Home flipping zoomed to a six-year high in the second quarter of 2016, as more investors eyed properties to spruce up and turn over for a quick resale.

A total of 51,434 single-family homes and condo sales were completed flips in the second quarter of this year, up 14 percent from the previous quarter and up 3 percent from a year ago. It is the highest number of home flips since the second quarter of 2010, according to the Q2 2016 U.S. Home Flipping Report, released by ATTOM Data Solutions.

“Home flipping is becoming more accessible for smaller operators thanks to an increasingly competitive lending environment with more loan options for real estate investors, who are also benefiting from the historically low mortgage interest rates,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “That favorable lending environment for flippers has helped to fuel the recent flipping frenzy we’ve seen over the past five quarters.”

Homes flipped in the second quarter accounted for 5.5 percent of all single-family and condo sales. A total of 39,775 investors (both individuals or institutions) completed at least one home flip during the quarter, the highest number of home flippers since the second quarter of 2007, the report showed.

“We’re starting to see home flipping hit some milestones not seen since prior to the financial crisis, which is somewhat concerning, but there are a couple of important differences in the home flipping of 2016 compared to 2006 when home flipping peaked during the last housing boom,” Blomquist says. “First, home flippers are realizing a much bigger gross ROI in 2016, averaging 49 percent in the first two quarters compared to an average gross ROI of just 27 percent in 2006. Second, while an increasing number of flippers are financing their purchases, more than two-thirds are still using cash to purchase compared to about one-third using cash to purchase back in 2006.”

Homes that were flipped in the second quarter took an average of 185 days to flip, up from 182 days a year ago. The metro areas that had the longest average times to flip properties were Ogden-Clearfield, Utah (229 days); Naples, Fla. (222 days); Punta Gorda, Fla. (212 days); Palm Bay-Melbourne-Titusville, Fla. (206 days); and Pensacola, Fla. (206 days), according to the report.

Overall, the following 10 markets had the highest flipping rates in the nation:

  1. Memphis: 11.1%
  2. Visalia-Porterville, Calif.: 10.1%
  3. Tampa, Fla.: 10%
  4. York-Hanover, Pa.: 9.7%
  5. Mobile, Ala.: 9.6%
  6. Fresno, Calif.: 9.5%
  7. Lakeland-Winter Haven, Fla.: 9.5%
  8. Deltona-Daytona Beach-Ormond Beach, Fla.: 9.4%
  9. Clarksville, Tenn.: 9.3%
  10. Miami: 8.6%

Source: RealtyTrac

A room’s size is sometimes a matter of perception, and the paint color on the walls has a lot to with that perception. Some colors can actually make a room appear smaller, while other colors can make the walls expand and feel larger. Realtor.com® recently highlighted some of the paint colors to create the illusion of more space, including:

White: White reflects light, thereby making a space look brighter and feel more open. “White will make any room appear bigger and complement the natural lighting,” Than Merrill, a real estate investor and host of A&E’s “Flip This House” told realtor.com®.

Yellow: A creamy and soft yellow can also reflect light, and can create a softer alternative to white (as long as it’s not too bold of a yellow). Add white accents, such as on the trim, to add further dimension to the room.

Gray: A calming, light shade can help expand a room and, unlike white, doesn’t cast off a glare.

Monochromatic color schemes: Use a monochromatic color scheme for the entire space to open it up (in other words, stick with the white, gray or soft yellow and don’t introduce then a bolder color). “Choose rugs, furniture, and accents in similar shades – like a patterned rug in white and light gray,” realtor.com®’s article suggests. “This creates a minimalist, clean look that makes the entire space feel larger.”

Source: “What Colors Make a Room Look Bigger?” realtor.com® (Sept. 9, 2016)

Kitchen redos can be pricey. That means home owners on a budget must be choosy when trying to decide what kitchen projects to spend money on and what improvements can wait.

Realtor.com® recently launched a new series “Renovations That Really Pay Off,” and their first article focuses on kitchen projects that have the best return on investment and won’t be too much of a financial burden for your clients.

Here are a few of the kitchen projects highlighted:

“Amped Up” Appliances

New appliances like a refrigerator, stainless-steel dishwasher, and stove can have a strong pull with home buyers, says real estate pro Al Cannistra. For example, Cannistra says he had a listing that lingered on the market with outdated appliances but as soon as the owners updated the appliances, the home received two offers in the first week and the home ended up selling above asking price. Just be sure to “keep the appliances and plumbing where they are because the rule of thumb is to add $5,000 each time you relocate either,” suggests Justin Riordan, founder of Spade and Archer Design Agency

Spruce up the cabinets

New cabinets can range from $3,900 and $12,000. That’s why home owners may be better off trying to give a face-lift to what they already have, such as replacing the cabinet hardware or painting the cabinets. “If you have existing wood cabinets that are still in decent shape, instead of completely refacing them, give them a fresh coat of paint,” says Tracy Kay Griffin, designer for HGTV’s “Get It Sold.” For example, Rust-Oleum offers a Cabinet Transformation kit.

Add a charging station

Everyone is looking for a plug to charge for their smartphones, tablets, and electronics. Nearly two-thirds of remodelers say they’ve added a charging station in the kitchen for the gadgets, according to the National Kitchen and Bath Association’s annual trend report. Cabinets and drawers can be modified to add hidden power strips, for example.

New countertops

A new countertop can have a big impact on the look of the kitchen. And don’t assume granite. NKBA says quartz countertops are gaining popularity. A new countertop “provides an opportunity to install a new glass or subway backsplash for additional punch,” says designer Erin Davis, co-owner of Mosaik Design & Remodeling in Portland, Ore. “A budget-friendly option is to install a 4-inch-high splash out of the same countertop material.”

Wood floors

NKBA’s latest report shows that wood floors are the most popular kitchen flooring. Plus, averaging $9 to $12 a square foot, wood flooring tends to be cheaper than tile too.

View more details about top kitchen renovations at realtor.com®.

Source: “6 Kitchen Renovations That Really Pay Off,” realtor.com® (March 2, 2016)

Addressing a packed ballroom at the Sheraton Grand in Chicago Monday, National Association of REALTORS® Chief Economist Lawrence Yun offered up a few key predictions for the next year or two, as well as one long-term guess about the future of a career in the real estate industry.

Yun addressed attendees at NAR’s Leadership Summit, which is a planning and educational event for chief staff executives and presidents-elect of state and local REALTOR® associations. He noted that there’s been some speculation about whether or not there’s a bubble brewing in the residential market. While he said there might be a bit of a slowdown coming, he told attendees he sees no need for concern, for one big reason: “We have a housing shortage,” he said. “We may be reaching the turning point at least in terms of sales activity, but not pricing.”

However, Yun did sound a small alarm about commercial real estate possibly being in a small bubble. His advice to real estate pros was to “be careful with commercial real estate prices, particularly the trophy properties.”

With the current focus of the presidential campaign on the impact of international trade on domestic employment rates, Yun told attendees that somewhere only around 10 percent of job losses are due to factors such as international trade, with the other 90 percent of jobs disappearing due to automation and advances in technology. He said this bodes better for real estate than others in the housing industry, however. He noted that mortgage lending, which relies on set formulas such as debt-to-income ratios are easier to teach robots than the specialized knowledge of a real estate pro: “You need to know all the idiosyncrasies of your local neighborhood, or at least you should.”

—Meg White, REALTOR® Magazine

So how much does the priciest home in the world cost exactly? $1.1 billion.

The home – known as Villa Les Cedres or “The Cedars” — is located in Saint-Jean-Cap-Ferrat, a town in southern France. And, it’s currently for sale.

So what does $1.1 billion buy you? Ten-bedrooms, a ballroom, chapel, 30-horse stables, a 35-acre botanical park (including 20 greenhouses and 15,000 rare tropical plants); and an Olympic-sized swimming pool.

The home also has royal history. It was built around 1830 and has ties to Leopold II, the king of Belgium who once used it as a holiday home in the 1900s. The most recent owner was Suzanne Marnier-Lapostolle, heiress of Grand Marnier, a liqueur brand.

The previous record for a list price, according to the French press Bursier.com was a Texas ranch offered for $725 million.

Source: “World’s Most Expensive House: Can You Guess How Much It Costs?” realtor.com® (Aug. 23, 2016)

Scorching heat waves this summer have pressed some to question whether developers should be looking at better ways to build to sustain the heat. For the most part, buildings use machines to keep them cool. But are there ways with the architecture or even the home’s orientation that could keep them cooler on their own?

Sun-based design of roofs and roof overhangs, facades, and fenestration can help make a building cooler, writes Roger K. Lewis, an architect and professor emeritus of architecture at the University of Maryland, for The Washington Post. Shutters can be used to block the sun too.

“During many days of the year, being able to open and close exterior shutters on windows facing south, east, and west is an effective means for warm-weather solar control,” The Washington Post reports. “Yet almost all shutters flanking residential windows are cosmetic and non-functional.”

A home’s lot orientation can also be key. However, yard dimensions and building setbacks on individual parcels and lots often disregard solar orientation, Lewis notes. But sun and shade conditions can greatly affect home owners’ gardening possibilities as well as even their enjoyment of their outdoor spaces.

Builders can use solar orientation to their advantage in design, Lewis writes.  Not only through solar panels to allow for cheaper utility bills, but the design of the home may also make a home more comfortable to its owners.

“Facades as a whole, window designs and habitable spaces — porches, balconies, decks and terraces — that are part of and extend facade compositions should capture desirable winter sun while blocking out or filtering unwanted summer sun,” Lewis writes. “Dimensionally adequate roof overhangs can shade exterior walls exposed to the sun to reduce air conditioning loads. Deciduous shade trees on the southeast, south and southwest sides of a house or low-rise building are especially effective in providing warm-weather solar control.”

Source: “Architectural Features Make It Easier for Buildings to Battle Sun,” The Washington Post (Aug. 19, 2016)

Economists are having a tough time figuring out what housing market moves baby boomers will make next. Americans over the age of 55 are veering from previous generations, opting not to retire but instead launching second or even third careers. They are shunning the traditional patterns of retirement and that could have a big impact on their housing choices, according to Freddie Mac’s latest Insight report focusing on the baby boomer generation.

Baby boomers are a critical piece to the housing market puzzle. Americans over the age of 55 make up a quarter of the population and control about two-thirds of the single-family home equity in the nation. Sixty-five-year olds who, on average purchased a home 35 years ago now tend to have a home value that is likely 3.7 times what they purchased it for.

Nearly a quarter of baby boomers recently surveyed by Freddie Mac say they need major renovations in their current home in order to stay there as they age. Many say they may face financial constraints to take on those remodels. For others who do plan to age in place, they may be underestimating the extent of the financial costs of outfitting their home with features so they can do so, says Sean Becketti, Freddie Mac’s chief economist.

As such, about 18 million home owners over the age of 55 may be shopping for another house in the next few years, according to the Insights Report.

The main reasons to move aren’t due to downsizing either. Instead, the survey showed the key influences making these generations move are: Affordability of the community, the need for retirement amenities, and a home with less maintenance.

Bottom line, the authors note, the 55-plus population likely is to be an active part of the housing economy for years to come still.

Source: “Boomers Ignoring Conventional Housing Wisdom,” Mortgage News Daily (July 19, 2016)

Fears about the effect of rising interest rates on housing markets prove to be misplaced. Affordability is a far more worrying issue.

woman bored by interest rate

The Federal Reserve at the end of 2015 increased its benchmark interest rate for the first time in almost a decade and home buyers responded with a big . . . ho-hum.

“Buyers are complacent on interest rates,” says Mike Smith, ABR, SRES, associate broker at Nothnagle, REALTORS®, in Geneseo, N.Y.

Real estate professionals say the 0.25 percent increase in the rate that banks charge each other for overnight loans is not spurring home buyers to jump into the market out of concern that mortgage rates are going to follow suit. “Buyers are keeping an eye on interest rates, but they’re not worried about them,” says Don McGlynn, associate broker at Maury Real Estate in Bethesda, Md.

The rates that matter most in real estate are those on 15- and 30-year fixed-rate mortgage loans and one-year -adjustable-rate loans. And although the direction of mortgage rates can be affected by movement in the Fed’s short-term rate, many other factors go into whether they move up or down and by how much. “There’s not a one-to-one correlation” between the different rates, says NAR Chief Economist Lawrence Yun.

Yun listed five factors in addition to the federal funds rate that impact the direction of mortgage rates:

  • The rate of inflation
  • The nation’s savings rate
  • The flow of foreign capital into the United States
  • The federal government’s debt and annual budget deficit levels
  • The country’s overall economic strength

There are times when changes in the federal funds rate can be more influential on mortgage rates than at other times, says Yun, most notably during periods of prolonged economic stability. During stable periods, if the Federal Reserve sets an interest rate target and then consistently takes preannounced steps to meet that target, banks are able to anticipate rate increases. That creates a closer correlation, he says, between the federal funds rate and other interest rates.

Curbing Risk-taking

Yun says it’s a sign of the U.S. economy’s strength that the Federal Reserve chose to start a process of gradual short-term rate increases late last year. “It was important to the Fed’s credibility that it raise rates while the country’s economy is growing, albeit slowly, and jobs are being created,” he says.

But the Fed also wanted to wean individuals and institutions off riskier investments. “The prolonged period of rates at or near zero that we’ve seen since about 2008 has driven investors to find higher yields, and the concern is that that can lead to inflating asset prices,” Yun says.

McGlynn says mortgage rates would have to go up by one or two percentage points before buyers in his market would really start to take notice. “If mortgage rates went up by two percentage points, that could affect some buyers,” he says. “That might scare them a little bit. But rates are so low now that, as long as they stay under 6 percent, most of the buyers I work with won’t be affected.”

As of mid-February, the national average commitment rate on a 30-year fixed-rate loan was just under 3.7 percent, the 15-year fixed-rate mortgage was 2.95 percent, and the one-year ARM (with a five-year fixed term) was 2.8 percent.

Yun is forecasting the rate on a 30-year fixed loan to rise to 4.3 percent by the end of the year and then to about 5 percent at the end of 2017. These are “very low by historical standards,” he says.

And if the Federal Reserve, worried about the slowdown in China and in other parts of the world, decides not to keep bumping up its short-term rate this year, as it originally planned, mortgage rates might not see even those modest increases, he says.

The bottom line: More worrying than interest rates these days is pace of home price appreciation, which is fueled largely by insufficient inventory for a growing population. Home prices are rising about 7.5 percent annually on average, while household income is only rising by about 2 percent, Yun says. That mismatch is hurting affordability now and will continue to do so until more homes are built. That remains a far bigger concern than rising interest rates.

Source: www.realtormag.com

 reverse

The New York Times is dubbing the reverse mortgage the “quiet comeback” kid in the mortgage marketplace.

Reverse mortgages allow home owners 62 years old or older to tap into their home equity without having to face monthly payments. Reverse mortgages had a bad reputation a few years ago when widespread abuses of their use was reported. But now they’re gradually making their way back into the market, as reforms in the system make them a safer option for lenders. The Federal Housing Administration and the Consumer Financial Protection Bureau have tightened regulations on their use.

Reverse mortgage volume was around 30,000 this year, modest compared to about 115,000 from its peak in popularity in 2009, according to the Federal Housing Administration.

“They’ve always been there as a last resort,” John Salter, a financial planning professor at Texas Tech, told The New York Times. “But they make a lot more sense now because home equity can be a big part of net worth.”

More financial planner are starting to recommend them due to the lowers costs and better consumer protections – such as the mandate that counseling is now required, says Jamie Hopkins, a professor at the American College of Financial Services.

“Many people don’t have enough money to get through retirement, so they have to consider all of their wealth, including home equity as a retirement income source,” Hopkins says.

Still, reverse mortgages aren’t right for everyone. “If you want to provide a bequest to your heirs by allowing them to sell your home upon your death, a reverse mortgage can wipe out much of the equity in your home,” The New York Times reports. The loans also can prove more challenging for those who need to move due to a disability or need to sell their home after a short period of time living there.

Source: “The Quiet Comeback of Reverse Mortgages,” The New York Times (July 22, 2016)

Do you know a Georgian from a Greek Revival? Brush up on your home architecture knowledge with this infographic below spotlighting the features and differences between some of the most popular home styles today.


Source: PartSelect.com