Article by Steve Raabe:  Denver Post

Housing sales and prices edge up in metro Denver

The metro Denver housing market took another step toward recovery in February with sales up and inventory levels down.

Unsold homes on the market dropped sharply, with the current inventory at 10,086, a drop of 41.9 percent from February 2011.

Properties under contract for sale totaled 4,150 in February, an increase of 12.4 percent from the same month in 2011, according to data compiled by independent real estate consultant Gary Bauer.

“The momentum that started at the beginning of the year is continuing,” Bauer said. “We’ve got a market that’s really moving.”

Driving the market is a surge in the number of first-time buyers and move-up buyers targeting lower-priced homes, Bauer said,

Among single-family home sales in February, 43 percent were properties that sold for less than $200,000.

For condo sales, 62 percent were priced at less than $150,000.

Sellers of the lower-priced properties are moving up to moderately-priced homes, creating a bottom-up chain reaction that should eventually stimulate the sale of more-expensive homes, Bauer said.

The median price of detached single-family homes that closed in February was $220,000, up 0.5 percent from January and unchanged from February of last year.

Condos and townhomes sold in February at a median price of $120,000, up 6.2 percent from January, but a decrease of 3.8 percent from February 2011.

Economist Patty Silverstein of Littleton-based Development Research Partners said that a 13.2 percent increase in home sales during the first two months of the year “demonstrates that the housing recovery remains on track in metro Denver.”

She noted that although inventory levels are down, they remain high enough that metro Denver “is still not achieving solid price appreciation.”

Housing and mortgage analyst Lou Barnes of Premier Mortgage Group in Boulder noted that two recent national reports showed ongoing weakness in the real estate market.

Case/Shiller’s home price index dropped 3.8 percent in the last 90 days of 2011. CoreLogic reported that 27.8 percent of households are under water with their homes valued lower than their mortgage balances.

Steve Raabe: 303-954-1948 or sraabe@denverpost.com

Denver Post: www.denverpost.com 

Warren Buffett’s investment advice is to buy houses

From MSM Money
Billionaire and Berkshire Hathaway CEO Warren Buffett gave out some free investment advice on TV Monday. Buffett said on CNBC that Americans should buy distressed houses, which are really cheap right now, and rent them out (after fixing them up a bit, of course). Buffett said he’d snatch up “millions” of single family homes if it were practical, but said he isn’t very handy.

America’s investment grandpa also was optimistic about the economy: He said it’s bouncing back in almost all sectors, except home construction, but he predicts it will bounce back there, too.

related links
Buffett says he was ‘dead wrong’ on housing market
Warren Buffett’s biggest stock investments
How to tap your inner Buffett

Markets are quiet, volatility gone, waiting for something to happen.  Not calm, plenty tense, a lot happening but not concluding.

The overriding influence near-term: The Battle of 1370. What, Europe again? The English and French refighting some unpleasantness between Crecy and Agincourt?

Nah. Every stock trader on the planet is mesmerized by S&P500 1370. Go above it, and stocks should rocket if only because so many buy the chart. One problem: the S&P since mid-December has already run straight from 1200, and been stuck between 1345 and 1365 for three weeks. As vulnerable on downside as likely to explode upward.

Fed-managed long-term rates no longer react to anything: the 10-year T-note since the end of October has traded 90% of the time between 1.90% and 2.05%.

Europe has pulled back from another Greek brink, but not resolved a thing. Austerity in the big dominoes — Italy, Spain, and France — has not begun, each promising fiscal tightening about 4% of GDP this year. In US equivalent, imagine a $600 billion tax-hike spending-cut combination during the onset of new recession.

The ECB will next week expand bank rescue funding toward infinity. However, the ECB firehose will have little economic effect, just preventing weak banks from failing, strong banks disinterested in risk-taking, no matter how much cash the ECB sprays.

So, the world admiring its navel, what’s up with the long-slow-roller, housing?

Finance types have amused themselves in the new year by announcing housing recovery. Merrill Lynch’s newest report concludes: “The housing recovery would support an even bigger commitment to equities in our portfolios.” Right. Merrill would find sunrise or Joe Stalin’s birthday good reasons to buy more stock.

Home sales data had been talked this winter into optimistic anticipation, and the flat reality misreported: a ballyhooed but minor gain in January sales of exiting homes was reversed by a downward revision for December. Sales of new homes were just the reverse: off .9% in January, revised up a little in December. And this winter was one of the mildest in a long time. New applications for purchase loans have been unchanged all through the winter into February.

Home prices have flattened. The FHFA Home Price Index wobbled weakly through 2011, and recovered in December to a decline of .8% from where it started. The Newest Case-Shiller data is a hair weaker, through last November off 3.7% year-to-date, the last two months showing new declines in 19 of 20 cities. Stock hawkers see these trends as a happy turn to price stability. If I have been dragged to the bottom of a swimming pool, holding my breath, is my situation stable?

There are genuinely positive trends, and one big puzzle. The true positives include some big drops in overall mortgage delinquency: in the last year, 18.9% in Nevada, 14.3% in Michigan, 21% in California, and 24.5% in Arizona. Total mortgages delinquent or in foreclosure have dropped by almost 900,000 in the last year.

Don’t get carried away just yet. Nationally, 12.3% of loans are still delinquent. 3,856,000 loans are 90+ days late or in foreclosure, down only 8% last year (LPS).

The puzzle: a nationwide drop in listed inventory for sale, down 21.5% last year, 11.5% of that in December alone. This is National Association of Realtors data, which given both hands and a mirror could not count both sides of its fanny and get to “two.” However, the decline is real and large, and normally a precursor to rising prices. This time we can’t tell how much is instead due to exhausted sellers, others fearful of discounts too deep, or with too little equity to hire a broker and have a down payment for the next home. We’ll hope, and see.

On the public policy front, the Federal government immobile and annoyed by Fed pleas for housing help, some states are moving. Florida has legislation pending which would make foreclosure easier. In the seventh year of fiddling and loan-mitigation pretense, there is no better sign than local governments wanting to get on with it. That’s a true marker of moving into the back half of this mess.

Poor graphic, but great data. The sort is based on column three, “Non-curr %”, highest top left, carr

ying to center column and then right. “Non-Curr %” includes all loans late to any degree.

Friday February 24th, 2012
By Lou Barnes

“‘Stranger and stranger’, said Alice,” and so it was this week at the Fed, in Europe, and Mr. Obama’s State of the Union.

Some brave souls thought the Fed would surprise by rolling out QE3, and begin to buy more MBS, driving mortgage rates down. Everyone expected a pair of meaningless inside-Fed jokes (more transparency, and an inflation target) and we got those. Nobody expected this: to extend its zero-percent rate from 2013 to the end of 2014.

Bonds have rallied, the 10-year T-note back down to 1.92% and mortgages close to 4.00%, markets still adjusting. Bernanke’s term expires a year before the end of the new zero-rate period! 2014 is so far off in the economic future that nobody can know its conditions, but you can bet — bet a lot — that the Fed would make a three-year commitment only if it is seriously worried. That anxiety has penetrated even the stock market, which has sold off for the first time in years after a new easing by the Fed. The Fed’s concern was justified by today’s weaker-than-looks Q4 GDP report.

Europe… the ECB will NOT allow a bank to fail. Those dominoes are off the table. The ECB may or may not play the ultimate card, buying or second-stage monetizing Club Med wallpaper, but banks will not be the trigger for ultimate euro collapse.

However, the underlying disaster is still rolling along. Christine LaGarde, French Minister of Finance until last summer, now Managing Director of the IMF, this week delivered a speech worthy of the White Queen. “Why, sometimes I’ve believed as many as six impossible things before breakfast.” In grand French style, her speech soooo important, soooo without consequence: demand European growth measures simultaneous with cutting spending and raising taxes; a larger financial firewall but no source for the money; and deeper integration among cultures farther apart every day. Banks not in play, European economies will determine the next stage there.

“The state of the union is getting stronger.” Uh-huh. Fifteen hours and fifteen minutes after the President spoke those words, the Fed announced an economy in such peril that its previously unprecedented aid would extend over the horizon.

Okay. All Presidents have the right to use lipstick. However, forty minutes and 58 paragraphs into his words, words, and words, the President first mentioned “homeowner.” Gave it three sentences to describe a refinance proposal that does not exist and will not. Three weeks after the Fed Chairman, a Fed White Paper, and four other Fed governors and regional presidents identified housing as the most serious risk to the economy, why it is, and what to do about it… three empty sentences in the SOU.

The 12th and 69th paragraphs (only) contained the word “deficit” in self-congratulation for last year’s painful mini-cut. Nowhere in the speech was a reference to a domestic spending cut or planned spending discipline of any kind.

We are entering the second year of an inert White House. Blame the Tea party, rightly, but a second year with no meaningful, Congressional pass-able economic proposal? At all? When in modern times has the White House been so dormant?

FDR was active, heaven knows. Some still argue about what he did, but not that he tried with mighty invention. Harry Truman let no grass grow in a deadly time and with a hostile Congress. Ike knew how to use staff better than anybody; it got him time for golf, but he got stuff done, and ornery Democrat Sam Rayburn ran Congress. JFK’s two years had questionable result, but action! Statues of LBJ would be common had he not become entangled in Vietnam, as any President might in 1965. Odd, brilliant Dick Nixon was plenty productive until the last six months, and never had a Republican Congress. Gerry Ford restored faith and fought inflation. Jimmy Carter never connected, and micromanaged his way to oblivion, but was anything but asleep. Anything Ron Reagan got done in eight years had to be negotiated with Tip O’Neil. Daddy Bush faced nothing but Democrats, and Bill Clinton had to make deals with the Mad Hatter. Newt.

These last 11 years… I find no parallel except the emptiness of Harding and Coolidge. Hell, even Herbert Hoover tried hard.

Fourth Quarter GDP arrived plus 2.8%, but consumer spending rose only 2.0% (after all that media jive through the holidays), and the savings rate fell below 4%, leaving little slack in household budgets. Inventory rebuilding aside, GDP rose only 0.8%, and that was boosted by an improbable 10.9% jump in residential construction, likely to be revised closer to Q3′s 1.3% gain.

NEW YORK (CNNMoney)

Flippers just got a reprieve from the Federal Housing Administration. In an effort to help stabilize housing prices and unload some of the foreclosures that are flooding low-income communities, the mortgage insurer extended a waiver of its anti-flipping regulations through 2012. The waiver, which was initially issued in 2010 and set to expire this month, suspends regulations that prohibit the agency from insuring mortgages used to purchase homes that are bought and resold in less than 90 days.

Read article:
http://money.cnn.com/2011/12/29/real_estate/FHA_flipping_waiver/index.htm

Tis the season to give money?  Some families may be in the position to  feel generous this holiday season and offer loved ones help with a down payment on a home. Coming up with the down payment for a new home has become a major obstacle to for both first time home buyers and folks “moving up” on home ownership ladder.

The donor does not have to be a family member, although it may be hard to ask a stranger for a gift for your down payment this holiday season. Every taxpayer can take advantage of the $13,000 exclusion, every year.  Married couples may therefore give $26,000 to each recipient.

The recipient may be anyone—not just a relative—and the gift may be either cash or a non-cash item such stock or other property. It may even be possible to give a $13,000 “interest” in a piece of real estate.

According to a survey by Harris Interactive, of folks who are currently renting, down payment is an issue for them.  The survey was conducted this past summer and was based on responses from 2,207 people, including 758 renters who expressed an interest in buying a home at that time.  Fifty-one percent of those renters said coming up with the money for the down payment was keeping them from buying (and 62 percent among adults 18 to 34), while thirty-six percent identified qualifying for a mortgage as a stumbling block.

Of course when giving a any gift of of a large amount the gift giver must consider his or her financial situation and plan accordingly.  Speak with you CPA and your financial planner / money manager to see if this type of gift is the correct decision to make.

Sources and additional articles to read:

Help With a Down Payment

How the $13,000 Gift-Tax Exemption Works.

Credit News: Friday, December 2, 2011

Everybody struggles now to find guideposts in the thicket of new economic information. Two old ideas may help. First, the time-sense of humanity is more calibrated to getting the bear out of the cave than musing about why bears like caves. Second, a version of frog-in-hot-water: we tend not to notice the gradual onset of lunacy, grasping the insanity only in retrospect……….

By Louis S. Barnes

To read the article in entirety click here.

Believe it or not, many parents truly care about the future of upcoming generations.  In addition, many of our parents fiscally have the means to lend a hand, even when economic times are challenging.  If you have parents that are willing to help you with a down payment on a home, consider taking them up on the offer!  Often times I have clients who are not able to buy homes because they do not have the access to a down payment, partial or whole.  Think about the next generation and the generation after.  Pay it forward.

An article in AOL Real Estate addresses to this opportunity to help the next generation.

Survey: Most Boomers Would Cover Kids’ Down Payment

Baby boomers may be in a better position than most to buy homes, but not before helping Junior out of a bind. A national survey found that at least two-thirds of boomers age 45 and up want to help their children or grandchildren with a home down payment.

The study, conducted by Meredith Research Solutions for Better Homes and Gardens Real Estate, polled a random sampling of 1,100 adults over 45 who had at least one child or grandchild over 18.

The results overwhelmingly show a generation that still appreciates the value of homeownership, despite their children’s difficulties in the market. One in five boomers stated that they’ve already loaned money, co-signed a mortgage, or given a cash gift to children for a down payment. When asked why they’re willing to help, 75 percent said that it was still a good investment for their children, while 58 percent still think that homeownership is part of the American Dream.

And it’s not just wealthier boomers who hold these beliefs. While the study found that boomers who make more than $75,000 are the most likely to offer financial help, roughly 46 percent of those who said that they will definitely contribute to their children’s home purchase made less than that. Within that group, 30 percent made less than $50,000 in household income.

For recent college graduates, the results should come as a relief. At least 41 percent of students are returning to their parents’ home after graduation, saddled with huge college debt and grim job prospects. Many others opt instead to never leave the family home, either by delaying college or commuting to a local school.

But helping the kids move out sooner may come at a high cost for boomers on a fixed income. Homeowners of middle age and older typically have more equity in their home and are better candidates for reverse mortgaging. But as more of boomers’ savings go toward securing their children’s futures, less financing may be available for their own move. And fewer boomers moving means a smaller pool of qualified buyers.

First-time homeowners may be the future, but it’s the repeat buyers who have the means to put down a substantial cash sum at closing.

And while respondents cited “love” as a top consideration in shelling out for their kin, another frequent reason is lighter on sentiment, heavy on foreboding. One in five boomers — who said that they have helped or likely will help with a loan to their children — said that their kids couldn’t afford the home without them.

By Stefanos Chen  | Posted Nov 30th 2011 8:30AM

http://realestate.aol.com/