents disclose their compensation to consumers.
Commissions may be quoted "using a flat fee, a percentage of the sales price, or a combination" of the two. The revised HUD-1 settlement sheet in use nationwide since Jan. 1 has lines where the commission charges and splits can be listed. However, Kanovsky warned that if the total charges "exceed the amount of the commission for listing and selling the home that are reflected in the real estate broker's or agent's listing agreement," then HUD has the legal power to review the extra charge "to determine whether additional services were provided" to justify the add-on.
If little or no services are performed, HUD would treat this as a violation of the Real Estate Settlement Procedures Act, subject to significant penalties. Kanovsky also warned about fees charged when there is no contract or agreement permitting the agent or broker to impose those charges. For example, if a listing broker charged the buyer an administrative fee of $250 but there was no contractual language sanctioning the charge, HUD might treat that add-on as an illegal fee.
What's the likely practical effect of HUD's clarifications? According to Steve Murray, a consultant to real estate brokers and editor of Real Trends, an industry journal, many of the largest firms tightened up their procedures on commission rates and fees in the wake of last year's district court decision.
But some smaller and midsize firms "probably haven't gotten the word yet," Murray says, and are still quoting fees in ways that could -- if consumers filed complaints with HUD -- put agents and brokers in legal jeopardy. Still other firms have agents who tack on and pocket their own extra fees on top of the broker's commission and administrative fees -- a practice that Murray considers vulnerable to legal challenge.
Brokers who quote admin fees on top of their commissions insist that they constitute an integral part of their compensation package and are fully justified by the work provided to clients. Chris Heller of Heller Real Estate Group in Encinitas, Calif., says his standard charge is 6 percent plus a $695 "transaction" or admin fee.
The fee pays for the work of the "administrative people" who assist on all transactions, according to Heller. Only two out of 10 clients even ask about the charge or its purpose, he said, "and maybe one out of 10 takes issue with it."
Northern Virginia broker Frank Borges Llosa, who runs Frankly Realty, is critical of add-on fees, calling them "sneaky" and "bogus." He says he welcomes HUD's clarification on the issue, and believes that when all compensation is quoted as "the commission, it's a lot clearer" to consumers, and "it's more open to negotiation" upfront.
Bottom line: Ask about all compensation and fees in any transaction. If you're asked to pay fees you've never heard of, or that come with vague justifications, don't roll over. Just say no.
From: http://ping.fm/GoPp1
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