Last Week's Show

Jack Welch Predicts Boom
Jim Cramer, financial analyst for CNBC, predicts a housing resurgence based on bullish comments from prominent businessman and recent housing statistics provided by the National Association of REALTORS®.

On Monday, Jack Welch, the former CEO of General Electric, had this to say about the housing sector.

“Housing has pretty well bottomed, rentals….we think it could be a blowout. Housing could be really good.”
Cramer continued on to cite NAR’s pending home sales index, which just hit a 19 month high and the Existing Home sales Index that that rose more than 7 times analysts’ predictions.

Mortgage Interest Rates
Record low interest rates on mortgages continue to be one of the key drivers in sustaining housing affordability and the Federal Reserve has pledged to keep rates low through 2013.

However some analysts say the 30 year – year fixed-rate mortgage is expected to rise. How much? Well, it could approach 4.5 percent for 2012. But the year after that? Listen to this: it could possibly hit 5.4 percent in 2013.

Compared to today’s rates, that could add nearly two hundred dollars a month to your mortgage payment, on a $200,000 loan. Economists told the Los Angeles Times that even with this small uptick, interest rates will continue to be very low compared to the rates you experienced over the past few decades.

However, if you are looking for the very best interest rates to maintain over the life of a 30 year fixed mortgage, now might be the very best time to see if home ownership is right for you.

Freddie Mac Furlough
Unemployed home owners may be eligible to get a longer break on their mortgages, possibly even up to a year without having to pay their mortgage or at reduced payments, according to a story from the Dow Jones News Service last week, based on a news release from Fannie Mae and Freddie Mac.

Unemployed home owners who have mortgages backed by Fannie Mae or Freddie Mac may be eligible for up to a 12-month reprieve from paying their mortgage or paying reduced payments for that time period. The mortgage giants’ program currently allows six months of relief to the unemployed, but the programs will soon extend that timeframe.

Freddie Mac Eliminates Minimum Credit Scores for Re-Fi’s
And as we continue our look at the Top News in real estate this week, Freddie Mac announced it has eliminated its minimum credit score requirements for borrowers wanting to refinance their mortgage loans, the kind of move many in the housing industry have been calling for over an extended period of time now, according to HousingWire, but as usual, there’s a catch: the borrower must have at least TWENTY percent equity in the home, something that won’t be of much use to the high number of people whose homes are under water.

While this is not the only strategy Fannie Mae and Freddie Mac are attempting to develop to help those in trouble, that one restriction on applying for refinancing aid alone will affect some 4 million loans serviced by the two mortgage giants.

Hawaii: Highest Mortgage Payments
And while we’re talking about mortgages, you might be surprised to find out in what part of the country home owners pay the most for their mortgage. It’s not New York, or California. In fact, according to a recent study by LendingTree, homeowners in Hawaii tend to take on the most debt with an average home loan approaching the $700,000 mark. Running the numbers, that means the average Hawaii homeowner pays more than $3200 per month for a 30 year fixed mortgage, before adding in taxes and insurance. If you are willing to trade your Palm trees for Magnolias, then Mississippi offers you the lowest loan amounts. The average price there? Just a little over $137,000. Which adds up to a very affordable $655 in monthly mortgage payments, on average.

New York Fed
Even with the special federal and state programs we’ve told you about over the past year that are designed to help those who need to pay their mortgage to avoid foreclosure, it’s generally accepted among those in the industry that what’s been done so far hasn’t been adequate to keep up with the problems, according to three Federal Reserve policymakers who spoke up at a forum last week.

These statements join those who say assistance to people in justified in some part by the fact that this would help the overall economy and add benefit to everyone.

New York Fed President William Dudley said on that the housing market is “only one factor behind the frustratingly slow” economic recovery but it’s an “important one that deserves our attention.”

Farmland Values Continue to Soar
If you’re a real estate investor, you might be surprised to learn that the best place to put your money for the highest return these days doesn’t necessarily come from industrial, retail or other commercial properties – it might just come from buying that vacant piece of farmland you pass on your way down the Interstate every morning.

According to the Federal Reserve of Chicago, farmland values continue to soar in the Midwest, climbing 25 percent from a year ago. Why? Rising prices in corn and other agriculture has sent land prices soaring.

Auctioneer Jeffrey Obrecht, for example, says that farmland is selling at $20,000 per acre, which he described as a once-in-a-lifetime deal.

Kansas City Leads Midwest Real Estate Revival
And one result of this boom in farmland values over the past year has been the elevation of cities in the Midwest emerging as leaders in HousingPredictor’s annual survey. HousingPredictors forecasts average rises of 6 percent this year, with places such as Kansas City, Kansas, leading the list, followed by Topeka, Charleston, West Virginia, Oklahoma City, Wichita and Bismark, North Dakota among other mid-American towns as leaders in the past year, according this report.

HousingPredictor said that the overall economic recovery is starting in housing with these cities and will eventually spread to other communities throughout the U.S. as the country recovers from the real estate crash.

Freddie Mac Prediction
And in our Top News today, a meeting last week concerning federal housing giants Fannie Mae and Freddie Mac. Freddie’s Chief Economist Frank Nothaft commented that signs that our economy is slowly recovering may sink during the year, largely due to continuing problems related to the housing market.

Nothaft says that foreclosures will continue to put downward pressure on overall home prices and most likely will remain high through the year, though at a slightly better pace than we saw in 2011. And he expects home prices will begin stabilizing in the second half of the year, though we’re already seeing that happening in many markets around the country.

Donations of Distressed Properties
As we continue to tally how the tough real estate market affected many people by the end of 2011, one possibly beneficiary has been overlooked. That’s according to the President of the Cleveland-based Cuyahoga Land Bank. He says non-profit charitable organizations are receiving some of these distressed properties, which is great news for them. They apparently get foreclosed and other distressed properties as donations, renovate them and then sell them for a profit to help support their cause.

In many cases, as 2011 came to an end, businesses and individuals took advantage of potential tax breaks by turning over the keys to qualified groups in what becomes a “win-win” situation for everyone. Habitat for Humanity, for example, received nearly twice the number of donations in the year ending last June.

Bank of America revealed plans to donate more than 1200 properties by the end of this year. And last year, Wells Fargo donated over 1100 homes. No reports yet though, on whether the Salvation Army found any keys – in their red kettles over the holidays.

Number One: The overall economy.

We have to factor in economic forces such as employment, manufacturing, availability of capital and then also whether we are talking about the national, regional, state- or city-wide economy.

Number Two: The type of housing.

We need to consider whether are talking about newly constructed homes versus existing single-family dwellings, or condos, urban, suburban or rural.

Number Three: The Weather

That’s right, we have weather everyday…but snow, heavy rain, and even worse natural disasters have a strong impact on the housing market.

And then there’s the continuing issue of what are being called “contract failures,” where, for instance, the buyer and seller have agreed on a price and signed a contract, but then find out that what may have been an incorrect or faulty appraisal, or a newly implemented credit standard, results in that sale either being delayed, sometimes indefinitely, or sometimes cancelled altogether.

With those caveats in place let’s take a look last year’s housing market now; 2011 generally showed signs of progress in a long, painful recovery from the worst housing downturn in several generations. By and large, a good rule of thumb to evaluate the year is the volume of homes; and we have good news there as the number of homes sold increased in 2011. At the same time, the number of homes available for sale dropped. These two indicators together point to a release of the pent-up demand accumulated after several years of consumers sitting on the sidelines. And that took a lot of effort on the part of the buyer to improve his personal credit record, and often save enough over a long period of time to be able to make a larger down-payment than we’d gotten used to in the past decades.

In short, then, it’s possible we’re going to look back at 2011 as the year that we began a real, long-term, economically sustainable recovery.

Looking at the latest national figures that aren’t yet finalized but are giving us more than a few hints for the year, 2011 was actually pretty good. Mortgage rates hit record lows, foreclosed and other distressed properties began to drop as a percentage of the whole sales picture, governmental agencies began looking harder for ways to help struggling consumers, and the real estate industry itself found ways to adjust to what are probably new realities for sales in the coming years.

What this all adds up to is a generally optimistic snapshot of what’s to come, especially if you’re one of those more inclined to see the glass as half-full rather than half-empty. Naturally we’ll have all the data to keep you informed as 2012 gets fully into gear, right here on Real Estate Today.

Next, put your running shows on – because you’ll have to pull double duty – acting as a seller and a buyer at the same time.

Talk this step over with your REALTOR®. Get their advice about whether to list your home for sale first – or whether to start looking first. If homes in your area sell slowly, it might make sense to list your house right away. If however, they sell fast – you might want to start house-hunting first. In any case, your REALTOR® can help guide you here.

OK now let’s fast forward. Your home is on the market – and you’re looking for your next house. Let’s talk about what happens next.

One scenario: You find a house to buy before you get an offer. Yep, you find your dream house, and you want it – even though your current home is still for sale. Well, in that scenario, you can try to put the new place under contract using a ‘sale of home’ contingency. That means that you will buy the place IF your house sells. If your current house doesn’t sell, you can walk away. It’s a good plan for you – but the other side of the transaction might not like it – so it might not fly – but, it might.

But OK, say it does happen. You get your dream house under contract. But still – your house doesn’t sell. Well, in that case, if you have excellent credit, and the home you’re selling is in a hot market – you might be able to get a bridge loan. In which a lender agrees to lend you enough money to buy the dream house – until your current house sells. Bridge loans are not as common now as they were in the boom market, but they do exist.

Finally – what if you have the new house under contract – and you can’t sell your current home, and you can’t get a bridge loan? Well, you will probably have to say goodbye to the dream house.

And what about that nightmare scenario we mentioned earlier? In which you can’t sell your current house – but are under contract to buy the next one. Can they force you? Well, usually that doesn’t happen. For one thing, if you don’t sell your current house, you might not have enough money to buy the next one. And they can’t force you buy something you can’t pay for. Also, if your loan on the new place was based on selling your old place – the loan won’t happen. So once again, no money.
I wouldn’t worry too much about them FORCING you to buy the house. More likely? You could lose your earnest money deposit. Make sure to talk about all of that with your Realtor before you sign the contract.

OK, now let’s move on to the next scenario – which does not happen as often, but is really, really good if it does: You get an offer on your current home immediately. Before you find your next dream home.

In that case, first of all, congratulations! But now it’s time to figure out what you do next.

One option, is to go ahead with the sale…while continuing your house-hunting. After all, buyers are sometimes hard to come by these days. And if they offer a good price, you won’t want to pass it up. So – you go for it. Worst case scenario? You store your furniture and live in an apartment or a hotel for a while.

Another option, is ask the buyers for a ‘home of choice’ contingency. Meaning that you will sell them your home – unless – you can’t find another one. It’s definitely an option – but again, in a buyers’ market – they probably won’t like that.

A third option – ask the buyers to let you rent back your current house after settlement. Offer to cover their mortgage and the utilities during the rental period. That could be a win-win – especially if the buyers don’t have to get into the home right away. And hopefully that will give you enough time to find your next house.

But of course – the best scenario of all? You get an offer on your current place – and put an offer on your next place – and both sales happen, smoothly and without any hassles. Now that could truly make 2012 the best year ever!

Difficult? Yes. Impossible? No.

Talk all this over with your REALTOR®. Because in this kind of double transaction – you’ll need a professional in your corner, more than ever.

I’m talking about one of the most popular beliefs among people selling their home: That burying a statue of St. Joseph in your yard will bring about a quick, and profitable sale. That’s right – burying a statue of St. Joseph.

Now there’s some debate in how the St. Joseph statue exactly should be buried in your yard. Some will say to bury him upside-down with his feet pointed toward the sky. Some say to bury him in the front yard; others insist the back yard. Some say he needs to face the home. Others say he needs to face the direction of your new home, the one you’re moving to. And some home owners who don’t have a yard, well, simply just stick him in a flowerpot.

Whichever way you choose, many home owners will testify it’s true: St. Joseph brought them good luck in selling their home. Places that went from an old, stale listing – to a red-hot property virtually overnight.

OK, so that’s the theory – but does it work? Well, if you believe what you read – yes. There are entire blogs and web sites devoted to home owners talking about how burying the Catholic saint in their yard brought about a speedy sale. And one of those is stjosephstatue.com.

It’s there that we read about the Florida couple who claim that they sold their home in one day – at 97% of the asking price – even in a brutal real estate market – because they buried a St. Joseph statue.

And about the man in Texas who had been trying to sell for two and a half years – he buried the statue and within 5 days, his house was under contract.

We even found letters from people who don’t pray at all – but who tried it, and who claim their house sold immediately.

One of our favorite St. Joseph stories involved a family who kind of did it wrong…they just couldn’t get their home under contract, so they bought a St. Joseph statue, and buried it in their front yard. Trouble is, they buried it the wrong way. They accidentally had the statue facing away from their house…and pointing towards the house across the street. Now, that house wasn’t even on the market. Wasn’t even for sale. But – you guessed it – someone bought it anyway.

And then there was that seller who thought he’s give the St Joseph statue a chance – but it didn’t work. His house still didn’t sell, even with the statue buried in his lawn. So the seller got fed up. He dug up the statue, and threw it away. Yep. Threw it in the trash.

A few days later, the newspaper headlines read “Local Dump Has been Sold.”

If you’re so inclined – you can find special home-sales kits that come with a St. Joseph statue, including a prayer to give him a little extra help in doing his job of bringing you an eager buyer.

Now there’s just one last thing. If you decide to a bit of spiritual intervention from St. Joseph to sell your home, just make sure that once your home does sell and the deal is closed, you don’t forget about him. Dig up the statue once you’ve closed, and be sure to give it a spot of honor in your new home. Say, on the mantle, or in a sunny corner of the garden.

Because you never know. You may need him again someday.