Real Estate Market Update by Paul Langrock


Pinellas County: Single family home median price increased 16.5% April 2016-17 to $169,000 ($133/sqft).
*Latest Local News – Palm Harbor
*: Over 12 months, April 2016-17, our Palm Harbor median SFH values were up 16.3% to $317,500 ($155/sqft). The average sold price rose to $365,475 ($160/sqft). 
Housing demand for previously lived-in residences hit its highest point in four years increasing 6.5 percent to 5.45 million sales in January – the highest since 2006. New homes were up 12.2% in 2016 – also the best in a decade. AND, an important FYI to consider: “The Standard & Poor’s CoreLogic Case-Shiller national home price index scored 4/25/2017 increased 5.8% in February, the most in 32 months. Such strong price gains and slightly higher mortgage rates may eventually cool off demand.”
30-year fixed-rate mortgages(FRM) averaged 4.05 percent, with an average 0.5 point, up from the last week’s average 4.03 percent. At this time a year ago 30-year rates averaged 3.57 percent.*
15-year FRM
Averaged 3.29 percent with an average 0.5 point, up from last week’s average of 3.27%. Last year at this time the 15-year rate averaged 2.81 percent.

National News – Home Prices Rise Above July 2006 Peak

Estate Agent - "I did have a house at that price but I sold it back in 1978."

By Paul Langrock: U.S. Home prices rose 5.5 %, according to Case-Shiller home price index, eclipsing the housing bubble’s July 2006 peak.
We remember that time vividly. It was October and for the first time in years our listing’s contract did not appraise. The appraiser’s August-September comparable sold properties could not support the contract price. We soon realized we may be on the other side of a peak although we had no idea what was to follow.
This time around we clearly do not see a “bubble”. Unqualified buyers no longer are able to obtain 100% loans (coined Eighty-Twentys: 80% first mortgage with a 20% second). Today, low inventory not high demand is what’s driving prices upward. This is in spite of lending institution’s now high qualifying bar. Yes, mortgage rates are also beginning to rise, however, experience has shown this actually becomes a catalyst pulling people off the sidelines. Potential buyers suddenly rush to purchase before rates go higher. They don’t want to miss these still historically low rates and it is wise to lock them in for a long term investments such as real estate.
Additionally, we envision a sleeping demand source by reason of homeownership being currently at its lowest level in nearly five decades.
Home prices are back and they are continuing to move forward. To paraphrase, “You’ll all need homes.”  And, as our Florida license plate reads, it’s TYM2BUY.

Paul Langrock




Custom cabinetry: 41% (the price premium: the difference between homes with the feature and homes without in the same ZIP code)

• Kitchen island: 30%
• Creative lighting: 21%
• Granite counters: 18%
• Large pantry: 14%
• Stainless-steel appliances: 12%
• Tile backsplash: 7%
• Breakfast bar: 6%
*Source: Daily Real Estate News

5 Fixes That Can Raise a Home’s Value

Mortgage concept by money house from coins

Mortgage concept by money house from coins


For home owners looking to spruce up their home before listing it, there’s plenty they can do to attract more buyers and potentially boost the value of their home too.

Veteran real estate professionals recently weighed in at This Old House on some of the best home improvement projects they believe can help a home show better. Here are a few of their ideas:

1. Open up the space.

Create more space, whether that’s even removing a kitchen island or knocking out a non-structural wall. “Right now buyers want a wide open floor plan, the living room right off the kitchen. They are into big spaces,” Kristin Wellins, senior manager of program development at ERA Real Estate, told This Old House.

2. Light it up.

Keep the home bright: Have windows open to let the natural light flow in, consider lights that use motion detectors to turn themselves off, or install sun tubes, a reflective material that funnels natural light from a hole cut in a rooftop down through a ceiling fixture in a room. “High wattage bulbs make small spaces feel larger, and soft lighting brings warmth to empty spaces,” This Old House notes.

3. Enhance the front door.

“Don’t underestimate the power of a front door,” Willens says. “People make up their minds in the first seven seconds of entering a house.” Have an overhang on the front porch, such as an awning or portico above the front door, suggests Roger Voisinet, a real estate professional in Charlottesville, Va.

4. Pay attention to the floors.

Spend some money on the floors, suggests the real estate professionals surveyed by This Old House. Even a $600 to $900 investment could help boost the home’s value by possibly $2,000, they say. Get a carpenter or handyman to eliminate distracting squeaks from floors, repair any broken tiles, patch damaged floor boards, and remove wall-to-wall carpeting, they suggest.

5. Tackle easy bathroom upgrades.

Bathroom upgrades can quickly get pricey but a few upgrades can still make a big difference. For example, swap frosted glass for clear glass, remove any rust stains, apply fresh caulk, update doorknobs and cabinet pulls, replace faucets, buy a new toilet seat, or install a low-flush toilet.

Source: “Brokers Tell All: 10 Ways to Boost House Value,” This Old House (September 2016) and DAILY REAL ESTATE NEWS, SEPTEMBER 01, 2016

It’s a Good Time to Sell, Americans Say

Money house on the white background
Fifty-two percent of home owners say now is a good time to sell in their neighborhood. This is up from 34 percent who said so last year, according to a survey conducted by the real estate brokerage Redfin.

What’s more, 58 percent of home owners believe sellers have more power than buyers in the market right now. Redfin researchers note this is nearly the highest level of seller confidence they’ve recorded.

The top reasons sellers say they want to sell now:

  • I want a larger or nicer home: 40%
  • I am relocating to a new city: 24%
  • I want to pull out my profit: 21%
  • I want a smaller or less expensive home: 20%
  • I have had a change in family status: 19%
  • I want to move to a better school district: 15%

“Many move-up buyers have told me they are buying now to take advantage of low mortgage rates,” says William Porterfield, a real estate professional with Redfin in Little Rock, Ark. “Buyers are trying to get as much home as possible before rates rise.”

Still, some Americans expressed concerns about selling, mainly about finding a new home to buy when they sell their own.

The following were Americans’ top concerns about selling:

  • I might not find another home I want: 30%
  • Prices might fall before I sell: 26%
  • I might not find another home I can afford: 25%
  • General economic conditions might discourage buyers: 23%
  • The appraisal might come in low: 19%

Pricing Matters

When it comes to setting the price for their home, 55 percent of home owners say they will price in the middle range based on comparable sales. However, 19 percent of home owners said they would price high, citing that negotiation is inevitable. Also, 12 percent of home owners said they would price high because if the market didn’t value their home, they would wait until it did.

“While we’re noticing a shift among sellers in terms of their confidence in getting their homes sold quickly and for good prices, it’s up to the agent as their advocate to keep their expectations grounded and recommend a pricing strategy that is most likely to get the best value for their home,” says Sascha Gummersbach, a Redfin real estate agent in Atlanta. “A seller’s market doesn’t grant home owners a license to skip things like valuable upgrades, home staging or setting a price based on comparable homes in their neighborhood.”

Source: RealtorMag & Redfin Research Center

Banks Rush to Offer 3% Down Payment Loans

As some banks veer from Federal Housing Administration loans, they’re offering their own low down payment mortgages to appeal to home shoppers struggling to save enough to buy a home. Wells Fargo made headlines this week when it debuted its 3 percent down payment loan.

Read more: 5 Surprising Ways to Save for a Down Payment

JPMorgan Chase also announced its offering called the “Standard Agency 97%” program, a 3 percent down payment loan geared for first-time home buyers and requires a FICO score of 680. Chase also has a loan program called “DreaMaker Mortgage,” which offers a 5 percent down payment – 3 percent of which can come from the borrower as well as flexible funding options for closing costs and reduced mortgage insurance requirements.

Other banks have recently announced their low down payment offerings. Earlier this year, Bank of America began offering a 3 percent down payment loan that did not involve the Federal Housing Administration and does not require mortgage insurance. The bank requires a minimum FICO score of 660.

Wells Fargo’s newly launching lending program, “yourFirstMortgage,” requires a 620 FICO minimum score and minimum down payment of 3 percent for a fixed-rate conventional mortgage of up to $417,000. Down payment assistance also can come from gifts and community assistance programs. Customers who complete a homebuyer education course can earn a 1/8 percent interest rate reduction, although the course is not required.

Brad Blackwell, executive vice president and portfolio business manager at Wells Fargo, says the monthly payment for the loan will be less than a government-insured FHA loan.

“We’ve taken all the complexity of the home mortgage lending process, removed it from the front-line consumer, so that it’s easy for them to understand and Wells Fargo is taking care of all the capital markets and other types of complexities behind the scenes,” says Blackwell.

Bank giants have been leery of FHA loans lately, with JPMorgan Chase CEO Jamie Dimon’s calling FHA lending “too costly and too risky” to pursue extensively.

“We have dramatically reduced FHA originations,” Dimon wrote in his yearly letter to shareholders. “Currently, it simply is too costly and too risky to originate these kinds of mortgages. Part of the risk comes from the penalties that the government charges if you make a mistake – and part of the risk is because these types of mortgages default frequently.”

Dimon acknowledges Chase’s new low down payment lending program also carries some of those risks, but he believes it responds to customers’ needs.

“Mortgages are important to our customers,” Dimon wrote in the letter. “For most of our customers, their home is the single largest purchase they will make in their lifetime. More than that, it is an emotional purchase – it is where they are getting their start, raising a family, or maybe spending their retirement years. As a bank that wants to build lifelong relationships with its customers, we want to be there for them at life’s most critical junctures.”

Source: “Wells Fargo Launches 3% Down Payment Mortgage,” CNBC (May 26, 2016) and “Chase Quietly Launches Its Own 3% Down Mortgage Lending Program,” HousingWire (May 26, 2016) DAILY REAL ESTATE NEWS | FRIDAY, MAY 27, 2016  

5 Surprising Ways to Save for a Down Payment

strategy-Maze house
Saving for a down payment does not have to be an impossible feat for your would-be buyers. HouseLogic recently featured several resourceful ideas to help them save up for a down payment on a home.


Maybe instead of a traditional wedding registry, your buyers use a site geared to saving up for their future home. Sites like Feather the Nest and Hatch My House can be sites used to raise funds for a down payment. Hatch My House says it’s helped raise more than $2 million in down payments on home purchases.

Read more: 70% Unaware of Down-Payment Assistance

Ask for the sellers help.

The home seller may be willing to help buyers with the closing costs, via seller concessions. However, realize that lenders do limit concessions, depending on the mortgage type. For example, the FHA’s mortgages have a cap of 6 percent the sales price; Fannie Mae-backed loans have caps between 3 percent and 9 percent.

Explore government options.

Some home buyers may find down payment help from state, local, or even national programs. For example, the U.S. Department of Housing and Urban Development offers several programs, such as assistance with down payment and closing costs. Most HUD programs are geared to individuals who meet certain income or location requirements. Check out links by state. HUD also offers assistance through its Good Neighbor Next Door Sales Program for law enforcement officers, firefighters, teachers, or EMTs. For veterans, the VA offers loans that often require zero down payment or private mortgage insurance.

See if your employer will help.

Employer Assisted Housing (EAH) programs can assist low- to moderate-income employees with a down payment through their employer. Ask the human resources or benefits personnel at your employer if your company participates in an EAH program.

Look into special lender programs.

Some lenders offer specialized programs to help too. With FHA mortgages, borrowers may need just 3.5 percent for a down payment (but make sure they take into account mortgage insurance, which could add another $300 to a monthly mortgage payment). Some lenders, such as TD Bank, offer a 3 percent down payment with no mortgage insurance program. Check with your regional bank for possible down payment assistance or first-time buyer programs.

Read more details at HouseLogic.

Source: “5 Ways You Didn’t Know You Could Save for a Down Payment,” HouseLogic (Oct. 26, 2015) DAILY REAL ESTATE NEWS | FRIDAY, MARCH 25, 2016

Sellers See Highest Price Gains in Years!

Green Upward Arrow

Most home sellers are seeing plenty of equity when selling their home. In March, sellers on average sold for $30,500 more than what they had paid for their home – a 17 percent gain, according to RealtyTrac’s March and First Quarter 2016 Home Sales Report. That marks the highest average price gain for sellers in any month since December 2007, the onset of the Great Recession.

“Home sellers in many markets are now seeing average price gains close to or above what home sellers experienced during the last housing boom,” says Daren Blomquist, RealtyTrac senior vice president. “That should encourage more home owners to take advantage of the prime seller’s market and list their homes for sale this year.”

The report reveals that sellers are seeing the largest average gains in the following metros:

  1. San Francisco: 72% average gain
  2. San Jose, Calif.: 60%
  3. Boulder, Colo.: 53%
  4. Prescott, Ariz.: 51%
  5. Los Angeles: 48%
  6. Denver: 42%
  7. Portland: 40%
  8. Austin: 40%
  9. Seattle: 38%
  10. Baltimore: 38%
  11. Riverside-San Bernardino, Calif.: 37%
  12. San Diego: 36%
  13. Sacramento: 35%                                                                                                                                                                                                                                                                                                                           Source: RealtyTrac – DAILY REAL ESTATE NEWS 4/21/16


Is Housing Poised to Return to Pre-Crisis Glory?

  Crystal Ball - CHARTCrystal Ball
The recent predictions from analysts of a dark year for housing based on tight inventory combined with rapid home price appreciation and slow wage growth may be a little off base, according toFreddie Mac’s March 2016 Monthly Outlook released Thursday.

Freddie Mac is predicting that housing fundamentals such as home sales, housing starts, and prices will all reach levels not seen since 2006, right in the middle of the housing bubble and two years before the crash.

“Housing markets are poised for their best year in a decade,” Freddie Mac Chief Economist Sean Becketti said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017.”

The year 2016 will be a robust one for housing for several reasons, according to Freddie Mac. For starters, the 30-year mortgage rate average is expected to attract homebuyers in the spring and subsequently remain below 4 percent for the second half of the year. Slowing home price appreciation is also expected to contribute to greater affordability—whereas home prices rose by 6 percent year-over-year in 2015, that pace is expected to slow down to 4.8 percent for 2016.

According to Freddie Mac, inventory, which has been cited by many industry analysts as a major hindrance to the housing market going forward is expected to pick up in 2016. Freddie Mac is predicting multi-family and single-family housing starts to increase this year by about 200,000, up to 1.3 million.

The labor force participation rate, which fell to nearly a four-decade low last year, is not expected to increase substantially from its current level, as recent analysis from Goldman Sachs suggests. This could mean good news for wage growth, which took a backward step by declining three cents in February.

3-31 Freddie Mac graph“If the labor force participation rate doesn’t increase and job gains maintain their recent pace, then pressures are going to build and wages will rise,” Freddie Mac stated in the report. “So far wage growth has been anemic, barely keeping pace with inflation. But if you look closely at the latest data on average hourly earnings you might convince yourself that we’re at the nascent stages of a gradual increase in wages. Wage growth ultimately will be a key factor for housing markets. If wages and incomes do not start rising, then rising interest rates, home prices, and rents will squeeze households and ultimately slow housing markets.”

The predicted increase in wage growth combined with steady job growth should lead to an increase in household formations, according to Freddie Mac. The household formation rate has still not picked up enough after the Great Recession to match underlying population growth. In 2015, the household formation rate experienced a major dropoff from the first half of the year to the second; it reached 2.2 million on a year-over-year basis during the first half, but by the second half of the year, had declined to a rate of 800,000 per year.

“The drop-off in household formations could be an anomaly due to noisy data, or it could be a symptom of the lack of supply of housing,” Freddie Mac stated in the report. “Total annual housing completions have been running below 1 million for several years, and the vacancy rates are dropping. With low levels of supply there is nowhere for households to be formed. So despite robust job gains household formations haven’t followed yet.”

Source: DSNews – Brian Honea 4/1/16

Low Inventory?

House pics getting Smaller
6 Ways Explain Low Housing Inventory.

There are a number of factors, according to a recent article at Real Estate Economy Watch. Make sure you understand the logic behind the market, so you can be the best advocate for your clients during these somewhat stressful times.

Read NAR Chief EconomistLawrence Yun’s latest column about the inventory shortage.

  1. Many home owners are still underwater. One of five homeowners with a mortgage still doesn’t have enough equity to sell. This isn’t the same situation as we saw during the depths of the housing crisis, but it’s still making its mark on inventory levels. Although rising prices may slowly reduce the number of home owners who owe more than their property is worth, Real Estate Economy Watch predicts that significant numbers will continue to be equity-challenged for several years to come, especially in Arizona, California, Florida, and Nevada.
  2. Boom buyers are still holding out. About 16 million families bought homes in the peak of the boom around a decade ago, and many are still waiting around to make a profit, even if they aren’t underwater. Even if CoreLogic’s prediction that the national median price will reach the peak of 2007 in the next year or so does come to fruition, Real Estate Economy Watch says many of these peak buyers will have to wait another five years or more before they realize much profit on their homes.
  3. The inventory shortage is squeezing move-ups. Owners who may be ready to move into a larger or more expensive home are often considered hidden drivers of the market. But right now, price instability and the lack of available homes is causing this group to hold off. But Real Estate Economy Watch says that stability is coming, despite the inflationary impact of market shortages, and predicts that this “vicious cycle” will ease.
  4. Investors aren’t ready to sell single-family homes they’re renting. They’re making money from both rising rents and home price appreciation. And that’s why Real Estate Economy Watch cautions against assuming they’ll “sell their mini gold mines to homeowners anytime soon.” The upside? At least some young prospective owners have access to a relatively affordable alternative to apartments, where they can start families while they wait for entry-level homes to come on the market.
  5. New-home construction is still very low. It may be tempting to blame this on the builders, but Real Estate Economy Watch points out that after the crash in 2007, thousands of smaller builders closed down, and many of those who survived did so by selling off their inventories of prime real estate earmarked for future construction. They predict that builders will make a dent in the higher-tier housing soon, but that they would help the inventory problem more if they concentrated on the lower-end demand.
  6. Baby boomers are running behind. Everything from later retirement ages, longer careers, better health, and loss of household wealth/equity during the Great Recession have contributed to a slower-than-expected timeline for this generation. But Real Estate Economy Watch predicts that this will change as many must convert their equity into cash while they can still enjoy it, and says others won’t be able to afford the costs to retrofit current homes in order to age in place.

Source: “Where Have All the Sellers Gone?” Real Estate Economy Watch (March 17, 2016) DAILY REAL ESTATE NEWS | 3/23/16