More homes, more buyers expected

More homes, more buyers expected for fall real estate market

By Sarah Shemkus

Meggin and TJ Kelly are ready to move. With two young children, dreams of a third, and a home-based Web development business, the couple just needs more room.

They have a four-bedroom Colonial in Ashburnham under agreement and have put their North Andover three-bedroom on the market. Now, they are waiting, hoping a pickup in real estate activity this fall brings a buyer their way.

“I don’t know what to expect,” TJ Kelly said.

If real estate industry specialists are correct, the Kelly family could be in luck. Agents and analysts predict a sustained seller’s market, as eager buyers flock to take advantage of more homes getting put up for sale and interest rates that remain near historic lows.

House hunters, meanwhile, can expect to face some stiff competition for any well-priced property. “Any time something comes up with a pretty reasonable price, it’s usually grabbed pretty quickly,” said Ryan Schruender, a real estate agent in North Andover.

After a disappointing 2014, when sales declined slightly from the previous years, real estate agents are optimistic about the fall market, largely because of strong sales in the spring and early summer. In July, the latest month for which data is available, single-family home sales in the state rose at their fastest pace in a decade, jumping more than 24 percent from a year earlier, according to the Warren Group, a Boston real estate tracking firm.

ales rose in every county but Nantucket, soaring about 40 percent in Essex, Hampden, and Worcester counties. Sales prices have edged up, too. The state median price for a single-family home rose 1.4 percent in July, to $359,900 from $355,000 in 2014. June’s median price of $365,000 was the highest in the state since 2007.

“The overall picture is very strong,” said Cassidy Murphy, editorial director for the Warren Group. “It remains to be seen whether the momentum will keep up for the rest of the year. I tend to think it will.”

The rebound in sales has come as more sellers put homes on the market — new listings rose 7 percent in July, according to the Massachusetts Association of Realtors — but inventories remain tight as demand in many communities exceeds supply. Buyers still face fierce competition and higher prices, particularly in markets close to Boston

For example, in Stoneham, convenient to Route 93 and just 10 miles north of the city, sales through the first seven months of the year were up 10 percent over the same period in 2014, while the median price jumped 15.4 percent to $450,000, according to the Warren Group.

“Close proximity to Boston just continues to be a real motivating factor for young families,” said Donna Frano, an agent with Jack Conway Real Estate in Pembroke.

For some buyers, the answer to bidding wars and high prices is to increase the distance from Boston. The Kellys for example, first looked for a new home in North Andover, about 25 miles from Boston right up Route 93, but found the houses they liked cost nearly double the price of a comparable property in Ashburnham, 55 miles from Boston

Their new home has 2,000 square feet of living space and more than two acres of land, a combination that would cost well over $600,000 in North Andover, TJ Kelly said. In Ashburnham, the asking price was below $370,000.

“I grew up here and I am sad to be leaving,” he said. “We can’t afford a house in North Andover that will be the size we need for our family.”

But there is some good news for buyers. Real estate agents expect prices to moderate as more people put homes up for sale and the burst of buyers who came out after the brutal winter diminishes. A house today is more likely to get three offers close to the asking price rather than the 10 offers $10,000 above asking a few months ago, said Deborah Heffernan, owner of Avenue 3 Real Estate in Cambridge.

“There was a lot of urgency and desperation,” Heffernan said. “I don’t think the sentiment is quite the same.”

Mortgage rates also remain very low. The average rate on a 30-year fixed rate mortgage is 3.9 percent, down slightly from the rate of 4.1 percent at this time last year, according to Freddie Mac, the government mortgage finance agency.

Homebuyers should prepare for the possibility of longer closing periods as new federal rules governing mortgage disclosures go into effect Oct. 3. The rules, aimed at curbing abuses that contributed to the foreclosure crisis, introduce “Know Before You Owe” forms intended to simplify and clarify the often confusing tangle of home-buying paperwork.

Important figures — total loan, interest rate, projected payments — are laid out in bold boxes that are easy to find and read. But making it simpler for buyers could require more work and time as lenders must pull together this information from various parties involved in the loan, including lawyers and title companies.

In the past, these parties worked somewhat independently, providing buyers with the different documents on different schedules. Industry officials say it initially could take as long as 60 days to close as lenders get used to the process.

Sarah Shemkus can be reached at seshemkus@globe.com.

The Real Estate Mini-Bubble Will Be Economy's Next Problem

Sy Harding, Contributor

The housing and automobile industries are the main driving forces of the economy – in both directions. That makes sense since consumer spending accounts for 70% of the economy, and homes and cars are the biggest ticket items consumers spend money on. More importantly, unlike most purchases, it’s not just spending the money they made last week, but through loans and mortgages it’s spending in advance money they will earn for the next five to thirty years.

That housing and autos therefore continue to be the economy’s main driving forces was dramatically demonstrated when both home and auto sales were so instrumental in driving the economy and markets higher after the 2000-2002 meltdown. And then when the resulting real estate bubble burst in 2006, housing and autos led the way down into the sub-prime mortgage catastrophe and then the meltdown into the 2008-2009 Great Recession.

Their powerful influence continued when in 2008 and early 2009 $trillions were spent, mostly on the bailout of banks and the rest of the financial sector, but the economy didn’t begin recuperating to any noticeable degree until the housing industry and automakers began their substantial recovery.

And they have indeed experienced a substantial recovery.

While the auto industry in Europe continues in recession (auto sales down 8.2% last year to the lowest level in 18 years), by 2012 U.S. automakers had jumped from reverse gear all the way into 4th gear, posting their highest annual sales since 2007, with the pace of sales continuing so far this year (although automakers missed the forecasts for their sales growth in July).

Meanwhile, for close to two years the real estate sector has been blasting through the most optimistic forecasts for its recovery.

At the end of May new housing starts were up a huge 28.1% year-to-date. Existing home sales had increased 15.2% over the previous 12 months. Home prices have shot up 12.2% nationally over the last 12 months, the biggest year-over-year jump since March, 2006 (near the peak of the housing bubble). Prices were up more than 20% in some of the trouble spots of the last housing bubble like Florida, California, and Las Vegas. It’s been hot. The National Association of Realtors reported two weeks ago that 47% of all homes sold in June were on the market for less than a month. As in the big bubble of 5005-2006, multiple bids and selling prices higher than asking prices have been fairly common.

However, there have been some troubling signs in the recovery, easily ignored because the basic numbers of sales and prices have been so impressive.

For instance, it’s no secret that the recovery has been mostly driven by institutional investors building inventories of rental properties. For them it’s all about profit. So far they’ve been able to take advantage of low interest rates and depressed home prices. But as prices rise and that opportunity fades away there are already indications they are dialing back on adding more homes to their inventory. Speculators looking for quick profits by buying at the distressed prices and flipping for a quick profit have also been significant factors in the sales numbers. RealtyTrac reports that single family home flips, where a home is purchased and sold again within six months, were up 19% in the first half of this year, and up 74% from the first half of 2011. But RealtyTrac expects that interest to also fade as bargain prices disappear, and is already seeing ‘buying to flip’ tapering off in many markets.

A sustainable housing recovery has always needed real home buyers who intend to live in the homes, and particularly a healthy percentage of first-time home buyers. We haven’t been seeing that, and we’re not liable to any time soon with the higher home prices and higher mortgage rates raising monthly mortgage payments significantly.

Meanwhile, even much of the reported increases in new home construction have been for multi-family housing for renters. As of June 30, single-unit housing starts were 67.6% below their January, 2006 pre-recession level.

And now we’re seeing the first indications of the mini-bubble potentially beginning to deflate.

New housing starts plunged 9.9% in June, to their lowest level in 10 months. Permits for future starts fell 7.5%. Existing home sales declined 1.2% versus the consensus forecast for a 1.5% increase. Pending Home Sales fell 0.4% in June. Construction Spending unexpectedly fell 0.6% in June, well below the consensus forecast for an increase of 0.5% (and the largest monthly decline in five months). And these reports are mostly from housing activity in the period prior to the spike in mortgage rates of the last six weeks.

The real estate sector led the way down into the financial meltdown and 2007-2009 bear market. It turned back up in early 2009 precisely at the bear market low even though housing sales and prices were still tumbling.

With the housing recovery potentially stumbling again investors would do well to keep an eye on the SPDR Home-Builder etf, symbol XHB, and home builder stocks like Toll Brothers (TOL), DR Horton (DHI), Pulte Corp (PHM), and Lennar Corp (LEN).

The Home Builder etf XHB was down more than 12% in May and June, but has been recovering some but lagging well behind the overall stock market’s spike to new highs.

Sy is president of StreetSmartReport.com and editor of the free market blogStreet Smart Post. Follow him on twitter @streetsmartpost. He was the Timer Digest #1 Gold Timer for 2012 (Gold Timer of the Year), as well as the #2 Long-Term Stock Market Timer.

Rosie O'Donnell Lists 2 New York City Apartments

Rosie O'Donnell listed two New York City properties. Her two-bedroom, 2.5-bath full-service condominium is listed for $2.25 million. The 22nd-floor unit features floor-to-ceiling windows with views of midtown Manhattan. She bought the property for $1.97 million in 2007, The New York Times says. The headquarters for her public school program, Rosie's Theater Kids, is a few blocks away.

Rosie O'Donnell's second Big Apple property is a four-bedroom Greenwich Village duplex that she purchased for $8 million last year. The 130 West 12th Street penthouse is now on the market for $10.95 million. 

5 things to know about rising rates

By Anne C. Lee

After years of decline to rock-bottom levels, interest rates are on the rise. The average rate for a 30-year mortgage was recently 4.35%, more than a point above the 2012 low of 3.3%.

Whether you're buying, selling or refinancing a home, here's how to navigate the new environment.

1. No more record rates, but still cheap loans

If the economy continues to improve as anticipated, rates will keep inching up. Freddie Mac expects the 30-year to reach 4.7% by the end of 2014. IHS Global Insight forecasts that rates won't hit 6% until 2017.

2. The refi window is starting to close

The rate bump is already cooling off refis, but most homeowners with the equity and stellar credit to refinance have already done so.

If you didn't have enough equity to qualify, check again -- rising prices pushed 850,000 homes into the black in the first quarter, according to CoreLogic. Plus, the recovery may lead lenders to loosen up.

The average credit score for an approved mortgage has been 761, says the National Association of Realtors, up from the normal 720.

3. Higher rates won't scuttle the housing recovery

At worst, this turnaround will only dampen the pace of growth, says IHS U.S. economist Patrick Newport. A healthier economy is what's boosting prices. Rates would have to rise sharply to make a mark. "Going up three percentage points would be a major wet blanket," says Bob Walters, chief economist of Quicken Loans.

With prices rising, sellers can be patient. For buyers, mortgages are still historically cheap.

4. Once you're ready to buy, lock in

To avoid any short-term spikes, Washington, D.C., mortgage banker Frank Donnelly recommends locking in as soon as you can (typically when you sign a contract).

Most lenders won't charge for a 45-or 60-day rate lock. Pay for a 90- or 120-day lock only if deals close slowly where you live (ask your lender); the typical cost is a quarter of a point per 30 days. With a float-down option, you'll pay less when rates fall at least a quarter point. Skip that add-on unless it's free.

5. Fixed loans usually beat adjustables

You may be eyeing adjustables, which are up less than fixed loans. An ARM is the better call only if you plan to own your home for a short time.

"When you need five or six years, you might save with an adjustable," says Keith Gumbinger of the research firm HSH.com.

A monthly payment on a $250,000 mortgage is $1,194 with a 30-year loan at 4%, or $999 on a five-year ARM at 2.6%. But it's crucial to get a loan that matches your time frame.

Vince Vaughn's Townhouse for Rent

This week in celebrity real estate, Vince Vaughn listed his Chicago townhouse for rent, Scarlett Johansson sold her L.A. condo and Octavia Spencer bought in the Toluca Lake neighborhood of the San Fernando Valley.

Vince Vaughn’s Chicago townhouse for rent
In Vince Vaughn's next big role, he'll play landlord at a property in Chicago. Or, at least, that's his hope. The comedic actor has listed his townhouse for rent for $9,500 a month.

This isn't the first time Vaughn has rented out the home. He first put it up for lease in 2010 at $7,000 a month. In 2011, the townhouse was back on the rental market for $8,000, and this time around, Vaughn is hoping a new renter will pony up that extra $1,500 a month.

The Chicago native bought the townhome in 2005 for $4.1 million, upgrading to a 7,800-square-foot duplex penthouse in the Palmolive Building just a year later. Rather than sell the townhome, he's kept it as an investment property, which seems to have done well for the actor.

Located in a "prestigious" City Club development, the upgraded townhouse has 3 bedrooms and 4 baths on a 4,063-square-foot floor plan. The home includes a 3-car garage, a custom-designed home theater with plush leather recliners and a rooftop deck with views of the city.

Zillow

Actress Scarlett Johansson has sold her 1-bedroom, 2-bath unit in the Hollywood Versailles Tower for $470,000.

Scarlett Johansson sells Hollywood Boulevard condo
We imagine stars living in sprawling Hollywood estates, but sometimes a modest condo is more believable for an actress hopping between movie sets.

While formerly owning a stunning mid-century modern home with ex-husband Ryan Reynolds, Scarlett Johansson has also owned a 1-bedroom, 2-bath unit in the Hollywood Versailles Tower since 2003. Listing the place for $425,000 in May, she's now handing over the keys for $470,000, theLos Angeles Times reports.

Measuring 1,148 square feet, Johansson's former condo is average in size for a 1-bedroom, but hardwood floors, granite countertops and other high-end finishes add an air of luxury. The home is also filled with touches of Hollywood glam, from gold sinks in the master bath to a dressing-room vanity surrounded by stage lights.

Located at 7135 Hollywood Boulevard, Apt. 506, Los Angeles, Calif. 90046 in a full-service high-rise, the condo's shared amenities include a 24-hour doorman and valet, a pool, gym and recreation room.

Zillow

Academy Award winning actress Octavia Spencer just bought a 1,714-square-foot home in the Toluca Lake community.

Octavia Spencer buys in Toluca Lake
Closing on a Toluca Lake house and making a red-carpet appearance for her latest film "Fruitvale Station," Octavia Spencer's keeping busy.

The Academy Award-winning actress just bought a 1,714-square-foot home for $841,500, according to property records. In the world of Los Angeles real estate, anything less than $1 million is typically not used as a celebrity's primary residence. Time will tell whether Spencer moves in permanently.

While modest in size, the 1927 Spanish-style home is filled with character — from dark hardwood floors and plantation shutters to vintage tiles and original fixtures. The property is also in a great location: a block and a half from Toluca Lake boutiques and restaurants on Riverside Drive.

Spencer received several prestigious accolades including an Academy Award and Golden Globe for Best Supporting Actress for her role as Minny Jackson in the 2011 film adaptation of "The Help."

Is Commercial Real Estate Recovering Too Quickly?

Is Commercial Real Estate Recovering Too Quickly?
Carole VanSickle

After avoiding a full-fledged catastrophe when the rest of the economy and residential housing went bust, the commercial real estate sector has, for the most part, made a pretty astounding and rapid recovery. Too astounding, fear analysts, who warn that “commercial real estate [may have] taken to the comeback trail…too quickly and could end up crashing again”[1]. This is one of the fastest, if not the fastest, recovery in commercial real estate history, says LaSalle global strategist Jacques Gordon. He believes that given the severity of the economic recession as a whole, “it should have taken more time than usual, not less, for the real estate market to rebound.” He cites high unemployment and quickly appreciating office properties as an example of the unrealistic recovery, saying that there is no reason for these two trends to exist simultaneously. Another analyst, managing director for Northwestern Investment Management Company Gregory Walz, calls the market “too frothy, too quickly.”




However, not everyone agrees that the swift improvement is a problem. In fact, accounting firm Deloitte recently released a report indicating that the markets are being “fuelled by the availability of capital, low prices, loan restructurings and alternative financing methods” and that these factors would pull the commercial market through today’s perilous waters[2]. Deloitte believes that the commercial markets are stabilizing, in part because “it was commercial real estate that felt the first impact of the downturn.” Deloitte analysts did emphasize that risks associated with refinancing remain high and that this issue will play a major role in the ultimate stability of a commercial recovery.

Do you think that the commercial market is making a comeback too fast?

Looking For A Hot Celebrity Home? The Market Is Ripe

Looking For A Hot Celebrity Home? The Market Is Ripe
John E. Miller

Celebrity properties are exceptional investment opportunities as they not only tend to be luxurious, but they also have the fame and memories associated with the celebrity that inhabited the home—an association in and of itself that increases the value of the home from that point forward.

There are some incredible celebrity homes that are currently on the market and could be amazing investment opportunities given the current buyers’ market. What hot celebrities homes are currently in play for the ambitious investor – and how do they stack up to similar properties? Read on.

Anna Nicole Smith

The late pop culture icon’s estate includes a 4,700-sq. ft., five bedroom, six bath home in Studio City, California. The home, the scene of “The Anna Nicole Smith Show”, is selling for $1.75 million. This seems like a pretty good deal because two smaller homes in the same neighborhood are selling for over $2 million each.

Elizabeth Taylor

Screen legend Elizabeth Taylor may have passed on earlier this year, but her name lives on – and so does her home. Her secluded Bel -Air home, complete with its own “secret garden” and 7,000 sq. ft. of living space, covers 1.25 acres and is listed for $8.6 million. With an average square foot of living space in Bel-Air costing approximately $539, potential buyers are paying roughly $4.9 million in markup for the celebrity connections of the four-room country home.

Harrison Ford

Film star Harrison Ford enjoys his seclusion in his primary Wyoming residence, and recently decided to relieve himself of his 5,564-sq. ft. penthouse in New York City’s Chelsea neighborhood for a cool $16 million. Those purchasing the property will buy into a neighborhood that is walking distance from Manhattan’s Garment District and Theatre District.

Billy Joel

Billy Joel’s Hamptons estate is on the market, and while anyone who buys it may not be an “Uptown Girl”, they’ll still be in the thick of the New York limelight. The home originally debuted at $22.5 million and has since been reduced to $16.8 million. The price is well above the average sales price in the Hamptons of $1.9 million, but the home itself – a pretty charming, rustic beachfront abode – is probably worth far more. Considering Joel paid roughly the same as the current listing price in 2007 and has renovated the home extensively since then, this is a pretty good deal.

Slash

Saul Hudson – better known as master guitarist and rock icon Slash – is also in the real estate mix, listing his hulking, 11,000 sq. ft. Mulholland Estates home for $9.5 million. The house features seven bedrooms and eight bathrooms, but may not fetch the full $9.5 million Slash wants because of the alleged bad reputation the neighborhood has been earning lately. Charlie Sheen and Paris Hilton both reported criminal acts on their property lately, so Slash may be looking to say goodbye to the jungle.

Sean “Diddy” Combs

Music mogul Sean Combs – a.k.a. Puff Daddy, P-Diddy, etc. etc. – is placing his swank New Jersey home for sale for the asking price of $13.5 million. He originally paid $6 million seven years ago for the estate, and is banking on his reputation as a way to get a sizable return on his investment. The 26-room mansion – complete with its own home theatre and tennis court - is large and impressive, but in this climate, it is doubtful he’ll get the full asking price.

Kenny Rogers

Country legend Kenny Rogers may no longer living in his former 973-acre spread in Georgia – he sold it in 2003 – but his name will have to exert some serious attraction to potential investors in order for $20 million asking price to be met. That is because the gargantuan, yet charming, Beaver Dam Farms estate is many times the median home price in Athens, Georgia, which has been steadily falling since 2007. Of course, an investor who buys this property – still complete with many original furnishings from when Rogers called it home – would probably operate it as a privately-owned resort.

Pamela Reed

Lastly, Hollywood couple Pamela Reed and Sandy Smolan are rumored to be looking to sell their 5,400 sq. ft. Windsor Square home – a property that has been on and off the market repeatedly in 2011. It is unclear whether or not the home is actually for sale at the moment, but some allege it can be bought for the relatively-low asking price of $2,995,000. The listing is as low-key as its is current owners, who have a long yet unassuming list of Hollywood credits to their names as an actress and director, respectively. Chances are, with the home’s past history, the two will ultimately decide to place the home for sale and up for grabs.

 These celebrity homes are only a sampling of the properties available on the open market today that have some connection with celebrities, or are located in upscale neighborhoods frequented by the rich and famous. Celebrity connections are powerful – why else would P Diddy’s home in New Jersey double in price? – and prime deals are to be had.  Investors can find even better deals with foreclosures – celebrity-related or not – by using listing services like ForeclosureDeals.com.

Keeping a sharp eye on the market is always a good way to snag a valuable property – especially if a star has called it home.