We have been very optimistic on this site before when it comes to the housing recovery.  Each time we have been disappointed!  However an article from DS News reports that with banks loosening credit standards, the housing crisis could end in 2012.  From DS News,

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.

This is good news and action that we hope sticks around for a while. Meanwhile home prices continue to drop according to the latest statistics from Case-Shiller.

Analysts were expecting a year-over-year drop in the range of 3.2 to 3.4 percent, holding constant with the annual declines reported for October of -3.2 percent for the 10-city composite and -3.4 percent for the 20-city measurement.

Eighteen cities’ annual returns were in negative territory in November. Detroit and Washington, D.C. were the only exceptions. At -11.8 percent, Atlanta continued to post the lowest annual results.

Realtors from around the country are reporting there is life in the housing market. That’s some good news!

From Pittsburgh to San Jose, several cities across the country are poised for a solid real estate recovery, according to an article in Forbes via MSNBC.com.  Strong employment numbers and a surprising surge in new home construction seem proof positive that recovery is imminent.

All of the cities that made our list share one common factor: a relatively strong job market. “For real estate to do well you want to see two things: that incomes are growing rapidly like they are in a market like San Jose … and that the growth in jobs attracts other people to that market,” says Ingo Winzer, founder and president of Local Market Monitor. However, job growth should be looked at as a bullish housing indicator only if the unemployment rate is already relatively low — that suggests local companies are creating new jobs rather than rehiring for positions they cut during the recession.

If you live in Boston, Pittsburgh, Rochester, NY, Austin, Raleigh, or New Orleans, the news may be good for sellers in 2012.

Photo by monkeyatlarge.

With 25 percent of delinquent mortgages across the nation belonging to investors, flippers played a big role in the housing implosion that began in 2006. According to MSNBC.com, purchases by people who owned other homes contributed significantly to the inflating housing bubble – ramping up prices across the nation.

By that same inflation of prices, values dropped just as precipitously when the bubble burst.

Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide, and more than a third in Arizona, California, Florida, and Nevada from 2007 to 2009.

As a result, millions of homeowners saw their home values decline so that they were worth less than the original purchase price. Foreclosures skyrocketed as people couldn’t or refused to pay their underwater mortgages. Residential construction also languished, putting hundreds of construction workers in the hardest-hit states out of work.

Cash buyers are best positioned today to step in and save the housing market.

When my husband and I bought our first house, we had to come up with about $8,000 for a down-payment and our interest rate – with great credit – was 8 percent.  We went from renting a duplex for $325 per month to a house payment of about $750 every month.

At today’s rates, the house payment would be about $510 per month (and that includes insurance and taxes)!  Florida agent Marco Giancola also recalls the days of high interest rates when he bought his first home,

It all hit me about a month later as I wrote the check for the first mortgage payment and discovered the interest rate was 18%. This memory popped into my head as I read that Freddie Mac announced on Thursday that the mortgage rates ticked up to 4 percent from 3.99 percent on a 30 year loan. Six weeks ago, it dropped to a record low of 3.94 percent, according to the National Bureau of Economic Research.

If you can qualify for a home loan, have good job security, a good down payment (and we’ve said this before here at the Shak), NOW is the time to buy!

While I do not believe my family is underwater in the value of our home, after almost nine years of living here, we are only at the “break even” point.  That is absent any real estate agent fees that would be paid if we chose to sell.  That is if there is no further job loss.  That is barring any major medical problem and falling behind on payments.

According to MSNBC.com, 29 percent of all homes are now underwater.

Homes with underwater status are often considered risks for future foreclosure, since owners could have trouble refinancing or selling and may opt for a foreclosure via “strategic default” if they feel they will never regain their lost equity.

[Stan] Humphries estimates that home values will bottom out in 2012 at the earliest and said the foreclosure market will remain “robust” for the next two to four years.

There are a lot of unknowns in this  never-before-seen housing market, but it will eventually return to normal.

However, in the informal world of the feel of everyday man on the street, there actually has been a peep of consumer confidence by some long-time businessmen in my community. There is now talk of developing a small shopping area behind one of our local grocery stores.

A good friend of mine has determined she just can not afford to sell her house through a real estate agent because of the cost of commission for a house with a value that dropped.  She is trying to sell her house on her own.  Meanwhile, more sellers are finding that the advise of agents is invaluable so there has been a drop in the number of “For Sale by Owner” houses on the market.  From Realty Times,

FSBO sales accounted for 14 percent of the market in 2003 and 2004 when the market was booming. Sellers took advantage of the fact that many times a simple sign or newspaper listing could sell a home in days, especially in highly desirable market.

2010 saw only 9 percent of sales originating from FSBOs. According to the report, the majority of FSBOs take place in rural areas and central city locations, both areas that experience less traffic. The boom of the mid-2000s is over.

Whether it’s through an agent or on your own, any sale with a fair price is a good deal today!

There is a lot of speculation about why sales remain slow in the real estate market – especially while interest rates are low and houses are very affordable.  Qualifying for a home loan is more difficult, that is true.  However given the ease in which buyers previously qualified – especially when they really could not afford to buy a home – the stricter rules are a huge necessity.

George Souto of MIddletown, Connecticut has a different theory about why sales remain slow in the very generous interest rate climate,

Until homebuyers stop being worried about a recession, fear of losing their jobs, and confidence restored in our economy, it will not make much difference how low the mortgage rates get, and home prices drop, Real Estate Recovery will most likely remain in its present state. Washington needs to restore confidence to the American people, and jobs need to once again be created. If that happens we will then see, homebuyers return to purchasing homes, and the true Recovery of the Real Estate Industry.

While I’m not an economist, I do know that the flight of jobs overseas has had an enormous impact on consumer confidence. Where our skilled labor force had been able to find jobs fairly easily, now it takes a year or five to land a manufacturing job.  And manufacturing has been a backbone of the American economy for decades. Perhaps by everyone in the nation making a concerted effort to buy American-made will send the message to industry that they are better served keeping the jobs on-shore.

While mortgage interest rates are low and while the housing market continues to offer homes at low prices, there are areas of the country that offer THE MOST affordable homes.  CNN Money explores several cities across the nation,

#1 Hunter’s Creek, Florida – What was once just a swamp in central Florida has turned into a thriving community of 12,000 residents.

#2 Lake Jackson, Texas – Dubbed the “City of Enchantment,” Lake Jackson was originally planned in the 1940s to house employees of the Dow chemical company.

#4 Johnston, Iowa – Local crime news for Johnston is telling: A recent headline proclaimed that a driver for a trash collection company spilled garbage on the highway and was issued a citation.

And my favorite (as it also happens to be MY hometown)…

#13 La Vergne, Tennessee – The high point on the calendar is the annual Old Timers’ Festival, which is expanding to three days from one in 2011 and includes midway rises, juried craft contests, a pageant and a parade, all around a “good-old-days” theme. (An event that I am helping to organize!)  (By the way, we have midway rides and juried crafters).

Congratulations to all the towns named affordable!  Especially my own little corner of Tennessee!

Even in these years of a sagging economy and a pitiful mortgage atmosphere, staging a home remains an important part of selling a home.  From Offbeat Home, Ariel Meadow Stallings shows how important it is to stage with some great before and after photo shots,

Everyone says this, and it’s true. You have to basically move out of your home to stage it, or make your peace with living in a sparse, slightly twisted version of your home. You’re allowed bland art (not too much!) and one tchotchke per room.

Here was how our living room looked before I staged it:

Here’s what it looked like after I took all our stuff out of it:

Still funky and colorful, but way less cluttered. No My Little Ponies or sagging spider plants to distract potential buyers.

Fantastic article!

The big supply of homes now for sale in the U.S. is driving home values down even more.  Double dip, anyone?

Although some areas still boast fairly competitive REO (or bank-owned) sales – there is plenty of competition as buyers try to snatch ones in good condition for low, low prices – other areas have some ugly price drops going on.

According to CNN Money,

But in some areas, the discounts were ever greater: In New York State, the discount for REOs was 53% during the first quarter. And it was nearly 50% in Illinois, Ohio, and Wisconsin.

Also weighing on market prices are “short sales,” homes where the selling price is less than what is owed by the borrowers. These sales sold at an average 9% discount.

Including both REOs and short sales, Ohio had the biggest discount of any state, at 41%.

Terrible news for sellers in those states.

New construction in my own area recognizes the overabundance of existing homes for sale. In my town, only three permits were pulled last month where in 2005 there were at least ten times that amount.  The waiting for a housing recovery continues.