State of the Union

In our Top News this hour – President Obama talks real estate – at this week’s State of the Union Address. In the speech, delivered before a joint session of Congress, President Obama promised to eliminate obstacles to refinancing for all responsible homeowners—not just those with government-backed mortgages.

So that’s the President’s plan. But will it ever see the light of day? That’s the question following the speech.

Bloomberg News reports that cost of the program will be covered by a fee on financial companies with more than 50 billion dollars in assets. Joshua Rosner, Managing Director of the independent research firm, Graham Fisher & Co. who advises regulators on housing and mortgage issues, says the likelihood of passage of the President’s plan during the election year of 2012 is minimal. The Wall Street Journal concurs adding that recent comments from Republican lawmakers make the passage of any major legislative initiative prior to the election unlikely.

Prediction For The New Year

And while you may not dancing in the streets yet, there are several recent indicators in the real estate industry pointing to a market on the mend and entering recovery mode, as reported by USA today and Deseret News.

Predictions for the New Year tend to center around stabilization before entering a slow but steady recovery.

Some signs that show you are seeing a move in a positive direction? Home sales are expected to increase this year, new homes are expected to bounce back, investors are showing renewed interest in home builder stocks and consumer confidence continues to rise through the New Year.

Remax Chairman Predicts Better 2012

In a recent You Tube video RE/MAX Chairman and Cofounder Dave Liniger shared his RE/MAX 2012 Top 10 Housing Predictions, chief among them is that 2012 will bring a better housing market. Here’s some of his top predictions for you.

He goes on to state that there’s a tremendous pent-up demand for housing particularly among young people and as the economy turns upwards they will become a formidable factor in the continued recovery of the real-estate industry.

Stigmatized Properties

If you are bargain hunting for a home, then what about a place where, well, a terrible murder happened? Maybe even serial murders? In real estate terms they’re called stigmatized properties. And yes – homes that were once crime scenes can offer you discounts of 10 to 25 percent, according to an article from Scripps Howard News Service and the Tampa Bay Times.

Randall Bell , who specializes in stigmatized properties, says mitigations, like remodeling and even applying for a new address, can help eliminate the stigma these properties carry. It varies by state whether you’re required to disclose serious crimes that have happened in a property, but Bell says it is important to be upfront and honest when you’re selling to avoid problems down the road.

Common Vocabulary For Real Estate

When you look at a listing, have you ever wondered if that full bathroom actually has a bathtub in it? With more than 900 multiple listing services across the country, terminology and data used to describe homes for sale can have a considerable difference.

But now, according to a report by Inman News, The Real Estate Standards Organization is going to meet in April to consider the adoption of a Data Dictionary which would create a common vocabulary for fields used in the MLS that describe properties.

Using our example of bathrooms, the Data Dictionary proposes breaking down the number of bathrooms into separate fields to provide more consistency and clarity in reporting. Other fields that will be addressed include number of bedrooms, square footage, and even days on the market.

Obama Creates Task Force

On Tuesday night during his State of the Union Speech, president Obama took on one of the ugliest parts of the nation’s housing downturn…and that is, alleged abuses by mortgage lenders. And the president announced the creation of a special Federal task force to fight back against those practices, on behalf of Americans who have been have been victimized – or who might be in the future.

The new unit is most likely going to be run by New York Attorney General Eric Schneiderman…who is well known for taking a ‘no-compromises’ approach to mortgage violations. In fact, according to the Wall Street Journal, Mr. Schneiderman used to be on the committee that is currently working on a 25 billion dollar settlement with the nation’s five largest banks, but he was apparently removed from that committee – because he was so vigorously opposed to any compromise with the lenders.

Home Builder Confidence On The Rise

Another sign that things are finally perking up for you in the new-home market is that builder confidence is at its highest level since June 2007. For the fourth month in a row, builder sentiment was on the rise, according to the National Association of Home Builders and the Wells Fargo Housing Market Index, which measures builder sentiment on current and future sales conditions and buyer traffic.

Bob Nielsen, NAHB chairman says this good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide.

Foreclosure Deal With Banks Nears

If a settlement between big banks and government officials gets the final go ahead, up to one million underwater borrowers may be eligible for a reduction on their mortgage.

MSNBC.com and Reuters report that under the proposed settlement, J.P. Morgan Chase, Bank of America, Wells Fargo, Citigroup, and Ally Financial would pay between twenty billion to twenty five billion dollars to settle alleged foreclosure abuses.

During a recent forum at the Winter Meeting of the U.S. Conference of Mayors in Washington, Housing and Urban Development Secretary Shaun Donovan said that they were very close to a settlement that would both fix the servicing problems, as well as help over one million families around the country stay in their homes and get the help they need.

Keep Up Your Winter Home Maintenance

As the January cold firmly settles in, a recent article at Realty Times reminds you not to skimp on maintenance during the winter months. In fact, it may be the most important time of the year to keep things in shape since your home may require some extra attention during the harsh weather.

Some maintenance jobs recommended include checking your doors and windows for leaks, servicing your heating system, assessing your duct work, cleaning your gutters and keeping your outside faucets on drip to prevent your pipes from freezing.

Rents On The Rise

If you’re in the buying market, housing affordability is near all-time highs but rental prices are continuing to climb according to rental listing service hotpads.com.

Rental costs went up nearly four percent in 2011 in twenty of the largest metro areas, with New York City having the highest rents in the country. Author of the report Paul Gleger told AOL Real Estate that in a lot of cases it’s getting to the point where buying makes more sense since rents are increasing dramatically, while home prices have been falling.

Don’t Shoot The Messenger

Don’t shoot the messenger. That’s the message from the Appraisal Institute. Sara W. Stephens, the Appraisal Institute’s president, is saying that appraisers don’t set the real estate market; they reflect what’s happening in the market and many homes simply aren’t worth what their owners think they are.

Appraisers have been taking heat over low home values, with critics arguing that values aren’t matching a home listing or contract’s price and that evaluations are unfairly weighing distressed properties into the equation.

Stephens, however, claims that appraisers know what adjustments to make, if any, when using distressed sales as comparables, and in some markets, distressed sales are so prevalent that they have to be used as comparables.

Now let’s crunch those numbers. Remember, the Pending Home Sales Index is a forward-looking indicator based on contract signings, not closed sales. The PHSI declined just THREE-AND-ONE-HALF percent in December. But compared to December of last year, it was up nearly SIX percent.

Even though we saw our first small month-to-month dip in a while, NAR Chief Economist Lawrence Yun said the trend line remains positive and that even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period.

However, there are still some concerns, namely the continued high level of contract failures that have been plaguing the market recently.

Even though one third of REALTORS® have reported contract failures, home buyers are not giving up. Yun said some buyers successfully complete a sale after a contract delay, while others stay in the market after a contract failure and make another offer. After all, housing affordability conditions are too good to pass up right now and it’s the hope of the National Association of REALTORS® that lending conditions will gradually improve with sustained increases in closed existing-home sales.

Now, as we said earlier, for the past few months pending home sales have been phenomenal and usually we see them reflected in existing home sales a couple of months down the road. That’s the average of how long it takes to go from a pending contract to closing. So we should see some good existing home sales over the next couple of months and that, as Mr. Yun says, could well lead to improved lending conditions, a better time for buyers and sellers, and a reduction in these contract issues.

Now let’s take a quick look at pending home sales by region.

The Midwest saw some of the best of the pending home sales action, rising 4 percent from November, and an excellent 13 percent from December a year ago.

The Northeast had a tough winter and it showed up in the drop in pending home sales there, where they were down about 3 percent from November, but even with that decrease, they were still pretty much on target with a year ago, dropping less than 1 percent.

The South saw a slight month-to-month slip of about 2 percent, but pending home sales were still approximately 5 percent above where they were 12 months ago.

And the West saw the biggest drop from November, at eleven percent. However, pending home sales in the West were still about 4 percent higher than they were in December 2010.

Your wife turns to you and says: “Honey, I wonder if the house is all right?”

So you pick up your phone, and after a few clicks you say – “Yep. House is fine, dear. The house just texted me that everything is OK.”

Because, yes – there’s an app for that.

This may sound like something picked from a sci-fi movie, but believe it or not, homes are starting to get a voice, alerting home owners when something is wrong and allowing you to check in to make sure everything is OK. And safety isn’t all, you also can monitor your utilities and check on your appliances, all from thousands of miles away. That’s obviously great for any home – but for a second home, located miles away? It can be worth its weight in gold.

Monitoring systems like that can serve as a source of comfort for second-home owners, who may grow worried when weather disasters strike…or, after a renter leaves your house and you want to make sure they didn’t destroy it. Or even, if you hear a few homes have been broken into – and you want to see if yours is among them.

There’s a bunch of gadgets on the market, but let’s highlight just a few.

You may already have an alarm system in the house. But did you know that many of these systems are now adding capabilities to text or e-mail you whenever the system senses something isn’t right, or for whenever you just want to check in? These can be handy add-on features for those who are far away.

Lowe’s, the home improvement retailer, will soon offer a do-it-yourself monitoring system, an Internet-based home management system called Iris, out later this year. Using it, you’ll be able to monitor and control your home’s alarms, lighting, door locks, motion sensors, and other home systems–all using your smartphone, tablet, or computer.

Here’s another neat one from Schlage, the same company that makes locks and deadbolts. Their ‘ LiNK Wireless Keypad Deadbolt’–which allows you to control your homes lock by key or code…or even control it from the Internet or your cell phone. Besides the attraction of a keyless entry, you can use it to program different codes…so if you need to let the cleaning lady in once a week while you’re away, you can give her a special code to use. The code will only be activated for a certain time of day. The device will even text or e-mail you to let you know when she arrives, and let you know how long she stays. This device may also come in handy for second home owners who rent out their properties. Imagine giving your renters a code instead of a key to enter the home. A code in which you can set to be activated for a specified period of time.

Want to see what’s going on at your place? Well, let’s start outside. Protection One’s eSecure system has cameras so you can even see whether there’s snow on your driveway. You can also use the device to set alerts, like in case the water heater ever springs a leak or frozen pipes start causing flooding in the home–…The service can send a text message to your phone that says “water detected.” Now that’s peace of mind.

Some owners would like to use a video surveillance system at their second home – one that allows them to see live video on their computer screen…hundreds of miles away. Samsung makes a few models, and so does a company called drop cam. The good thing about these web cams is, they don’t need a computer to work…just the internet. So as long as the DSL line is still up and running – you can see exactly what’s going on inside your place, when you’re not there.

You know Apple’s Siri probably has some thoughts about home monitoring too. For home owners with the iPhone 4S, you’ll soon be able to control your home’s lights, set the thermostat, and even operate the home theatre system using Siri–that is, Apple’s all-knowing, voice-activated personal assistant. Carnes Audio Visual is debuting a Siri-enabled smart home system to let you talk with your home appliances and systems while you’re away, and ensure everything is working the way it should be.

And Google’s Android platform also wants to give homes a louder voice with its Android-at-Home program. It aims to connect every household electronic, appliance and system in your home to an Android app so that you can monitor and control all the systems in your home, from wherever you may be.

And finally – if you have a second home, have you ever packed up the car and started the drive home…and suddenly wonder, ‘Did I leave the stove on?’

Well, there’s an app for that too. Just a few weeks ago at the Consumer Electronics Show, there was a big push…designed to connect you to your appliances, like never before.

So before too long, instead of turning around and driving all the way back to your second home to check the stove – you’ll be able to just look at your phone – and know the answer. And if in fact you did leave the stove on – you’ll be able to turn it off, with just a few clicks on your phone.

However, if you forgot to empty the trash? Better go back. Because no…there’s no app, for that.

So let’s start with the perfect scenario:

First, you and your partners agree on a REALTOR® and you get to work. You find the perfect vacation house, write a contract, and before you know it, you’re all sitting at the settlement table. And since these are your best friends, or close family, you agree to split everything. The down payment, the closing costs, the taxes, and the upkeep.
You’re all on the mortgage, and you all agree to split the monthly payments.

But, that’s not all… Need a new fridge? You split the cost. Need a new canoe? Once again, you split the cost. And every year you sit down together and decide who gets the place, and when. Everyone’s happy – congratulations!

And that’s the perfect scenario…

But now, let’s take a dose of reality!

First of all, paying for it.

If you and your friends are paying all cash, you can skip this step. You just both arrive at the settlement table with a wheelbarrow full of money. But, if you are planning on getting a mortgage? That’s where things get complicated. Some things you need to consider when getting a mortgage with other people include considering their credit score, and how much money they make every year? …How much do they have saved up? Chances are, you don’t know. And chances are, they don’t know those same things, about you. Remember also, in this tight credit environment, you might have a tough time finding a lender willing to write one mortgage on one property, for two or more families. It’s not impossible, but it will be a challenge.

Assuming you manage to get the mortgage, and you and your friends actually buy the place. Now the real fun begins. Because virtually every decision you make, from paint colors, to replacing the air conditioner, to buying that new canoe, is going to be done by committee. Everyone’s going to have a say — and have to agree — on expenses and bills, in addition to scheduling fair use for all involved.

And, don’t forget the other issues that could arise. What if your friend loses his job, and can’t pay the mortgage, the bills, or any of the expenses? And, on top of that, he still wants to use the place? Or, sometimes in arrangements like these, the friend believes they should pay a lower share because they don’t use the property as often. These are issues that should be accounted for during the planning stages of the property purchase.

And finally… What if your friends want to sell? Depending on the type of deed you get, your friends might be able to sell their part, and you might end up sharing the place with another family, you don’t even know. Or, if your ownership interest can’t be divided like that, you might be forced to either buy out your friend, or just sell. You can’t force them to own it, and keep it – because if they want to sell and you don’t? They could go to court and ask for a court-ordered sale.

And poof! There goes the friendship.

Obviously, there are real challenges to the idea of co-owning a second home, but many people are successful with this venture – they write down every possible issue, and how to deal with them, in an agreement that they all sign. They often agree to appoint one person as the treasurer, and everyone else pays them a lump sum on a regular schedule And, many families agree to be flexible if tough financial times hit.

But for many of them, the real key to making it all work, is the power of friendship. And friendship is the key ingredient to making sharing a second home work, in the long run.