Today's Real Estate: August 2010

Tuesday, August 17, 2010

Housing Starts Rise in July

U.S. housing starts in July rose 1.7 percent to a seasonally adjusted annual rate of 546,000 units, the Commerce Department reported Tuesday.

This is lower than analysts had predicted and down 7 percent compared to July of last year. Starts of new single-family homes declined by 4.2 percent to 432,000, while starts of large apartment units rose 32.6 percent to 114,000.

New building permits fell 3.1 percent to an annual rate of 565,000 units, the lowest level since May 2009.

Owners in Default Stay in Homes Anyway

An increasing number of home owners in foreclosure continue to live in their homes, mostly ignoring the foreclosure action and refusing to pay anything.

The average borrower in foreclosure is unlikely to be evicted for 438 days, says LPS Applied Analytics. LPS says more than 650,000 households haven’t paid their mortgage in 18 months, and in the case of 19 percent of those households, the lender hasn’t made any effort to repossess the property.

In some states like California and Texas, lenders can foreclose without a say-so from the courts. In those states, the action is likely to be quick. But in 19 states, including Florida and New York, the court must approve the foreclosure and resulting eviction and the process is slow.

Source: The New York Times, David Streitfeld (05/31/2010)

5 Costly Mistakes First-Time Buyers Make

Buying a first home can be a daunting experience. Here are five common and costly mistakes that novice home buyers make: 1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan. 2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan. 3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating. 4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates. 5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise. Source: CNNMoney.com, Les Christie (04/19/2010)

Buyers Often Overlook Insurance Costs

Insurance is usually the last thing people worry about when they are buying a new home. According to the Insurance Information Institute, that's a mistake, because it will be an expense a buyer will have as long as they own the property. Here are some key issues that the institute urges every buyer to consider: • How far is the home from the fire department? A location close to the station usually means lower insurance costs. • What is the condition of the plumbing and electrical systems? Older and poorly maintained systems cost more to insure. • Does the property meet current building codes? Up-to-date properties are safer and also cheaper to insure. • What about wind damage? If insurance against windstorms is required, is private insurance available or will the buyer have to rely on a state-run program? If there a windstorm deductible, how high is it? • Is the home vulnerable to flooding? Floods aren’t covered under a standard homeowner policy, although most major insurers will provide it through the National Flood Insurance program. How much the insurance costs depends on where the property is. More information is available at FloodSmart.gov. • Is there earthquake risk? Earthquake insurance requires an endorsement or a separate policy. Source: Insurance Information Institute (05/06/2010)

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Tuesday, August 17, 2010

Housing Starts Rise in July