U.S. Negative Equity Rate Dips Below 20 Percent in Q4

zillow map

Today, Zillow released the fourth quarter Negative Equity Report. Nationally, the share of homeowners with a mortgage that are underwater, owing more on their home than their home is worth, has dropped below 20 percent for the first time in years.

As home values have continued to rise over the past year, millions of underwater homeowners have come up for air and are finally able to put their home on the market. This increase in inventory should, in turn, help create a more balanced home shopping season than we’ve seen in the past few years, with buyers having more choice and perhaps less competition.

According to the most recent numbers, nearly 10 million people were underwater on their mortgage in the fourth quarter 2013, collectively owing $657 billion more than their homes are worth. But the number of underwater homeowners is slowly but surely receding. Almost 3.9 million U.S. homeowners were freed in 2013, and the negative equity rate fell to 19.4 percent at the end of the fourth quarter, from 27.5 percent at the same time in 2012.

Nationwide, the negative equity rate is expected to fall to 17.2 percent by the end of 2014, signaling further stabilization of the market and likely freeing up even more inventory.

Source

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Weekly Marketing Tips

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Advice for Home Buyers Interested in the Hampton Road Area

According to Market Watch, U.S. residential property sales have experienced a 10% jump from the previous year, with the Hampton Roads area of Virginia Beach, Norfolk and Newport News experiencing some of the strongest annual sales for a major metro area.

A Region Primed for Growth

It’s not surprising, really, that this area is quick to bounce back from the economic recession. Unlike many metro regions, this part of Virginia is still growing, with a 2% population growth between 2010 and 2012. It’s a region characterized by beautiful beaches, strong industry, and a military presence in Norfolk, home to the largest Navy base in the world.

A Good Time to Invest

It’s a good time to buy a new home on the Virginia coast. Many people are finally selling their homes after holding back in a tight economy, opening the door to good deals for first time home buyers. It’s important to keep future resale value in mind, as well. The median sales price in the Virginia Beach general area has been steadily rising over the past 14 years, going from $107,000 in 2000, to $230,000 in 2014. What this means is that, unlike other regions in the country, you probably won’t need to worry about your home losing value as you live in it, rather than gaining as an investment.

Tips for Buying Beachfront Property

Beach homes are a popular sell in this area, but you need to be a wary buyer. It’s a good idea to work with real estate agencies while planning your move. They can advise you as to hidden costs in the home — you might not realize at first that it’s located in a bad school district for your kids, or that the area is forecasted to experience heavy flooding in the next few years. Look for beach homes for sale that don’t require extensive renovation, but instead are already in decent condition and only require minimal work. It’s easy for optimistic homebuyers to underestimate the real cost of restoring a home. With the damage some homes have received, though, you’d end up paying more than the house is ultimately worth in repairs.

Other Real Estate Listings to Look Into

Although many buyers have their hearts set on beachfront property, there are a lot of other attractive locations worth considering. After all, the beach is usually just a quick car ride away. The Ghent neighborhood in Norfolk, for example, is a national historic district that features unique shops, beautiful churches, and tree-lined streets. One commenter on City Data agreed that Ghent was a personable community, noting that “sometimes it can seem like a big family.” This can be ideal for people looking for that small-town feel, with the advantages of living in a big city.

Do you have tips for new home buyers concerning beach homes for sale? Let us know in the comments.

Top Virginia Beach Home Investments for 2014

New wooden deck on house.

Thinking about adding a deck or remodeling your kitchen to increase the value of your home? Check out Remodeling magazine’s 2014 Cost vs. Value stats to see which projects add the most return on your investment before you do.

All the home improvement project on their list returned less than 100% of the money invested when the work is hired out, so it’s important that the improvement is either something you and your family will enjoy (like a new deck) or that is needed to maintain your house (such as a new roof).

Below are the projects that provided the highest and lowest return on investment, along with the average cost of the project if the job is hired out.

So, for example if you spent $10,000 on a new deck, it would add about 87% ($8,700) to the value of your home. As the improvement ages over time, the value would depreciate as well.

Home improvement projects with highest return on investment:

    • Replace entry door with prefinished steel door (97% return, cost: $1,162)
    • Add wooden deck (87% return, cost: $9,539)
    • Replace siding with fiber cement siding (87% return, cost: $13,378)
    • Convert attic space into bedroom addition (84% return, cost: $49,439)
    • Replace garage door using existing opener (84% return, cost: $1,534)
    • Minor kitchen remodel (83% return, cost: $18,856)
  • Replace windows with clad, wood windows (79% return, cost: $10,926)

Home improvement projects with lowest return on investment:

    • Convert room into home office (49% return, cost: $28,000)
  • Add sunroom addition (52% return, cost: $73,546)

NOTE: The above numbers are for home improvements with the labor hired out for the project. The rate of return on investment for a DIY project where you do the work yourself will be higher, assuming you do a good job!

Source

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Weekly Marketing Tips

Keep Track

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Snow Puts a Chill on Hampton Roads Home Sales

By Dave Mayfield
The Virginian-Pilot
© February 13, 2014

The home sales market in Hampton Roads hit a downdraft in January, and the region’s multiple-listing service speculates that last month’s unusually heavy snows are partly to blame.

Across the region from Virginia Beach to Williamsburg, sales of new and existing homes fell 16 percent in January from the same month last year, according to a report today from the Real Estate Information Network.

Some of the biggest drops were in South Hampton Roads. Sales were off 30 percent in Chesapeake, 27 percent in Portsmouth, 17 percent in Suffolk and 16 percent in Virginia Beach. Norfolk was the lone city on the south side that fared better than average, with a year-over-year decline of 9 percent.

The listing service said snowfalls, especially toward the end of a month, can delay settlements into the following month.

The January tally of 674 existing homes sold across South Hampton Roads and Western Tidewater was down 17 percent from the year before and was the lowest monthly total for that portion of the metro area since February 2010. Prices for existing homes nudged down to a median of $178,000 last month from $181,000 a year earlier.

In addition, 108 new homes were sold in January across South Hampton Roads and Western Tidewater – a drop of 27 percent from the same month in 2013. The median price of new homes sold in that area was about $291,000, down from $310,000 the year before.

The multiple-listing service said home listings totaled 10,222 across the entire metro area in January, barely changed from 10,169 the year before. It said the January inventory worked out to about 5.7 months of supply at current sale rates, down from 6.2 months a year earlier.

Sales of distressed homes remained high in January – about 29 percent of all existing homes sold across the metro area. But that was down from 35 percent of sales in January 2013. Distressed sales include foreclosures and short sales, which occur when a seller owes more on a mortgage than a house is worth.

Source

How to Approach Real Estate in 2014 and Beyond

2014

The current real estate recovery is like a marathon. Last year, buyers and sellers sprinted out of the gates at full speed, fueled by lowinterest rates and affordable home prices. The press and social media were full of stories about limited housing inventories, bidding wars and multiple offers. In 2013, real estate was sexy and headline-worthy.

As we move into 2014, it’s clear we’ve only run the first few miles of this marathon. Last year’s excitement will surely wear off, and there will be a lot less flashy magazine covers, posts, tweets or evening news stories about real estate. Most experts predict a slower, steadier, more even “pace” this year in most of the country, even as interest rates and home values inch up.

This doesn’t mean 2014 won’t be as good a time to buy real estate. It helps to look at the bigger picture and not get caught up in the micro stats or the latest headlines. Sure, we likely won’t see interest rates as low in 2014 as we did in 2013. But to put that into perspective, interest rates were as high as 18 percent in the 1980s, yet people still bought homes.

As you approach buying a home this year, it helps to focus on the long term by keeping the following five best practices in mind. These were best practices for home buying a generation ago. And they’ll most likely still be practical when the next generation of home buyers sprints out of the gate.

Buy when you’re ready

Just because you didn’t buy last year when the market was super hot doesn’t mean you’ve missed out. Could you have gotten in when the rates were at their lowest and values near the bottom? Sure. But were you ready to buy then? Probably not. The main thing to remember is that you should buy a home when you can afford it, you have your financing and you’ve found a home that meets your needs. That will always be the best time to buy.

Home buying is a journey

Despite how quickly the world works today, you can’t force a home purchase. It’s not like buying a television or a laptop. A home is a much more expensive and complicated purchase. It’s where you can feel safe and calm from the outside world, a place you can customize to your needs, and where you will make lasting memories. Because of this, buying a home comes with emotional and practical implications on top of the financial ones. Remember that a home is your place to live first and an investment second. Take the time you need to find the right home.

Don’t be driven by data

If you watch the nightly news or read news online, you’ll hear real estate market predictions and numbers on a national level. And at any given time, you’ll likely get conflicting real estate forecasts. A lot of information and data will come at you from many different angles — including social media. Don’t take anything to be an absolute. Keep your own goals and needs top of mind at all times.

Real estate is local

The national real estate news headlines may be about multiple offers and bidding wars. But that situation may only be relevant to one part of the country or even to just a handful of cities. Meanwhile, the neighborhood where you want to buy a home still has distressed sales and is more of a buyers’ market.

All that really matters in real estate is what’s happening in your own community. If you’re interested in getting into the market, follow the local economy and housing markets. Go to open houses and learn. Get connected to a real estate agent who has “feet on the street.”

Go with your gut

You know your financial situation better than anyone. You know your down payment amount, credit score, amount of savings and the upper limits of what you can afford to put toward homeownership every month. Apply what you know about your finances to your local real estate market. You know the neighborhoods, the commercial districts and the types of homes for sale. By merging these two, your gut will inform you on what’s a good buy, when it’s the right time to buy and how to approach a purchase.

In 2014, stay focused on what you know, stay local, take your time and don’t let outside forces sway your decision to buy a home. People have bought and sold homes for years, at higher prices and with higher interest rates. If you’re in it for the long haul, consider yourself at mile 3 of a 26-mile marathon.

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