"Downtown Real Estate Expert"
Tuesday, March 19, 2013
Not Enough Inventory!
This is another installment of the Franklin American Mortgage Company Real Estate Report. I find this report to be an excellent view of current market conditions, along with an insiteful view of why things are happening the way they do.
Not Enough Homes For Sale?
Who would have thought that we could be
entering the home selling season with a headline which says there are not
enough homes for sale? After all, analysts had warned that the shadow
inventory of homes held by banks would weigh down the markets for years to
come. Where did these millions of homes go? Many were foreclosed upon.
Others were sold by short sale rather than going through the foreclosure
process as foreign and domestic investors bought millions of bargains.
Also, many others were modified to help homeowners to remain in their homes
as the economy has gotten stronger and provided more jobs for those who
were unemployed. This stronger economy has meant that fewer home loans have
moved into default in the past few years as well. On the other hand, there
are still many homes waiting to be foreclosed upon.
How could we have a shortage of inventory at this juncture? Investor
demand along with population growth and rising household formulation have
all combined to remove excess inventory. Combine these factors with the
fact that those who owe more than their homes are worth are reticent to
sell. Even those who were foreclosed upon are starting to purchase again or
need single family homes to rent. The question is not why is the inventory
down, but will the lower inventory slow down the real estate market in the
coming year? You can't have rising home sales with not enough homes for
sale. We think that two factors will increase inventory in the coming year.
Rising home prices will encourage more home owners to list their homes. And
builders can create inventory by building more homes. Increased building
activity is expected to help pump up the economy in the coming year. If
real estate demand continues to rise, expect banks to accelerate the
process to get rid of homes in their inventory. In other words, we are expecting
the low inventory 'problem' to be self-correcting during the year -- unless
new demand outstrips this additional supply.
Fifty percent of Americans say they expect
the housing market to improve in 2013, while 16 percent say they expect it
to get worse, according to a Bloomberg National Poll of 1,003
adults. What’s more, the majority of the Americans surveyed said they
have big hopes that the improvement in the housing market will also help
give a boost to the overall economy. “Prices are very steadily,
slowly, starting to creep back up,” Eric Matheny—an attorney from Fort
Lauderdale, Fla., who recently purchased a new home—told Bloomberg. “The
housing market is a major part of the economy, so it says something about
the strength of the economy.” More Americans are expressing optimism about
the trajectory of home prices too. Twenty-seven percent expect their home
values to rise while 16 percent said they expect their home’s value to
fall. In the previous survey, 20 percent predicted that their home’s value
would rise while 20 percent had said they expected values to fall. Source:
Single family home tenants are 18 percent
more likely than apartment tenants to stay in their current homes five
years or longer, suggesting that demand for single family homes, the
fastest growing rental category, will be more stable than multifamily
demand, according to a new national opinion survey released by ORC
International for Premier Property Management. Twenty-six percent of single
family tenant plans to stay in place five years or more, compared to one
out of five apartment dwellers (22 percent). Founded in 1938, ORC
International is a leading global market research firm and since 2007 has
conducted the CNN|ORC International poll. One factor contributing to single
family stability could be high marks renters give the quality of single
family property management. Some 80 percent of tenants in single family
rentals said their property management was good or excellent compared to
only 63 percent of apartment renters One out of four apartment dwellers
(26%) rated their management as only adequate. “With the emergence of the
single family rental option, American families have a new housing choice
that brings them the aspects of associated with owning their own homes
important to families such as living space, privacy, safe neighborhoods and
the sense of community. Single family rentals can be found in virtually
every community today and more and more families are choosing single family
rentals either as a temporary stop on the road to becoming homeowners or as
a permanent solution to their housing needs,” said Chris Clothier, director
of sales & marketing and partner of Premier Property Management. Over
half, 52 percent, of renters, including 60 percent of single family renters
and 44 percent of apartment dwellers, said they anticipate becoming
homeowners in the next five years. Families with three or more members (64
percent) and children under 13 (69 percent) were more likely to become
homeowners than the 43 percent who don’t plan to become owners. Clothier
said near term interest in becoming homeowners among single family tenants
reflects the new roles single family rentals are fulfilling as a stepping
stone to homeownership for first-time buyers and as a sanctuary for large
numbers of families displaced by foreclosures but who plan to buy again
when they can afford to do so. Source: ORC
The IRS no longer mails reminder letters to taxpayers who have to repay the
First-Time Homebuyer Credit. To help taxpayers who must repay the credit,
the IRS website has a user-friendly look-up tool. Here are four reminders
about repaying the credit and using the tool:
needs to repay the credit? If you bought a home in 2008 and
claimed the First-Time Homebuyer Credit, the credit is similar to a
no-interest loan. You normally must repay the credit in 15 equal
annual installments. You should have started to repay the credit with
your 2010 tax return. You are usually not required to pay back the
credit for a main home you bought after 2008. However, you may have to
repay the entire credit if you sold the home or stopped using it as
your main home within 36 months from the date of purchase. This rule
also applies to homes bought in 2008.
to use the tool. You can find the First-Time Homebuyer Credit
Lookup tool at IRS.gov under the ‘Tools’ menu. You will need your
Social Security number, date of birth and complete address to use the
tool. If you claimed the credit on a joint return, each spouse should
use the tool to get their share of the account information. That’s
because the law treats each spouse as having claimed half of the
credit for repayment purposes.
the tool does. The tool provides important account information to
help you report the repayment on your tax return. It shows the
original amount of the credit, annual repayment amounts, total amount
paid and the remaining balance. You can print your account page to
share with your tax preparer and to keep for your records.
How to repay the
credit. To repay the First-Time Homebuyer Credit, add the
amount you have to repay to any other tax you owe on your federal tax
return. This could result in additional tax owed or a reduced refund.
You report the repayment on line 59b on Form 1040, U.S. Individual
Income Tax Return. If you are repaying the credit because the home
stopped being your main home, you must attach Form 5405, Repayment of
the First-Time Homebuyer Credit, to your tax return. Source: IRS
I have been living in downtown Charlotte since 1999.
I have embraced an urban lifestyle by eliminating my car!
It is not that I hate cars, just that I choose a lifestyle where I can rent a car when I absolutely need one, and take public transportation or walk for other needs.
I spent most of my adult life in sales, and transitioned into real estate in 2004. My focus for my practice is the downtown Charlotte market.
I am active in this community, and can usually be found walking from place to place, or at the YMCA, where I am on their Board of Managers.
Thanks for stopping in on my blog, and contact me (email@example.com) if you need more information.