Home sale offers new protection

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RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

June Existing Home Sales

NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: June Existing Home Sales
KEY DATA: Sales: -0.8%; 1- Family: 0 %; Condos: -7%; Median Prices (6 ’10-6 ‘11): +0.8%

IN A NUTSHELL: “It’s tough to turn around the housing market when equity has disappeared and mortgages are hard to get and we keep seeing that fact month after month.”

WHAT IT MEANS: Disappointing is the simplest way to put it. After housing starts popped, it was hoped that maybe there was some new life in the residential real estate market. At least when it comes to existing homes, that doesn’t seem to be the case. The National Association of Realtors reported that demand eased a touch in June led by a sharp drop in condo sales. Geographically, modest increases in the South and Midwest were offset by a sharper decline in the Northeast and a smaller drop in the West. The report pointed to a surge in contract cancellations as an explanation for the overall decline. Why that was the case is a good question. The logical reason is tight credit but by now you would think potential buyers and realtors would do some pre-approval action to find out buyer capacity. So I cannot give you a good reason for what hopefully is only a temporary phenomenon. There was some good news in the report as median prices rose from last June with the West and the Northeast up solidly. Both condos and single-family home costs managed gains.

MARKETS AND FED POLICY IMPLICATIONS: The housing market just cannot get much traction, at least the existing home market. We get new home sales next week and that is the segment of the market on which I am focusing. The reason is simple: Building more homes is where more of the jobs are created. Clearly, you cannot delink the two part of the market especially now. The large number of distressed existing homes is depressing the new house market. For builders the rise in existing home prices is a start. Clearly, prices need to increase a whole lot more but we may finally have found the bottom in prices and that points to more healing of the housing sector in the months to come. Investors are watching Washington and earnings so this report may be a tree in the forest. The debt ceiling charade may finally be coming to an end. Republicans got to vote on their spending cuts and Democrats will vote on their tax expenditure cuts. Now that the deadline is two weeks away, a compromise will have to be agreed upon. The alternative is simply unthinkable.
RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

A Reverse Mortgage: Is It Right For You?

A Reverse Mortgage: Is It Right For You?

A reverse mortgage is a financial option available to seniors which allows them to free up some of the accumulated equity in their home. This may be an appealing option for obtaining some extra income in your retirement to use for a variety of reasons; however, there are some important considerations to weigh before borrowing against your greatest investment. Here are some facts about reverse mortgages, and some tips for making the right financial choice.

What Is A Reverse Mortgage?

Sometimes called a lifetime mortgage, a reverse mortgage allows you to borrow against the equity in your home, which can be paid out either in one lump sum or in several payments over time. This amount does not have to be paid back to the lender during your lifetime provided you stay as a resident in your home and it remains your property. That percentage of the value of your home which you have taken out now becomes the property of the lender, and will be returned to them after the sale of the home. Your heirs still inherit the property upon your passing, and they have up to one year from that time to either refinance the property, or sell it and keep the remainder of the proceeds for themselves.

Do I Qualify For A Reverse Mortgage?

Depending on where you live, the qualifications for a reverse mortgage may differ. In general you must be 62 years or older, have no outstanding mortgages on the property upon which you are borrowing, and you must have sought the advice of a qualified financial advisor in order to prove that you fully understand the process. You can use the monies from a reverse mortgage for whatever you want, as there are no restrictions.

How Much Can I Get From A Reverse Mortgage?

Again, depending on where you live, the amount of equity you can receive from your home with a reverse mortgage will differ. In the U.S. there is a maximum limit of $625,500, no matter what the value of your home, but for most homeowners the actual amount will be considerably less. The actual amount you will get depends on a variety of factors such as the value of your property, the interest rates at that time, your age, and whether you want a lump sum payment.

Reverse mortgages can be a great addition to your retirement income, but being sure you know all the facts before going ahead will ensure peace of mind for both you and your family in the long term.

RE/MAX Connection Realtors disclaimer:
RE/MAX Connection Realtors are not licensed financial advisors, and are not providing any financial advice, you should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors are only providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.
Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.
RE/MAX Connection Realtors, 1000 East Lincoln Drive, Suite 2, Marlton, NJ 08053 www.goconnectionnj.com

November Existing Home Sales

NAROFF ECONOMIC ADVISORS, Inc.

Joel L. Naroff

President and Chief Economist

 

INDICATOR: November Existing Home Sales

KEY DATA: Sales: +5.6%; 1-Family: +6.7%; Condos: -1.9%  

IN A NUTSHELL:   “The housing markets upward climb from the depths of depression is continuing.”  

WHAT IT MEANS:   The housing market is coming back!  Okay, that is saying way too much about a sector that is still hurting.  Nevertheless, the direction is up and that is good.  Existing home sales rose in November, according to the National Association of Realtors.  Yes, I know, the sales pace remains pathetic but everything is relative.  Since hitting rock bottom in July, a consequence of the government’s home buyers’ credits disappearing, demand has steadily improved.  Most of the gain came in the single-family portion of the market.  Condo and coop purchases have improved modestly.  Looking across the nation, while every region posted an increase, the Midwest and West shined the most.  As for prices, they firmed but mostly in the Northeast.  With inventory declining, we could see prices rise slowly going forward. 

MARKETS AND FED POLICY IMPLICATIONS: Yes, Virginia, there is a housing market.  No, it is not a robust, economy leader but it is turning around.  Housing starts seem to be edging upward and now we see that existing home sales are on a clear improving trend.  Mortgage rates are still quite low even with the recent pop and that rise will likely hurt refinancings more than new purchases.  That, indeed, is what the Mortgage Bankers Association weekly applications data seem to be indicating.  The rates remain great on an historical basis and should hot stop too many sales.  The problem is more with equity and credit availability.  With prices so low and appraisals using many fire sale comparables, it is hard to get much money from a home.   Lacking equity, it’s tough to move and without people trading up or down, demand is limited.  That not only hurts the housing market but also affects labor mobility.  While another housing bubble would not be a good idea, some decent increases in home prices would be a great help.  Despite the depressed levels, investors should look at this report as a sign that housing could add somewhat to growth going forward.  As for the Fed, the members have hung their bond purchases on the economy with care, hoping a robust recovery will soon appear.  They will likely get that upturn, but not because of QE2.