Is there a “best day” of the week to list your property for sale?
A recent analysis of over 1 million listings over nearly two years suggests there may be. Redfin, an on-line real estate brokerage known for sharing its commissions with sellers, recently reviewed property listing and sales data nationwide to determine which listing day correlates with the highest sale success.
The result? 
Homes listed on Friday received 19% more tours and were 12% more likely to sell within 90 days. Thursday and Friday listings were also found to sell slightly closer to the original list price than properties listed on other days.
Click here for study results and some reasons why Friday listings may do better.
Regardless of which day your property is listed, setting the right listing price and ensuring proper positioning in the marketplace is key to selling any home. If you are considering selling a home soon, make sure you are working with an agent who understands the dynamics of today’s market.
For a complete market analysis and listing presentation, contact me for an agent referral.
In scrolling through some older posts, I found this one from 2009. Following the recent downgrade of the US Credit Rating, continued high unemployment and raging campaign rhetoric regarding how best to fix our broken financial system, it remains a highly relevant commentary on how we got here. Hope you enjoy it.
On a recent Saturday afternoon I tuned in to National Public Radio and ran into one of my favorites: This American Life. Any regular NPR listener knows this show is one of the most engaging programs every invented, with quirky takes on the thoughts that run through all of our minds but most of us dismiss the second after they arise. Thoughts like “How long does it take to boil a 3 pound ostrich egg?” and “What is the statistical probability I will meet my match in life?” OK, maybe these things don’t run through your mind everyday, but when tracking interest rates and economic news all day, they are welcome diversions in mine.
The majority of the program was devoted to economic team Alex Blumberg and Adam Davidson, who in 59 minutes presented one of the best explanations of the current financial crisis anyone could hope for — the big picture basics, touching on everything from how a bank balance sheet works to the practical and political challenges facing every government recovery plan.
The best part? They got economic experts and banking analysts to speak plain English about why we are where we are.
The conversation focuses on the banking system, and covers the two basic options for confronting today’s crisis: buying up toxic assets to remove them from bank balance sheets, or injecting new capital to offset the losses incurred by banks continuing to hold bad assets. Because pricing these assets has been nearly impossible given their complexity, the first option could be tremendously costly to taxpayers, transferring huge losses from the banks to the rest of us. The second option involves the taxpayers taking an equity stake in the banks themselves, amounting to nationalization of the banking system.
Both options are controversial. The problem, say analysts, is less a technical one and more a political one. Neither option has been fully embraced, and the debate rages on as the government straddles the fence.
A third option – letting the banks fail and the system work itself out – is even less tenable. Fed Chairman Ben Bernanke, testifying before Congress, observed that “If we let the banking system fail, no one would talk about the Great Depression anymore, because this will be so much worse.”
In the end, it seems the damage is done. According to Columbia Business School Professor David Beim, “What is happening to us is something that goes way beyond toxic assets in banks, it’s something that has little to do with the mechanics of mortgage securitization or ethics on Wall Street or anything else. . . The problem is us. We have over borrowed.” It seems all that is left is sorting out the winners from the losers.
You may not feel much better after listening, but you will have a decidedly clearer picture of what has often been a murky pool of news, numbers and analysis to even the most well informed business readers.
To hear the entire broadcast, try this link or visit “This American Life” at www.thisamericanlife.org.
Despite low home prices, some of the lowest interest rates in history and even a generous recent tax credit, it’s hard to find anyone getting excited at the prospect of applying for a mortgage these days.
Battered by high default rates, record foreclosures and increasing capital reserve requirements, lenders are being ultra-cautious when qualifying new borrowers.
Borrowers who are unable or unwilling to satisfy today’s tighter lending requirements are faced with 2 choices: paying cash or foregoing their decision to purchase or invest altogether.
With the Asset Based Lending program, Chicago Bancorp clients enjoy a third, more powerful alternative.
Chicago Bancorp’s asset based loan is a powerful tool that allows qualified borrowers to leverage their publicly traded assets for cash that can be used for any purpose. Among the benefits:
- Fixed interest rates between 2.5% and 4.5%
- Interest Only quarterly loan payments
- No income or credit criteria
- No closing costs, banker or transaction fees
- Turn times of 2-4 weeks, from term sheet to funding
- Loan terms of 3, 5, 7, or 10 years
- Funds that may be used for any purpose, including real estate purchases, renovations, business expansions and more
- Loans available for up to 80% of the securities’ value
- Borrower retention of all dividends and upside market appreciation of the securities
Chicago Bancorp clients have used this innovative product to meet a variety of financing challenges:
When a client needed to refinance a commercial loan for a real estate development project, Chicago Bancorp worked with the developer to pay off the existing lien and use the security for our collateralized repurchase agreement. The borrower received a much higher Loan-to-Value along with a lower interest rate.
Loan Amount: $2,725,000 / Interest Rate: 3.25% / Term Sheet to Funding Time: 2 Weeks
Another client was buying a foreclosed property from a bank and needed funding in two weeks or less. Traditional funding was not available for this borrower, but the Asset Based Loan provided a solution. The borrower was a Special Needs Trust and pledged mutual funds and Exchange Traded Funds (ETFs) as collateral.
Loan Amount: $505,000 / Interest Rate: 3.75% / Term Sheet to Funding Time: 9 Days
A business owner was refinancing a commercial loan and was unsatisfied with the terms offered by his bank of 20-plus years. This borrower had a portfolio of a wide range of many different individual stocks.
Loan Amount: $627,000 / Interest Rate: 4.00% / Term Sheet to Funding Time: 2 ½ Weeks
The Asset Based Loan is an example of Chicago Bancorp’s longstanding commitment to providing trusted, reliable solutions to address the widest range of client financing needs, from first-time homebuyers to seasoned investors.
For details on our Asset Based Loan program, click here or contact me direct at 312-738-6253.
Loan-level pricing adjustments are mandatory loan fees based on a borrower’s specific default risk.
First introduced in 2008, LLPAs were Fannie Mae’s and Freddie Mac’s logical response to massive balance sheet losses. At the time, the housing market was deteriorating and mortgage delinquencies were rising.
To “better align with loan risk characteristics”, the two entities created specific fees to be associated to specific loan traits, to be charged to all borrowers.
LLPAs are still in existence today.
Today’s loan-level pricing adjustments can be grouped into 5 basic categories. Application exhibiting any of the 5 traits can trigger LLPAs, adding to a borrower’s loan fees:
- Credit Score (i.e. the borrower’s FICO is below 740)
- Property Type (i.e. the subject property is multi-unit)
- Occupancy (i.e. the subject property is an investment home)
- Structure (i.e. there is a subordinate/junior lien on title)
- Equity (i.e. mortgage insurance is required by the lender)
In many respects, loan-level pricing adjustment are similar to auto insurance. All things equal, the driver of a “fast” car will pay higher costs than the driver of a “safe” car. The same is true for mortgages.
Loan-level pricing adjustments are public information. Fannie Mae publishes the complete LLPA matrix on its website. The chart can be confusing, however. If you have questions about how LLPAs work, talk with your loan officer.
Mortgage markets improved slightly through last week’s holiday-shortened trading sessions. Better-than-expected housing data led mortgage rates higher Tuesday and Wednesday, but rates retreated Thursday morning in advance of Good Friday.
Markets were closed Thursday afternoon and Friday. They re-open this morning.
Conforming mortgage rates in Illinois ended last week unchanged overall. It’s a strange outcome considering that Standard & Poor’s issued a downgrade on U.S. debt Monday.
In most instances, a debt downgrade would lead investors away from a particular group of securities — in this case, a group that includes mortgage-backed bonds. However, Wall Street reacted in the opposite.
When S&P issued its opinion, however, mortgage bonds rallied.
Some say this is because the downgrade will force Congress to address a rising debt-load; others think a downgrade slows growth which, in turn, slows down inflation. Both scenarios are considered a positive for mortgage bonds. Hence, mortgage rates fell.
This week, momentum could reverse. In addition to a slew of housing and economic data including New Home Sales, Pending Home Sales, and Consumer Confidence data, the Federal Open Market Committee is meeting for the third time this year. And this month, the FOMC is meeting a little differently.
Usually, when the FOMC gets together, it adjourns and releases a press statement to the markets at 2:15 PM ET. This month, though, the FOMC will release its statement at 12:30 PM ET, and then Fed Chairman Ben Bernanke will hold a press briefing at 2:15 PM ET to address the aforementioned statement. He’s expected to add growth forecasts to the official FOMC release, among other items.
Whenever the FOMC meets, mortgage rates can be volatile. This week, with the new press briefing format, that volatility is even more likely.
If you’re floating a mortgage rate or wondering whether to lock, mortgage rates will be at their “calmest” levels of the week Monday and Tuesday. Once Wednesday hits, and the FOMC statements begin, expect for rates to change.
Home resales rose 4 percent last month, according to the March Existing Home Sales report. A total of 5.1 million homes were sold on an annualized, seasonally-adjusted basis.
The strong results re-establish the national, long-term trend toward rising home resales.
March marked the 6th month out of eight in which sales volume has increased and sales are up 32 percent from July 2010 lows.
Home supply has resumed its downward trajectory, too.
At the current pace of sales, the entire home resale inventory would be depleted in 8.4 months. This is 0.1 months faster as compared to February, and a full month faster than the 12-month average.
The Existing Home Sales report also included a breakdown by buyer-type.
- First-time buyers bought 33% of homes, down from 34% in February
- Repeat buyers bought 45% of homes, down from 47% in February
- Investors bought 22% of homes, up from 19% in February
35 percent of buyers paid in cash.
And, perhaps most noteworthy, according to the National Association of REALTORS®, 40 percent of March home resales were “distressed properties”. Distressed homes include foreclosures, short sales, and REO and typically sell at discounts “in the vicinity” of 20 percent.
Home prices in Chicago are based on the basic economic theory of Supply and Demand. So, with home supplies dropping and demand for homes rising, it’s reasonable to expect home values to rise later this year.
If you’re in the market for a home, play the recent trends to your advantage. Today, homes are affordable and mortgage rates are low. This may not be the case later this year. The best “deals” of the year may be what you buy now.
According to the Census Bureau, seasonally-adjusted, single-family Housing Starts rebounded in March, increasing 8 percent over February’s 2-year low.
We can’t put too much faith in the data, however, because for the second straight month, the government reports that the data’s margin of error — 15 percent – exceeds its actual measurement.
As written in the footnotes, there’s no “statistical evidence to conclude that the actual change [in Housing Starts] is different from zero.”
In other words, single-family Housing Starts may have dropped up to 7 percent last month, or may have increased by as much as 22 percent. We won’t know for certain until several months from now. As the Census Bureau gathers more data, it will revise its initial monthly findings.
Such adjustments are common. February’s starts were revised higher by 4.5%, for example.
Also included in the Census Bureau’s report is the March 2011 Building Permits tally. As compared to February, permits were higher by 6 percent nationwide. This is a noteworthy development because permits-issued is an excellent forward-predictor for housing.
When permits are issued, 86 percent of them will start construction within 60 days. This means that new home sales and housing stock should follow the Building Permits report trend, but on a 2-month delay.
Permits were strong in all 4 regions last month:
- Northeast : +2.6 percent from February
- Midwest : +10.0 percent from February
- South : +5.3 percent from February
- West : +5.3 percent from February
With Building Permits rising, we can infer that the housing market is improving.
Therefore, if you’re currently looking for new construction, consider that the market may be less favorable for buyers 4-6 months from now than it is today. Especially because homebuilders are already projecting higher sales volume.
The better time to buy new construction — relative — may be now.
Homebuilder confidence is falling — a good sign for buyers of newly-built homes.
According to the National Association of Homebuilders, the Housing Market Index slipped one point to 16 in April. It’s the 5th time in 6 months that the index read 16 — a figure exactly in line with the 1-year average, but still considered “poor”. The Housing Market Index reports on a scale of 1-100.
Values of 50 or better representing “favorable conditions”. Values below 50 are considered “unfavorable”.
It’s been 5 years since the Housing Market Index read north of 50.
As an index, the HMI is actually a composite of three separate surveys, the results of which can be as telling as the final, compiled results. The surveys focus on specific aspects about a homebuilder’s business, and use the broader responses to gauge overall market “sentiment”.
The 3 questions are:
- How are market conditions for the sale of new homes today?
- How are market conditions for the sale of new homes in 6 months?
- How is prospective buyer foot traffic?
In April, interestingly, home builders felt market conditions were worse across the board, but still cited higher buyer foot traffic. This may be the result of a combination of rising mortgage rates and falling home values. Both tend to be bad for builders, and both tend to spur home buyers into action.
As a home buyer this spring, therefore, use the HMI data to your advantage. When home builders feel less confident on housing, buyers can often exact better concessions and/or upgrades during the negotiation process.
And, so long as mortgage rates continue to rise, that pressure on builders should build.
Mortgage markets improved last week, buoyed by two days of out-sized gains. Mortgage rates bounced off their 8-week highs on much weaker-than-expected inflation data, and debt concerns abroad.
It’s an abrupt change in mortgage rate momentum.
Since the Federal Reserve’s March 2011 meeting, in which the Fed said rising energy costs are “putting upward pressure on inflation“, inflation chatter has figured big for Chicago mortgage rates. With each tick higher in gas prices; in every conversation on U.S. debt load; as fruits and vegetables get more expensive at the supermarket, Wall Street’s fears of inflation have grown, and rate shoppers have suffered.
The connection between inflation and mortgage rates is straight-forward. Inflation is the devaluation of the U.S. dollar — the currency in which mortgage bonds are denominated. As the dollar loses values, so do mortgage bonds, therefore, leading mortgage rates to rise, inevitably.
Leading up to last week, concerns peaked and rates did, too. And then, a strange thing happened. The government’s March inflation report showed inflation well under control.
The results surprised Wall Street and the trades that had previously served to pump rate up, last week, ran in reverse.
The biggest gains were made Friday.
This week, inflation takes back-seat to housing data. There’s a lot of it coming.
- Monday : Homebuilder Confidence Index
- Tuesday : Housing Starts and Building Permits
- Wednesday : Existing Home Sales
- Thursday : Housing Market Index
There’s no data due Friday with markets closed for Good Friday.
This is a holiday-shortened week so expect low trading volume to render rates more erratic than typical. If you’re not yet locked in to a mortgage rate with your lender, consider doing it this week.
Foreclosure activity is much slower this year than last.
According to foreclosure-tracking firm RealtyTrac, the number of national foreclosure filings plunged 35 percent in March 2011 as compared to March 2010, a statistic that reflects a more healthy housing market and more robust outlook for 2011.
A “Foreclosure filing” is defined as any of the following : a default notice, a scheduled auction, or a bank repossessions. Foreclosures filings were down in all but 8 states last month.
Activity remains concentrated, too. More than half of all bank repossessions can be tied to just a handful of states.
In March, 6 states accounted for 51% of activity.
- California : 15% of all repossessions
- Florida : 9% of all repossessions
- Arizona : 7% of all repossessions
- Michigan : 7% of all repossessions
- Texas : 6% of all repossessions
- Nevada : 5% of all repossessions
At the other end of the spectrum is Vermont. With just 5 repossessions for all of March, Vermont accounted for 0.008% of repossessions nationwide.
Distressed homes remain in high demand among today’s home buyers, accounting for almost 40% of all home resales. It’s no wonder, either. Distresses home typically sell at a steep, 15 percent discount as compared to non-distressed properties.
Buying foreclosures can be a great “deal”. However, make sure you’ve done your homework.
Buying homes from banks is different from buying a homes from “people”. Contracts and negotiations are different, and homes are often sold with defects.
If you plan to buy a Chicago foreclosure, therefore, make you you speak with a licensed real estate professional before submitting a bid. You can research a home online and learn a lot of the process, but when it’s time to purchase, put an experienced agent on your side.
