Some Rents Determined by ‘Priceline Model’

As rental housing demand continues to surge, more landlords are testing out dynamic pricing to figure out what to charge tenants based on real-time supply and demand—adopting a software system similar to how Priceline.com determines hotel rates and airfare, CNNMoney reports.

Landlords use real-time supply and demand to determine what to charge tenants. Therefore, when demand for apartments is high, the software will advise the landlord to raise rents on vacant apartments. In turn, when demand drops, the software will suggest lowering rent rates. The software automatically lowers the rent based on day-to-day market conditions until a tenant takes the apartment.

Dynamic pricing is used to determine the rent of some 5 million apartments today, says Andrew Rains, president of the multifamily division at Rainmaker Group, a company that produces one of the software packages widely-used by landlords to determine prices.

“When pricing is done manually, emotion enters into it,” says Rains. Software also helps avoid overpricing units that can lead to vacancies and steep losses for landlords.

Source: “Priceline for Landlords May Determine Your Next Rent,” CNNMoney (Feb. 19, 2014)

Families Step in to Help Kids Buy a Home

Employment troubles, large student loan debt, and tight underwriting standards have been major hurdles holding back potential first-time home buyers in their 20s and 30s, the Los Angeles Times reports.

In 2012, Americans 30 to 34 had the lowest home ownership rate of any similarly aged group in recent decades at 47.9 percent, according to demographer Chris Porter of John Burns Real Estate Consulting. As comparison, Americans born between 1948 and 1957 had a 57.1 percent ownership rate by the time they were in the 30 to 34 age group.

Studies have shown a strong desire among 20- and 30-somethings to buy a home, but their finances are holding them back from making such a move. As such, more relatives are stepping in to provide assistance with downpayment and closing costs. Twenty-seven percent of first-time buyers received a money gift from relatives last year.

Instead of just handing over money, some family members also are serving as “mini-lenders” themselves to help their adult children purchase a home, The Los Angeles Times reports. The family members may provide a second mortgage or first mortgage that are designed to deal with the relative’s financial hurdles,  like paying off student loans to reduce debt-to-income ratios (which has been a hurdle for many in qualifying for a loan). What’s more, the loans can provide annual returns to family members that have been known to perform better than money-market funds or bank deposits.

Source: “Finding Ways to Help Young Adults Make Their First Home Purchases,” The Los Angeles Times (Feb. 16, 2014)

Consumers Positive About Access to Mortgage Credit

More Americans now believe it would be easy for them to get a mortgage, according to Fannie Mae’s January 2014 National Housing Survey results. Consumer attitudes regarding the ease of getting a mortgage climbed 2 percentage points to an all-time survey high of 52 percent, while those who think it would be difficult dropped 3 points to 45 percent. This indicates that consumers perceive that mortgage credit is more accessible. Even though this month’s survey shows a more moderate expectation for home price gains within the next 12 months, the view that mortgage credit is more available may allow for continued but measured improvement in the housing recovery.

Consumer attitudes toward the economy also improved in January despite downbeat jobs data for the past two months. The share of consumers who believe the economy is on the right track climbed 8 percentage points to 39 percent, while the share who believe it’s on the wrong track declined to 54 percent. Additionally, the share who expect their personal financial situation to improve in the next year increased to 44 percent, continuing an upward trend since November 2013.

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‘Big Year Predicted’ for Commercial Success!

Commercial real estate investments are expected to produce solid returns this year, according to an annual forecast report released by the Real Estate Research Corporation, Deloitte, and the National Association of REALTORS®.

“We have seen steady, if slow, progress since the commercial real estate market collapsed in second quarter 2008, and as the future unfolds, we expect that the positive returns for commercial real estate will continue,” says Kenneth Riggs Jr., president and CEO of RERC. “The value increase from the trough is now about 30 percent, just slightly less than the value lost during the past 6 years. Although returns are likely to be positive in 2014, we forecast them to be a little lower than in 2013, but still a very reasonable approximate average of 8.75 percent.”

Researchers say they have a “cautiously optimistic” outlook for commercial real estate after recent stabilization, according to the report.

Lawrence Yun, NAR’s chief economist, says the commercial real estate recovery will continue as economic growth gets slightly stronger in 2014.

—By REALTOR® Magazine

Rising Prices Chip Away at Housing Affordability

Strong year-over-year price gains are starting to take a bite into housing affordability, according to the National Association of REALTORS®’ latest quarterly report.

“The vast majority of home owners have seen significant gains in equity over the past two years, which is helping the economy through increased consumer spending,” says Lawrence Yun, NAR’s chief economist. “At the same time, home prices have been rising faster than incomes, while mortgage interest rates are above the record lows of a year ago. This is beginning to hamper housing affordability.”

The national median existing single-family home price in the fourth quarter was $196,900, up 10.1 percent from $178,900 one year earlier.

NAR’s Housing Affordability Index, calculated on the relationship between median home prices, median family incomes, and the average effective mortgage interest rate, dropped to 175.8 in 2013 from a record high of 196.5 in 2012. The higher the index, the stronger household purchasing power is, according to NAR.

Source: REALTOR® Magazine Daily News

 

Home Sellers Getting Ahead of Spring Rush

The spring selling rush may already be under way, as some home owners are already throwing their properties on the market to take advantage of rebounding home prices and improved equity.

Inventory shortages persisted last year, when supply was at a 12-year low leading into the spring. The shortages helped boost home prices, but gave home buyers limited choices and sparked bidding wars in many markets. New-home construction is now at a third of its 2006 peak, which likely will keep inventories tight this spring. But, economists say, improved home prices will likely convince more sellers to sell this year, and that should relieve the inventory crunch in many markets.

Inventories increased in some of the states with the tightest markets, such as Arizona, California, Georgia, and Florida. In Sacramento, Calif., asking prices rose 11 percent last year, and listings soared 58 percent in December, according to realtor.com®’s housing report. Inventories also rose by 20 percent or more in Minneapolis; Orlando, Fla.; Atlanta; Dayton, Ohio; Oakland, Calif.; and Phoenix.

“Rising inventory is the primary reason that we expect the pace of price gains to drop back,” says Paul Diggle,  economist for Capital Economics Ltd. Prices are expected to rise only 4 percent nationally this year, compared to an 11 percent gain in 2013.

Source: “U.S. Home Sellers Return for Spring as Buyers Get Relief,” Bloomberg (Feb. 7, 2014)

 

Men, Women Lust Over Homes Differently

Sixty-nine percent of consumers recently admitting to having a “home crush”—a property they liked so much they were drawn back to looking at it more than once online or in person, according to a new realtor.com® survey of 1,000 consumers. But men and women respond quite differently to these crushes, according to the survey.

For example, the survey found that women are more likely than men to have a crush on a home that was out of their financial league. Forty-one percent of women revealed their home crush is out of their price range, compared to only 30 percent of men.

Men were more likely than women to move from one home crush to another. Thirty-six percent of men surveyed say they find a new house crush weekly, compared to 29 percent of women.

But when it comes to true love, the sexes agreed on one thing that makes them most fall in love with a home: outdoor living space. Both men and women identified this feature as the top attribute in a home.  Women’s hearts tended to be set a-flutter by open floor plans, great curb appeal, and appliances and fixtures, while men said they swooned over good garage space, curb appeal, and open floor plans.

Source: “Realtor.com Survey: Men, Women Dig on Digs Differently,” realtor.com® (Feb. 6, 2014)

‘Housing Recovery Threatened’ by Flat Wages

While job growth is picking up nationally, wages remain flat, which is holding back a more robust recovery, the National Association of Home Builders wrote in a recent blog post.

“A significant amount of pent-up housing demand exists, but for it to be unlocked more rapidly, additional gains in wages must be realized,” NAHB economists wrote.

During the recession, all age groups saw a decline in incomes, with the exception of the 65-and-older cohort. Since 2000, those under the age of 24 have seen the largest reductions in income, followed by people ages 45 to 54 (the top-earning age group), NAHB’s analysis shows.

First-time home buyers remain a shrinking number in the housing market. They accounted for 27 percent of existing-home purchases in December, down from 30 percent a year earlier, according to the National Association of REALTORS®.

Many young adults are facing high student loan debt, stifling their wage growth and ability to qualify for a mortgage, according to NAR’s Economists’ Outlook blog.

—By REALTOR® Magazine

New Way to Sell a Home: Arrange a Sleepover

One of the fun parts of searching for a home to buy is visualizing living in it. Will your furniture fit? Is the kitchen big enough for all of your kids? Imagining your belongings and your family living in the home can make the buying decision easier.

When checking out a house, some buyers take the extra step of spending the night. It’s a simple yet effective way to kick the tires and test-drive a prospective home. Along the way you’ll have an opportunity to check for noisy neighbors, test the water pressure, and inadvertently, for one couple — learn how concerned the neighbors are and even how quickly the police respond.

HGTV’s “Sleep On It,” which follows potential buyers as they stay overnight in two homes with the sellers’ approval before deciding which one to buy, hasn’t seemed to spark a national trend. But it has prompted such proposals to surface more often.

Source: “When Homebuyers Insist on Staying the Night,” U.S. News (2/3/14)

 

 

Freddie Loosens Credit Score Requirement for Refinacing

Freddie Mac announced it has eliminated its minimum credit score requirement for borrowers wanting to refinance, but they must have at least 20 percent equity in their home, HousingWire reports. Freddie Mac used to require a minimum credit score of 620. 

In following instructions from the Federal Housing Finance Agency, government-sponsored enterprises Freddie and Fannie Mae are both looking at how they can ease requirements to spur more refinances so more borrowers can take advantage of record-low mortgage rates.

Fannie Mae has removed a refinancing requirement that lenders must determine the borrower’s ability to repay — aimed at increasing refis and helping more underwater borrowers stay current on their mortgages. 

HousingWire reports that about 4 million loans serviced by Fannie Mae and Freddie Mac are underwater, in which the borrower owes more on their loan then their home is currently worth. 

Source: “Freddie Cuts Some Refi Credit Score Requirements,” HousingWire (Jan. 5, 2012)

More news from the “Sierra Foothills” of El Dorado, Placer, Amador and Sacramento Counties of California at: www.sierraproperties.com or www.dougandbudzeller.com