By Melinda Fulmer of MSN Real Estate
The real-estate recovery in now in full effect in most areas, and that means more of you in Salt Lake, Sandy, Holladay, Draper and South Jordan are hopping off the fence to buy or list a home. Do you know what you're in for?
The housing market is a different place than it was just six months ago, with new issues, rules and opportunities - even for those who are planning on stayin in their house for a while. The following will fill you in on eight ways the housing market has shifted since lst spring's peak selling season and what these changes mean for you: the buyer or seller.
1. Homes are more expensive - but not much more.
An improving economy and low interest rates have boosted buyer demand in most markets, decreasing supply and raising prices. Indeed, the national median home price increased 10,1% in November to $180,600 from the same period a year earlier, according to the National Association of Realtors, November marked the ninth consecutive month of home-price increases.
2. Loans are getting pricier.
After bouncing along at record lows in 2012, interest rates are expected to rise slightly in 2013. Just how much is really anyon'es guess.
Moreover, the costs associated with securing some loans are rising, as well. The Federal Housing Administration last spring once again increased its one-time upfront mortgage insurance premium for mimimum down-payment loans (less than 5%down) to 1.75% of the loan, while raising its annual monthly premiums to 1.25%
3. Inventory is bottoming out.
Rates are great, but not a lot of houses are for sale.
The inventory of existing homes for sale at the end of November was down 3.8% from the previous mont to 2.03 million. That represents a 4.8-month supply at the current sale pace and is the lowest supply since the go-go market of fall 2005. Listed inventory is down 22.5% from a year ago, when there was a 7.1-month supply.
The problem is, prices haven't gone up enough to enable many homeowners to sell and recoup enough to put down on a move-up home. Also, the banks are funneling more of their distressed sales to investors as rental properties.
4. A new mortgage rule will protect buyers from shady lenders.
To head off another financial crisis, the government's consmer watchdog, the Consumer Financial Protection Bureau, recently announced a new rule to ensure that prospective buyers are actually able to repay their morgage.
The Ability to Repay rule, which officially takes effect in January 2014 but will be put into place by most lenders sometime this year, protects consumers from risky practices such as 'no doc' and 'interest only' features that contributed to so many people losing hteir home in recent years.
5. Home-equity loans are back.
Low mortgage rates may have stolen all the headlines last year, but rates on home-equity loans have been falling, too, making those long-overdue home remodels more attractive to people who have been in their house for some time.
The average rate on a fixed-rate-home-equity loan fell to 6% in early January from 6.3% at the beginning of Novemer, according to Bankrate.com. That average ran as high as 8.5% during the financial crisis in 2009.
6. There are fewer distressed-home bargains to buy.
The mortgage crisis is starting to fade inot memory, and so are those cheap foreclosure deals. While the number of distressed homes is still fairly high at 2.3 million units, according to CoreLogic, fewer of these homes are getting a for-sale shingle.
One reason: Almost half of those 2.3 million homes are still seriously delinquent but haven't been taken back by the bank because of a backlog in processing.
Moreover, a large number of the properties being repossessed by lenders are being sold off in portfolios to investors, rather than listed for individual buyers. When they make it back onto the market with a little face lift, they aren't such a bargain anymore.
That's great news for sellers, who have seen their neighborhood property values hammered by bargain-basement bank sales. But it's meant rising prices for buyers as iventory has dwindled.
7. More new construction is coming.
Exsiting homes are in short supply, but there will soon be many more new homes to add to the mix. While housing starts fell slightly in November on delays related to superstorm Sandy, the number of building permits for new single-family homes and condominiums rose 3.6% from the previous month alone and a whopping 27% from the same time last year.
Record-low interest rates and an uptick in hiring spurred the increase activity by builders. New-home sales are up 15.3% over the past year, hitting an annual rate of 377,000 in November, according to Census Bureau data.
8. The luxury market suffers a hangover.
Sales of homes over $1 million surged 51% in November, as high-net-worth owners rushed to list their existing homes and buy new ones to avoid the capital-gains tax hikes in January that were part of the fiscal-cliff deal.
Under these changes, high-income earners would pay $88,000less in tazes if they made a $1 million profit on their home in 2012 rather than 2013. So, out went the for-sale signs, and down came the inventory of luxury homes in the last quarter of 2012.
LINDA SECRIST - LINDA SECRIST & ASSOCIATES - EVERYTHING THEY TOUCH TURNS TO SOLD!