Bozeman Montana Real Estate Information Archive


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Affordability Reaches Highest Level in 20 Years

Homes are more affordable to more families, according to the latest index for the first quarter of 2011 that shows affordability reaching its highest level in more than 20 years.

Nearly 75 percent of all new and existing homes sold in the first quarter of 2011 were affordable to families earning the national median income of $64,400, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. The previous high was set in the fourth quarter of 2010 with 73.9 percent.

"With interest rates remaining at historically low levels, today's report indicates that home ownership is within reach of more households than it has been for more than two decades," says Bob Nielsen, chairman of the National Association of Home Builders.

The most affordable metro housing market in the nation? Syracuse, N.Y., in which 94.5 percent of all homes sold were affordable to households earning the area's median family income of $64,300.

Other metro cities ranking high on the affordability index were Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; Warren-Troy-Farmington Hills, Mich.; and Toledo, Ohio.

Meanwhile, the least affordable major housing market for the first quarter of 2011 was New York-White Plains-Wayne, N.Y.-N.J.

Source: “Housing Affordability Rises to Record Level, Tight Financing Continues to Constrain Sales,” National Association of Home Builders (May 25, 2011)

Will REOs Hamper a Housing Recovery?

by The New York Times

Will REOs Hamper a Housing Recovery?

The nation’s largest banks and mortgage lenders currently own more than 872,000 homes properties in which they repossessed from foreclosure, according to RealtyTrac. That is nearly twice the amount they repossessed in 2007, when the financial crisis began.

But the problem may get even worse: Banks are ready to repossess another 1 million homes in foreclosure, RealtyTrac reports.

The swelling number of lender-owned homes has economists concerned because higher inventories of distressed homes can depress overall home values. Economists say that it could take lenders three years to sell their foreclosed home inventory.

“It remains a heavy weight on the banking system,” says Mark Zandi, the chief economist of Moody’s Analytics.

Indeed, the high number of lender-owned homes stands to cost banks $40 billion in additional losses as they’re forced to sell these homes at sharp discounts over the next two years, according to Trepp, a real estate research firm.

Real estate professionals told The New York Times that lenders seem overwhelmed by the huge inventory of homes. They also say these lender-owned listings are often out of date and overpriced by as much as 10 percent, and that lenders take too long to accept an offer.

These homes also can sit in limbo for nearly two years. It can take 400 days just for lenders to foreclose on the home and then 176 days, on average, to sell it.

Source: “As Lenders Hold Homes in Foreclosure, Sales Are Hurt,” The New York Times (May 23, 2011)

U.S. Home Sales by Foreign Buyers Surge

by National Association of Realtors

U.S. Home Sales by Foreign Buyers Surge

The U.S. continues to remain a top destination for foreign buyers as international purchases surged by $16 billion this year, one of the highest increases in recent years. This is according to the National Association of REALTORS®2011 Profile of International Home Buying Activity. According to the survey, total residential international sales in the U.S. for the past year ending March 2011 equaled $82 billion, up from $66 billion in 2010. Total international sales were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing-home sales in the U.S. reached $1.07 trillion.

“The U.S. has always been a desirable place to own property and a profitable investment,” said NAR President Ron Phipps. “In recent years we have seen more and more foreign buyers coming here to take advantage of low prices and plentiful inventory. In addition to the advantageous market conditions, REALTORS® in this country have a global perspective and experience in working with clients from different cultures and real estate practices, helping them bring value to their international clients.”

Historically, foreign buyers have been attracted to property ownership in the U.S. for a number of reasons. U.S. homes are generally less expensive than comparable foreign properties, homes in this country are viewed as a secure investment, and the U.S. market offers rental opportunities and long-term appreciation potential.

More recently, REALTORS® have noticed new factors motivating foreign buyers. Many U.S. colleges and universities have a significant number of international students, and some foreign families are purchasing U.S. properties in college areas so their child has a place to live. Another source of international demand is foreign executives temporarily working in the U.S., some of whom prefer to purchase a residence instead of renting.

“Besides the strength of the dollar and the general economic trends in the U.S., international buyers are also recognizing the benefits of home ownership in this country, especially in the case of recent immigrants,” said Phipps. “Many foreigners perceive owning a home here as an important accomplishment in their efforts to become established in this country.”

Recent international buyers came from 70 different countries, up from 53 countries in 2010. For the fourth consecutive year, Canada was the top country of origin, with 23 percent of sales to foreigners. China was the second most popular country of origin, with nine percent of international sales this year. Tied for third were Mexico, the U.K., and India. Argentina and Brazil combined reported an increase in foreign sales with five percent, up from two percent in 2010. The top five countries of origin accounted for 53 percent of international transactions in 2011.

The average price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. However, 45 percent of international purchases were under $200,000. This price segment has grown significantly over the years, most likely due to overall price declines in the U.S. as well as the strengthening of some foreign currencies.

Almost every state had at least one international transaction in the past year. The four states with the heaviest concentration of international buyer activity have remained the same over the past five years. Florida had 31 percent of total international transactions this year, the most of any state. California had 12 percent, Texas had nine percent, and Arizona rounded out the top four with six percent of international transactions.

Foreign buyers are primarily interested in three factors when deciding where to buy in the U.S.: proximity to their home country; convenience of air transportation; and climate and location. Generally, the East Coast attracts European buyers. The West Coast remains popular for Asian purchasers. Mexican buyers are traditionally attracted to the Southwestern markets. Florida is most popular among South Americans, Europeans, and Canadians.

Similar to last year, 28 percent of REALTORS® in 2011 reported working with an international client. Fifty-five percent served at least one foreign client, while the bulk of international transactions were handled by a small percentage of REALTORS®. Only eight percent of members obtained 50 percent or more of their transactions from international clients.

Sixty-one percent of foreign buyers purchased a single-family home while 36 percent bought a condo/apartment or townhouse. In addition, 62 percent of international purchases were reported as being all cash. This percentage is significantly higher than all-cash purchases for domestic buyers, mostly due to the differences in international credit reporting standards. Financing challenges continue to be a major hurdle for international buyers, with 32 percent reporting these as their reason for not buying a home. Many REALTORS® reported that their foreign clients faced mortgage financing issues, as well as problems with legal, tax and immigration laws.


How to Get Mortgage Lending Moving Again

by Brian Summerfield - Realtor Magazine

How to Get Mortgage Lending Moving Again
Why did a mortgage finance system that had endured for decades stall and then break down in 2008? And what’s required to get mortgage lending back on track?

Those were the central questions of the Mortgage Liquidity Symposium held yesterday afternoon at the Midyear Legislative Meetings & Trade Expo in Washington, D.C. Panelists representing the banking sector, government-sponsored enterprises, and advocacy organizations participated in the discussion.

Neither of those questions lends itself to an easy answer. The first is challenging because so many parties made mistakes that led to the meltdown, said David Stevens, the former FHA head who now serves as CEO of the Mortgage Bankers Association.

“Our entire industry made pathetically bad decisions,” he said. “We all participated in this mess that we got into.”

On the mortgage financing side, the short-term solution to the problem was getting as far away from the loose conditions of the previous decade as possible.

“As an industry, we had to get back to solid, sound underwriting — full documentation and verification of income and assets,” said Cara Heiden, co-president of Wells Fargo Home Mortgage.

“We’ve clearly improved the credit standards and credit policy,” said Michael Williams, CEO, Fannie Mae. “Now we’re pretty comfortable with the credit quality that we have.”

Other panelists expressed concern that the pendulum had swung too far in the direction of caution. “A lot of people are intimidated because they’ve heard how restricted and conservative lending is,” Heiden acknowledged. That fear, combined with lender recalcitrance, has restrained a recovery in housing.

Panelists identified the following conditions as necessary for a sustained resurgence in mortgage lending:

▪ Economic confidence: To get lending back to normal, “there’s a level of confidence needed in the market more broadly,” Stevens said. That’s getting better, though, in part because of performance improvements in financial institutions’ assets. “That means the healing process is on its way,” said Doug Jones, consumer sales & institutional mortgage service executive at Bank of America Home Loan.

▪ Job creation: “The key to the stability of the housing market is the stability of the jobs market,” said Marc Morial, CEO of the National Urban League. “A person without a job can’t afford anything. They can’t afford a mortgage and they can’t afford to rent.” While the private sector has been adding jobs in recent months, the unemployment rate is still well above what’s considered a full-employment level. And job insecurity and income stagnation have contributed to consumer anxiety.

▪ Government support: Some kind of government backstop is needed to hold up mortgage lending in good times and bad. Although some have argued for a fully privatized mortgage market, that approach is untenable, said Martin Eakes, CEO of Self-Help/Center for Responsible Lending. He explained that their case is “premised on a private mortgage lending market that never existed,” at least not since 1934, when the Home Owners Loan Corp. (HOLC) was formed. Free-market advocates aren’t arguing that we “should go back to 1999. They’re arguing that we should go back to 1929,” Eakes said.

▪ Renewed demand for homes: If consumers don’t want homes, they won’t take out mortgages. And Diana Olick, CNBC real estate reporter and moderator of the panel, noted that under-30 consumers don’t seem to be as interested in home ownership as their parents. However, Stevens dismissed this as a short-term aberration. “This is purely a result of instability and insecurity,” he said, and added if stabilization of home prices lasts and the price of renting rises, demand for home ownership will go up. Furthermore, research from Wells Fargo shows that 75 percent of Generation Y still wants the American Dream of home ownership, Heiden said.

All the panelists expressed confidence that the mortgage lending environment would improve over time, but they said it would likely operate somewhat differently from the system that persisted through the latter half of the 20th century.

“The reason this conversation is so important is that this is a remake in the housing architecture, one that we’re going to have to live with for a long time,” Morial said. “We have to think about what kind of nation, communities, and financial system we want to build for the 21st century.”

— Brian Summerfield, REALTOR® Magazine

How to Sell in Tough Times


4 Keys to Selling in Today's Market
Home sales and prices are still dropping around the country as huge inventories of foreclosures and short sales continue to weigh on many markets. So how can traditional sellers stand out in a crowded real estate marketplace? recently highlighted several keys to getting a home sold in a tough real estate market.

1. Cut your price by a lot. Buyers nowadays want to feel they are getting a “steal,” real estate experts say. But some sellers may be tempted to list a property above fair market value just to test out the market and see if they can get a taker. In the past year, about 25 percent of sellers who initially listed their homes too high ended up having to reduce the price, according to

"The first 30 days on the market are the most important," says Elizabeth Kamar, a real estate professional in Norwalk, Conn. That crucial time is when the home gets the most attention and showings. For sellers who aren’t realistic about the price from the get-go, they often end up with less than they would have if they priced it right initially, Kamar says.

Experts also note that if after 30 days on the market there are still no buyers, sellers may need to make a big move.

"When a property sits, people start thinking it must be listed too high," says Ellen Klein, a real estate professional in Rockaway, N.J. She suggests making a giant price cut--as much as 10 percent of the asking price--which may be extra motivation for buyers to take a second look or attract a new pool of potential buyers seeking a lower price range.

2. Play hardball in negotiations. Sellers shouldn’t feel they have to accept any lowball offer that comes their way. However, if a buyer is willing to negotiate, that’s when sellers need to try to set aside feelings of anger or insult and start to counteroffer, says Mabel Guzman, president of the Chicago Association of REALTORS®. Guzman says the ideal is that you’ll be able to negotiate within $10,000 to $20,000 of an acceptable offer. Using incentives--such as agreeing to leave the appliances--may get buyers to budge in agreeing to a higher price.

3. Stage it. Staging is becoming popular in trying to sell mid-range homes. Professional stagers will help home owners highlight key areas of a home and often rearranges furniture or bring new furniture in, repaint, and get the home looking like it’s ripped from a catalog. Real estate brokers say that proper staging can actually speed up a sale and increase the final sales price too.

4. Get the home in front of as many buyers as possible. The real estate professional needs to get creative in the marketing to make sure the home gets a lot of attention from buyers. "The more eyeballs that get on the listing, the better," says Katie Curnutte of the real estate information web site

One key: Boosting the home’s online presence. Having 20 instead of five photos will nearly double the number of hits the property gets on the Web, according to Incentives can also draw out buyers, such as with offers to cover a buyer’s closing costs, pay the first year’s property taxes, or even a $1,000 gift card (and maybe one for the buyer's agent too). (Note: You must disclose any such gifts or payments when the offer is agreed on.)

Check out more tips.

Source: “Your Home: How to Sell in Tough Times,” (May 2, 2011)

Bailing on Mortgage Not a Good Idea

by “The Consequence of Walking Away,” (Apr

Bailing on Mortgage Not a Good Idea
An estimated 11 million home owners owe more on their mortgage than their property is currently worth. That’s made more home owners consider walking away from their mortgage and home ownership, even those who can still comfortably afford to make their payments (known as “strategic default”).

Walking away from a mortgage usually results in either a short sale or foreclosure. So what are the consequences of walking away? There may be far more consequences than what most home owners ever considered.

The consequences include everything from badly affected credit to potential tax consequences and deficiency risks. There are even possible professional implications, Justin McHood with Academy Mortgage in Chandler, Ariz., warns in an article at

Home owners' credit scores will be badly hit regardless of whether they attempt a short sale or have their property foreclosed on. (See How Missed Mortgage Payments Hurt Credit Scores)

There also could be the potential for deficiency risks when walking away from a home, which largely varies from state to state. (View anti-deficiency laws by state.) In some states, lenders may sue you for the difference between what you owe and what your short-sale or foreclosure proceeds are, McHood notes.

Home owners considering walking away also should weigh the potential difficulty they may face from moving too. For example, if moving into a rental property, they’ll have to convince a landlord to rent to them after they have the red flag of missed mortgage payments on their credit record. And paying for moving expenses which many walkaways fail to consider can quickly add up too.

Plus, home owners may find professional consequences from walking away from a mortgage, as the number of employers eyeing employees’ credit profiles continues to grow.

Source: “The Consequence of Walking Away,” (April 27, 2011)

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