When the rebound arrives, desirable zip codes will see price jumps first.  Real estate is always local.  

Here are a few things to start watching in your neighborhood: 

How fast are homes selling?  It is a good sign when price drops slowly down, inventory levels are actually a better gauge of where your market is headed.  Ask a Realtor to tell you the number of listings now on the market in your area and the number of homes sold over the past year.  An example would be that there are 100 listings and there were 240 sales last year, or an average of 20 per month.  That equals a five-month supply, which is considered stable.  More than six months and it’s a buyer’s market; less than three and sellers probably have the upper hand. 

Compare your neighborhood’s price-to-rent ratio with what it was before the housing boom.  Calculate the price-to-rent ratio, or the price of a home divided by one year’s rent on a comparable one.  In general, it’s cheaper to buy when the price-to-rent ratio is below 15. 

A decrease in foreclosure filing is often an encouraging sign but not always the case depending on the processing delays in foreclosures.   Distressed owners tend to fall behind on lawn cutting and house painting long before a foreclosure.  If you see several places in disrepair, don’t expect your home value to rise soon. 

If you area is a prime location.  As buyers return, they naturally grab places with short commutes and better schools and amenities which will help increase the sales price.

 A lot of non-family households are looking at SMALL HOMES: preferring a home under 2500 sf with three or fewer bedrooms.  LOCATION:  the proximity to work and entertainment over home size and they are less interested in media rooms and pools.

Among renters, 59% said they aspired to own a home, but of those, 51% said saving enough for a down payment was their biggest obstacle. 

Those in the 18-34 age group cited the following concerns:   62% saving down payment, 36% qualifying for a mortgage, 34% having poor credit, 31% in ability to pay off existing debt, 29% not having a stable job and 13% declining home values.  

Both the 18-34 and over 55+ age groups expressed preferences that indicate they prefer to live in urban centers:  The younger group preferred short commutes to work and the older group preferred the proximity to restaurants and shops. 

The majority, 70% of respondents said owing a home is part of their American dream.  This attitude toward homeownership rose with age, from 65% of 18-34 year olds to 76% of those 55 +. 

Among current homeowners, 80% said they plan to buy another home in the future and 57% said owning a home is among the best long term investments.

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Remember that owning rental property is time consuming, expensive, challenging, and many investors lose money. 

Mistake 1:  Confusing a cheap deal for a good deal – You can buy homes at a low price but that doesn’t mean you can rent them out.  They usually aren’t any more appealing to rents than they are to buyers.  Also less-desirable school districts may hamper renting your property. 

Mistake 2:  Overlooking key costs – Knowing potential rent is not enough.  You should also factor in closing costs 3-6%, costs to fix up the place and maintain it, and your holding costs.

 Mistake 3:  Forgetting that time is money – You lose money when your home is empty, whether you are trying to rent it, in between tenants or painting.  You may be better off accepting a lower rent than waiting for a higher-paying tenant. 

Mistake 4:  Assuming you will sit back and watch the rent roll in – You are a rent collector and sometimes tenants lose their jobs and stop paying rent.  Evicting them can take several weeks without rental income coming in. 

Mistake 5:  Underestimating repair costs – Carpet in rentals typically must be replaced every five years and you may have to repaint after every tenant.  The National Association of Residential Property Managers suggests setting aside six months of expenses so that you will have funds if a major repair is needed. 

Mistake 6:  Assuming that owning a rental is the same as owning a home – You might put up with flaws in a home that a renter won’t tolerate.  A property manager can handle most headaches, but you should expect to pay up to a month of rent for finding and screening tenants and up to 10% of the monthly rent for management fees.

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The Lawyer’s Committee is starting to file complaints against Nathanson Law Center and other alleged loan mod scammers.  The suit claims that the defendants lured desperate homeowners into paying up-front fees to secure them loan mods, and then did little or no work to follow up on their promised services.  While homeowners were offered 100% guarantees that their funds would be returned if a modification could not be obtained, the defendants later refused to turn their fees.  Many of the victims lost thousands of dollars – or worse, their homes. 

If you believe you have been the victim of a loan mod scam, you are encouraged to call (888) 995-HOPE or visit www.preventloanscams.org and click “Report a Scam!”  Victims are being represented free of charge

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Recently the House Financial Services Committee took a look at the performance of the Obama administration’s foreclosure-avoidance program in early October; here is what came out of that hearing and it doesn’t look good: 

1)      HAMP – designated to help as many as 4 million troubled homeowners modify the terms of their mortgage and obtain more affordable payments.  The program has resulted in approximately 800,000 permanent modifications and 106,000 trial modifications still ongoing, according to Darius Kingsley, deputy chief of Treasury’s Homeownership Preservation office.  These figures are far less than the original target.

2)      Emergency Homeowner’s Loan Program – The Dodd-Frank financial reform law authorized $1 billion to provide bridge loans of up to $50,000 for homeowners who had experienced sudden drops in income because of employment or medical problems.  As of Sept. 28, it has resulted in 12,000 completed transactions and is expected to use just $400-$500 million of the authorized $1 billion, according to acting FHA commissioner Carol Galante.  The 12,000 funded cases were all that HUD could manage to approve out of 100,000 applications.

3)      FHA Refinance Program, aka “Short Refi” This was designed to help as many as 1.5 million underwater owners refinance into affordable FHA loans, and was funded by $8 billion originally set aside for HAMP.  As of the end of September, FHA and the program’s 27 participating lenders had completed just 334 refinancings according to the agency.

4)      HARP – The administrations signature program for homeowners who have lost equity because of declining home prices but who nonetheless have stayed current on their payments.  Only borrowers with loan-to-value ratios above 80 percent and no higher than 125 percent are eligible.  Originally projected to help between 4-5 million homeowners, as of August it had resulted in 838,000 refinancings.

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2)      Make a template:  some people use 15 pound roofing felt that comes in three foot rolls.  Measure the width of the room and cut the paper a little long.  Lay the first sheet on the floor and set it in place with tape.  Carefully trip the paper with a sharp utility knife so that matches the contours of the walls and the toilet.  Add another sheet and tape the second sheet to the first.  Repeat until the template is complete and carefully remove it from the floor.

3)      Cut the vinyl:  a six foot wide sheet should provide an almost seamless floor in a small bathroom.  Roll the vinyl out on a floor and tape the template to the vinyl.  Pay attention to the patter to make sure it aligns properly.  Cut the vinyl with a sharp utility knife.  Cut a little wider than the template, as it is easy to trim.  Make a cut behind the toilet to allow placement.

4)      Position the vinyl on the floor:  Once it is in place, roll half of it back and trowel vinyl adhesive on the floor.  Make sure to apply a uniform coat of glue.  Gently roll the sheet onto the adhesive smoothing it with your hands as it lies down.  Use a J-Roller to smooth the surface.  Next, lift the remaining half of the flooring, trowel on the adhesive, smooth and roll.

5)      Trim the edges:  Use the utility knife and go slowly.  Use a metal straightedge where the floor meetings straight wall runs.  Smooth the edges as you go.  You will need to free-hand it around the toilet.

6)      Caulk:  Apply caulk around the edges and around the toilet.

1)      When faxing or sending in your paperwork to your lender, make sure that your loan number is printed on every page you are sending in.  Lenders received thousands of papers a day and sometimes the cover sheet gets lost or the fax gets misplaced.  If you have the loan number on every page, they can make sure it gets in your file.

2)      Make sure that ALL of the requested paperwork is included in the file.  If you are missing just one required document, they will show your account is incomplete and your file sometimes goes to the bottom of the pile.

3)      Follow up every week with your lender to make sure all of the documents they have are up to date.   Don’t worry about being a pest; this usually keeps your file moving along.

 These tips are the same tips we use when submitting Short Sales.  The complete packages move along much quicker then the packages submitted with missing documents.  Some lenders even tell us to keep sending in pay stubs and bank statements so the file is kept current at all times.

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Separately, last month, the Experian, Equifax and TransUnion, began providing estimates of consumer income as a credit report option.  And, earlier this year, Experian began including data on on-time rental payments in its reporting. 

This new information could either help some potential homeowner’s to obtain a loan or could be detrimental to those who are on the board of qualifying for a loan. 

The CoreLogic – FICO partnership won’t result in a credit score that will rule out a borrower for a mortgage backed by Fannie Mae, Freddie Mac or the FHA, which together own or guarantee at least 90 percent of the mortgages being written.    That’s because the Experian, Equifax and TransUnion “tri-merge” report required for such a loan does not rely on CoreLogic data.  But it could mean either more or fewer mortgage fees or a higher or lower interest rate charged by lenders that in today’s cautionary lending environment have heartily adopted risk-based pricing.

1. Add a fresh coat of paint. At about $30 a gallon, paint is one of the least expensive ways to spruce up your living space. Add paint in neutral, earth-tone colors to bring out the best in each room.
2. Explore energy updates. Evaluate your home’s energy efficiency by going to the U.S. Department of Energy website. There, you can get tips to make improvements that sellers will appreciate.
3. Fix minor plumbing and electrical problems. It’s worth your while to take care of these problems before a potential buyer uncovers them during a home inspection.
4. Add storage. Lack of closet space can be a deal breaker for some buyers. Adding a DIY wire or laminate system to all closets will give them the appearance of being more spacious and organized.
5. Let light in. Ditch dark and heavy drapes for simple wood blinds and/or upholstered cornices. Update or add lighting fixtures — wall lights, lamps, ceiling fans with lights — to give the rooms a bright, more updated look.
6. Give kitchen appliances a facelift. Mismatched appliances can make a kitchen look outdated — but that doesn’t mean you need to replace them. Many appliances can be updated with new doors or face panels.
7. Don’t neglect the bathroom. Simple fixes can make a bathroom look more modern in no time. Get a new shower curtain, switch out the old toilet seat with a new one and replace drab or damaged flooring with vinyl tiles.
8. Update your front door. It’s the first part of your house that potential homebuyers see. Give it a fresh cost of paint and consider switching out your current lock-and-handle set for a sturdy, more modern piece of hardware.
9. Power up. Rent a power washer — it’s less expensive than hiring someone to do it — and thoroughly clean your house’s exterior.
10. Curb appeal. When it comes to your yard, definitely sweat the small stuff. Clean up clutter and have it hauled away or store it in the shed. Get rid of weeds and add some in-season plants and flowers to your walkway or in pots on your front porch. Make sure to mow your lawn as needed — potential homebuyers frequently drive by unannounced.