Saturday, December 03, 2005

Existing-Home Sales Fell By 2.7% in Latest Month

From The Wall Street Journal Online

Sales of previously owned homes fell by 2.7% in October as the housing market continues to signal that the boom of the past five years is ringing more hollow these days.

The National Association of Realtors reported Monday that sales of existing homes and condominiums declined by 2.7% last month to a seasonally adjusted annual rate of 7.09 million units. The decline would have been an even larger 3.2% without a spurt in sales in areas where people displaced by the Gulf Coast hurricanes have moved.

Even with the decline in sales, the median price of an existing home sold last month rose by 16.6% to $218,000 compared to the median -- or midpoint -- price in October 2004.

"This signals that the housing sector has likely passed its peak. The boom is winding down to an expansion," said David Lereah, chief economist for the Realtors.

The 2.7% drop in sales of existing homes would have been a larger 3.2% decline without a boost in activity from people relocating after Hurricanes Katrina and Rita devastated the Gulf Coast. The boost in sales outside of the hurricane areas offset sales declines in cities hardest hit by the storms.

Sales surged by 83% in Baton Rouge, La.; 32% in Mobile, Ala., and 14% in Houston. By contrast, sales were down 42% in New Orleans and 44% in Beaumont, Texas.

Mr. Lereah predicted that housing activity would cool further in coming months if, as expected, the Federal Reserve keeps pushing interest rates higher to combat rising inflation pressures that have been triggered by a surge in energy prices.

Those price increases have contributed to a rise in mortgage rates although rates retreated a bit last week to 6.28% from 6.37% the previous week, which had been the highest level in two years.

"We feel confident that housing is landing softly as rates continue to rise," Mr. Lereah said.

Some economists had expressed fears that rising mortgage rates could burst the housing bubble much as a speculative bubble in Internet stock prices burst in early 2000, sending shockwaves throughout the economy.

The 16.6% increase in the median sales price was the biggest year-over-year price increase since a 17.2% jump in July 1979.

By region of the country, the biggest sales decline in October occurred in the Northeast, a drop of 7.4%. Sales were down 1.9% in the Midwest and 1.2% in the West. Sales were down 1.8% in the South despite the big gains in areas where displaced homeowners relocated.

New Requirements for AC Units

New AC units must meet higher energy standard
Minimum efficiency standards for air conditioners are on the rise. Starting Jan. 23, 2006, air conditioning manufacturers must produce units with a seasonal energy efficiency ratio (SEER) rating of at least 13. The higher the SEER rating, the more energy efficient the air conditioner. The current minimum is SEER 10. The new standard does not prevent a consumer from repairing an existing unit with a SEER lower than 13, nor are homeowners required to replace or upgrade existing air conditioners that have a SEER rating lower than 13. However, replacement parts for lower-efficiency units may become scarce, and a larger, more-efficient new air conditioner may necessitate structural modifications such as a larger pad or additional support.

Residential service contracts may not cover some of the additional costs necessary for a property owner to replace an older air conditioner with a new 13 SEER unit. The specific terms of the residential service contract will specify the extent of any coverage, as well as any costs to the property owner.
Fannie Mae, Freddie Mac, and FHA increase loan limits for 2006
Fannie Mae and Freddie Mac will raise their single-family conforming loan limit to $417,000 starting on Jan. 1, 2006. (The current limit is $359,650.) Loan limits for two-, three-, and four-family properties will also increase. Freddie Mac estimates that about half a million more homebuyers will benefit from the new limit, saving as much as $24,700 over the life of the loan with lower-cost conforming financing. These increases will automatically boost the FHA's floor limit to $200,160 and the high limit to as high as $362,790, depending on the county.

Tuesday, November 15, 2005

Reversed Mortgage

I just found very interesting article, which I want to share with you all.

Handy reverse mortgage book reveals consumer choices
Author answers most basic questions effectively

Tuesday, November 15, 2005
by Robert J. Bruss
from Inman News

If you or your parents are a senior citizen homeowner over 62, "Pocket Idiot's Guide to Reverse Mortgages" by Jennifer A. Pokorney should be required reading. I've read lots of books about reverse mortgages, and I've written articles on this important topic, but I have never before found such a concise source that compares reverse mortgage choices in an easy-to-understand format.
Pokorney, a branch manager for a major mortgage lender who specializes in reverse mortgages, speaks with authority and writes with practical advice for senior citizen homeowners. Just in case you are not familiar with reverse mortgages, these financial devices pay money to senior citizen homeowners who are at least age 62. No repayment is required until the homeowner sells, moves out, or dies.
This new book has the best comparisons I've seen of the FHA, Fannie Mae and Financial Freedom Plan reverse mortgages. Pokorney doesn't hesitate to say which type of reverse mortgage is best, depending on the many typical situations she explains.
The basic rule is that reverse mortgage amounts available depend on the borrower's age, the home's appraised market value, and the type of mortgage chosen. Although FHA reverse mortgages are the most popular, the author explains when the Fannie Mae and Financial Freedom offerings are the best choice.
This handy guidebook, in a small format of only 7 inches by 4 inches, has just a few key points on each page. Pokorney uses lots of examples to relate the information she explains to practical senior citizen homeowner situations. Her comparison charts are especially simple and easy to understand.
Although I already know quite a bit about reverse mortgages, I learned new information, such as these mortgages are available on New York City co-ops but not elsewhere. Also I discovered why reverse mortgages are "declined" on some properties, mostly due to repair issues or where the residence is unusual or substandard. I especially enjoyed the author's explanation of how to best handle lender-required repairs.
The author's explanations of the differences between FHA monthly interest rate adjustments and FHA annual adjustments are the best and easiest to understand that I've seen. She has a knack for simplifying what can be confusing.
With a little study, this book will answer most basic reverse mortgage questions senior citizen homeowners and their concerned friends and relatives may have. It explains all the choices, such as lifetime income, credit lines (except in Texas), lump sums, and combinations that the homeowner can select.
A valuable feature is "The least you need to know" summary at the end of each chapter. This quick review highlights the most important topics explained in that chapter.
A key topic that Pokorney doesn't hesitate to tackle is the issue of up-front costs. She explains reverse mortgage costs are paid at the time of obtaining the mortgage and they might seem high depending on the mortgage amount. But she emphasizes loan representatives expect to be paid (from the loan proceeds, not from the borrower's pocket) and that's only fair.
However, the one topic that the author only mentions briefly is Fannie Mae's Home Keeper Reverse Mortgage for home purchase. This very special type of reverse mortgage is rarely used (perhaps because most senior citizen home buyers don't know about it). But it can enable seniors to buy a retirement home and never have to worry about mortgage payments.
Chapter topics include "What is a Reverse Mortgage?" "Is a Reverse Mortgage Right for You?" "Single-Purpose Mortgages"; "Home Equity Conversion Mortgage"; "Home Keeper"; "Cash Account"; "Applying for a Reverse Mortgage"; "The Approval Process"; "The Property Appraisal"; and "Living with a Reverse Mortgage."
This new book can't be recommended too highly if you are interested in senior citizen reverse mortgages that pay money to the homeowner and require no monthly repayments. The author obviously knows her topic very well. She explains it in a direct, simple format, which is easy to comprehend. On my scale of one to 10, this well-written book rates an off-the-chart 12.
"Pocket Idiot's Guide to Reverse Mortgages," by Jennifer A. Pokorny (Alpha-Penguin Group, New York), 2005, $9.95, 152 pages; Available in stock or by special order at local bookstores, public libraries, and

Saturday, November 12, 2005

Right to Choose Electric Service Provider

In Texas you have a right to choose the electric provider, just like you
choose your long distance phone company. You can buy your electricity from companies that compete for your business. Some electric providers offer lower rates, wind or solar power, or the promise of better customer service.
Shop and compare. Make sure you choose the electric provider that's right for you. If you do choose to switch, you are one mouse click away from a new electric provider. Want more information? Go to

Friday, November 11, 2005

Why Loss Of Homeowner Tax Benefits Will Cause Real Estate Bust

by Blanche Evans

In a moving letter to Treasury Secretary John Snow, Tom Stevens, president-elect of the National Association of Realtors pleads for extreme caution in deliberations to include the elimination of the mortgage interest deduction in budgetary and legislative proposals. Doug Duncan, chief economist for the Mortgage Bankers Association explains in plain terms why losing this important homeowner tax benefit will throw the housing market into a bust.

Stevens writes, "Now that the President's Advisory Panel on Federal Tax Reform has completed its work, the U.S. Department of the Treasury will be working to convert the Panel's recommendations into budgetary and legislative proposals. The National Association of Realtors (NAR) urges extreme caution in your deliberations, and we ask you to preserve the mortgage interest deduction in any proposals to reform the tax code."

He adds, "America's Realtors are deeply concerned about the Tax Reform Panel's recommendations."

"Housing and the overall real estate market have been the engine of our nation's economy and the heart of America's families. Eliminating the mortgage interest deduction would de-value homes across America, hurting all of America's families. Moreover, such tax reform would place the largest burden on "middle America" -- those who have achieved homeownership through mortgage financing."

"NAR estimates that the value of the nation's residential property could decline 15 percent or more, if the tax reform panel's proposal to convert the mortgage interest deduction to a tax credit takes effect. Entirely eliminating the tax deduction for second homes would have a negative impact on at least 5 percent of the gross domestic product, since second homes accounted for 35 percent of all home sales in 2004."

"NAR is undertaking further research to ascertain the full impact of the tax Panel's proposals on all types of real estate and state and local property taxes. However, our conclusion will not change. Realtors believe the mortgage interest deduction is the single most important tax provision for our nation and our families. Diminishing or eliminating the mortgage interest deduction would hurt all families, the housing market and our national economy."

"On behalf of our 1.2 million members who are involved in all aspects of real estate, I would like to meet with you, at your earliest possible convenience, to discuss potential tax reforms proposals. With your help, we can preserve the mortgage interest deduction for the next generation of homeowners and keep our nation strong and growing."

Explains Doug Duncan, chief economist for the Mortgage Bankers Association (MBA,), "Quite simply what will happen is that the interest expense for borrowing money will rise and that will reduce demand, so the demand side will fall. Second, the value of the tax deduction is capitalized into the price of the house, so if you remove it, the house price will fall by the capitalized value of that deduction."

By how much? It's hard to estimate, but economists suggest between 10 to 20 percent. From a theoretical perspective, it's possible only to guess.

As far as the effects of the real estate tax deduction, Duncan says it is a tax increase "whether you have a mortgage or not, so that will boost the amount by which properties fall, particularly in high property tax states like California and New Jersey. If you own an existing home, it will be fairly dramatic. That won't be the capitalized value -- it would be the carrying costs of the house, so if you eliminate the deductibility of real estate taxes, your total tax load rises and you'll be paying a higher real tax rate on owning that house and that will reduce demand and house prices will fall."

The effects of the loss of the property tax deduction are also difficult to calculate, he says. "They will be more localized because property taxes are determined at local levels."

Lawrence Yun, senior economist with the NAR says, "Residential housing is about 15 percent of the gross domestic product, including new homes, workers to build the homes, income generated from Realtor services, title services, etc., but what is important to realize the housing market has supported consumer spending. Home prices have risen, and homeowners have felt wealthy. Consumer spending is two-thirds of the gross domestic product, and it's been the rising home prices that have supported that. A plunge of 15 percent in home prices would be devastating and put the economy into a recession. It could have severe effects and could put a lot of lenders under water because the collateral value is below the loan amount. You would put financial institutions under stress, and the effects could last for quite some time."


"It would be one of the sharpest recessions for quite some time," Yun hedges.

About the panel's recommendations, Yun acknowledges that there has been no model of the potential disaster that could come from reducing such homeowner tax benefits.

"They realize they are taking away some of the benefit going to the housing sector, and many are saying the housing industry has been subsidized, so let's take that away, but for the short term -- up to five years -- it could be devastating to the economy," he explains. "Flatter taxes or consumption-based taxes should be efficient for the economy, but what is being overlooked is the short-term effects. It's unfair to change the rules in the middle of the game and this 15 percent hit for homeowners is a tax increase. That's very unfair because homeowners didn't anticipate when they bought that there was a possibility this would take place."

Another thing that is suggested is that the people who don't have mortgages or who pay low property taxes won't be hurt. This simply isn't true, according to Yun.

"That is wrong way to look at it," he says. "One can think of the current tax benefit that is accruing, and if you take that away, people will agree home prices will decline. But if you have two identical homes for sale on the same street, one being sold by a person who itemizes and the other being sold by a person who doesn't itemize, it is inconceivable that the home prices will be different because the owner itemizes or doesn't itemize. The owners who don't itemize will lose appreciation, too."

"The only comforting thing its I really don't think it would fly," says Yun. "Seventy percent of the nation are homeowners, and in a democracy it is impossible for any politician to go after 70 percent of the population. People need to be educated and informed of the consequences."

The panel said it was aware that its recommendations are "bold," and Treasury Secretary Snow has said he did not know what ideas the administration would embrace after the Treasury makes it recommendations.

"Now it's up to us," Snow said. The Treasury Department will "take the report, review it carefully, understand the implications and use the report as a starting point for recommendations that we will make to the President."

"The effort to reform the tax code is noble in its purpose, but it requires political willpower," the group said Tuesday in a letter to Snow. "Many stand waiting to defend their breaks, deductions and loopholes, and to defeat our efforts."

An AP report suggested that "members of the panel urged taxpayers and lawmakers to look at the whole plan, not just individual components," so they would know that "withdrawn tax breaks" would be replaced by "simpler benefits."

As the tax-writing House Ways and Means and Senate Finance committees will review the recommendations, so will the NAR. The Board of Directors has pledged to authorize a report on the financial impact of the loss of the mortgage interest rate deduction.

Saturday, October 29, 2005

Be aware of sex offenders!

Be aware of sex offenders and go to the website:

This Web site is a " must" to you, if you are concerned about safety of your children, children of your relatives, children of your friends, children of the people you know. Just forward information about this Web site to anyone you know, because through this Web site you can locate registered sex offenders throughout the USA. You will find how many sex offenders lives next to you, next to the school your children are attending, next to your children's friends house. Are you sending your children during the Summer to your relatives in other part of the USA? You can check registered sex offenders living next to their house also. You will know how those individuals look like, because you will be able to see their photos.

Here is just some information from this Web site:
"This service exists for one reason, and one reason only. The founders are tired of reading stories about missing 9 and 10 year old children killed by registered sex offenders, and decided to do something about it.

We invite you to use our free service to locate registered sex offenders in your area. You just enter an address, and we'll show a map. You can click on the squares that appear, and see photos (where available), addresses, and convictions.

Our notification service is very simple. You specify up to three addresses (not zip codes) that you want to watch and the distance around those addresses. We do the rest. We update our data daily from multiple public data sources. As soon as a convicted sex offender registers an address in your area, we will alert you. It's that easy.

We pray for the day that our service is no longer necessary, and look forward to shutting it down. Until then, let Family Watchdog be your family's best friend."

Wednesday, October 26, 2005

Houston MLS Monthly Press Release

September 2005 Sales
Houston Area Single-Family Home Sales Drop For First Time In 19 Months
Evacuation Due to Hurricane Rita Resulted in Slight Decrease, as Activity Pushed to October

HOUSTON – (October 25, 2005) – The first impact from Hurricanes Katrina and Rita were reflected in September’s real estate sales market, according to statistics released by the Houston Association of REALTORS® Multiple Listing Service. Total sales for single-family homes in Houston decreased by 0.8 percent to 4,910 in September, down from last year’s 4,950. This is the first year-over-year monthly decrease in single- family homes sales in 19 months; however, total property sales still gained compared to last year. Total property sales for the month totaled 5,977, which was a 0.7 percent increase over September 2004. Properties sold during the month reached a total of almost $1.1 billion, a 6.7 percent increase compared to last year’s more than $1.0 billion in September sales. Additionally, year-to-date total property sales reached 59, 525, which is an increase of 8.5 percent over the same period of 2004. “Obviously, the evacuation of Houston and surrounding areas due to Hurricane Rita negatively impacted September real estate sales figures, pushing quite a few closings into October, but we continue to be on course to break last year’s housing sales record,” said Toni C. Nelson, HAR Chair and Division Vice President for Coldwell Banker United, REALTORS®. “It will be interesting to see October’s home sales since one to two weeks of activity was lost in September, but it should be noted that this is an anomaly purely due to the hurricane and not necessarily a sign of a weakening real estate market.”September Monthly Market ComparisonAll listing categories combined, Houston’s overall housing market in September experienced increases across the board including total property sales, average sales prices, median sales price, available inventory, pending sales – those listings expected to close within the next 30 days – and overall total dollar volume on a year-over-year basis.The number of available homes (active listings), at the end of September was 43,767 properties, which was an increase of 1.5 percent versus last September but down somewhat from last month, likely due to hurricane-related impact. Month-end pending sales of properties reached 3,626, which was down 8.1 percent from last year. The months inventory of single-family homes for September was also down to 5.8 months, which remains low, signaling more of a seller’s market and also shows that demand is keeping up with the available supply of homes.
September (all categories)
All Classes
September 2004
September 2005
Percent Change
Total property sales
Total dollar volume
Average single-family sales price
Median single-family sales price
Active listings
Pending sales
Months inventory*
* Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.

Single-family Homes UpdateThe overall median price of single-family homes reached $145,000 in September, which was an increase of 7.5 percent compared to the prior year, and the average price for single-family homes reached $191,827, which was up 7.0 percent versus the same period last year. The median is a typical market price where half of the homes sold for more and half sold for less than that figure. Both the median and average sales prices were monthly records for September.Houston’s current median price of $145,000 is 31.7 percent less than the national median price, which reached $212,200 in September, according to statistics released by the National Association of REALTORS®. These data continue to show the tremendous value and lower cost of living afforded to Houstonians.Additionally, total sales for single-family homes in Houston decreased by 0.8 percent to 4,910 in September, down from last year’s 4,950. In the first nine months of 2005, 49,271 single-family homes sold, which was an 8.6 percent increase over the 45,351 homes sold during the same period in 2004..HAR is now also reporting existing home statistics for the single-family home segment of the real estate market. For the month of September 2005, existing single-family home sales totaled 4,316, which was a 2.0 percent increase from September 2004, countering the decrease in new home sales through the MLS that drove the overall sales figure lower. The median sales price for existing homes in the Houston area was $140,000, an increase of 9.4 percent compared to the same period last year. The average sales price for the month of $181,820 was an increase of 8.2 percent from last year’s level. Townhouse/Condo UpdateThe overall median price in the townhouse/condo segment in Houston rose slightly by 1.0 percent, from $107,450 in September 2004 to $108,500 last month. The average sales price for which a townhouse or condo sold in the greater Houston area was $140,662 in September 2005, which was a 2.3 percent decrease from the same month last year. Additionally, the number of townhouses and condos that sold in September reversed last month’s trend and increased this month compared to last year’s sales, with 541units being sold last month, versus 536 properties in September 2004. So far, year-to date, 5,245 townhouse/condos have sold, which was a 1.3 percent increase compared to the 5,179 units sold during the same period of 2004.Houston Real Estate Milestones in September
Reached the highest number of properties sold in September.
Reached the highest monthly average sales price for single-family homes in September.
Marked the highest monthly median sales price for single-family homes in September.

The computerized Multiple Listing Service of the Houston Association of REALTORS® includes residential properties and new homes listed by 19,000 REALTORS throughout Harris, Fort Bend and Montgomery counties, as well as parts of Brazoria, Galveston, Waller and Wharton counties. Residential home sales statistics as well as listing information for more than 40,000 properties can be found on the Internet at information published and disseminated to the HAR Multiple Listing Services is communicated verbatim, without change by Multiple Listing Services, as filed by MLS participants.The MLS does not verify the information provided and disclaims any responsibility for its accuracy. All data is preliminary and subject to change. Monthly sales figures reported since November 1998 includes a statistical estimation to account for late entries. Twelve-month totals may vary from actual end-of-year figures. (Single-family detached homes were broken out separately in monthly figures beginning February 1988.)Founded in 1918, the Houston Association of REALTORS® (HAR) is a 20,000-member organization of real estate professionals engaged in every aspect of the industry, including residential and commercial sales and leasing, appraisal, property management and counseling. It is the largest individual membership trade association in Houston, as well as the second largest local association/board of REALTORS® in the United States.

This site is intended to help people stay well informed about trends in the greater Houston area real estate market. Updates include news and other topical issues. I'd love to hear from you. Please post your comments, thoughts and ideas