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The housing market seems to be turning a corner, with prices ticking up thanks to reduced inventory and a decline in foreclosure sales. But problems looming in the broader economy could roil this housing rally.

 

Will the housing recovery last? That’s the question some economists are asking, given the plodding growth in the economy, as well as the looming “fiscal cliff,” which threatens to raise taxes and cut jobs.

Tight inventory in many markets and a decline in foreclosure sales have lifted prices, and record-low mortgage rates eased some buyers off the fence, but weak job growth, lousy credit and the large number of buyers with little or no equity could conspire to flatten out the rebound, making this one of the longest, most excruciating recoveries in housing history.

That’s possible even if Congress manages to stave off the “fiscal cliff” in January that would take away the Bush-era tax cuts and raise taxes for most Americans.

“It’s clearly not sustainable,” says Sam Khater, deputy chief economist for real-estate analytics firm CoreLogic. “Real incomes are not growing. We are at the same level we were in the mid-1990s. [The recovery] is not sustainable until incomes recover.”

Some markets have yet to hit bottom, says Robert Shiller, the Yale economist who first warned of the looming crisis in real estate, and who — with Carl Case — created the S&P/Case-Shiller Home Price Index. Home prices have yet to turn positive in markets such as Milwaukee, Atlanta, Philadelphia and even New York City.

Shiller, for one, is still reluctant to call the recent improvement in the market a solid recovery.

“The question is how strong is it, and will … this rally fizzle or not? And I don’t know the answer to that,” Shiller said in a recent interview with NPR. “But I point out that this is the fourth time we’ve had a rally since the crisis ended.”

A good start
Still, there’s no question that the overwhelmingly negative news about the housing market has turned positive.

Existing-home sales jumped 11% in September from the same time a year earlier, while the median home price of $183,900 was 11.3% higher than a year ago — the seventh straight month of year-over-year increases, according to the National Association of Realtors.

With sales increasing, the supply of for-sale housing has dwindled to a healthy 5.9-month supply, down from the 8.2-month supply last summer. Of those homes on the market, far fewer are foreclosures, which typically sell for 20% to 30% less than traditional listings.

“When properties come on the market they move fast,” says Gary Bauer, a broker and blogger in Denver. “It’s not uncommon in the price ranges up to $750,000 for a new listing to get multiple offers.”

While new-home sales dipped slightly in August, the median price of a new home surged 11.2% to $256,900, the biggest one-month increase ever recorded. Prices have climbed 17% over the past year and are at the highest level since spring 2007, according to the Commerce Department, fueling some talk of a growing bubble.

It’s true that homebuilders are feeling more confident. New single-family home starts ticked up 5.5% in August from the previous month.

Add to that rising consumer confidence and record-low mortgage interest rates in recent weeks, and it’s easy to see why so many are starting to think the housing market has really turned the corner.

Too much excitement?
Of course, some things are missing for a robust and sustained rebound, including meaningful job growth, pay increases and enough affordable inventory in some markets.

Tight inventory helped pushed the NAR’s Pending Home Sales Index (based on signed contracts) down 2.6% to 99.2, despite being 10.7% higher than the same time last year.

Prices have yet to rise enough to make selling viable for those who bought in the past seven years, Khater says.

About 10.8 million, or 22.3%, of homes financed with mortgages were in negative equity at the end of the second quarter, according to CoreLogic. And 45% of all homes have mortgages with an 80% loan-to-value ratio, giving homeowners little to put down on another house.

Moreover, many foreclosures that would have wound up with a for-sale sign in front are being sold in packages to investors as rentals. While that’s good for propping up prices near term, this affordable inventory won’t make it to individual buyers.

And despite the record-low mortgage rates of late, qualifying for a loan can still be tough.

Paul Diggle of Capital Economics pointed out the growing gap between the NAR’s Pending Home Sales Index and its monthly sales figures in a recent housing report. As many as 15% of contracts don’t make it through to closing, he says, in part because of today’s tight lending environment.

But the real driver of the recovery, Khater says, needs to be jobs. Without meaningful growth in jobs — job creation that outpaces population growth — and stronger pay raises, the recovery could fizzle out.

“The economy is fundamentally very weak,” he says, “and that could keep the malaise out there for an extended period of time.”

Especially, he says, if Congress fails to push off the spending cuts and tax increases due to take effect at the beginning of next year. That could send the country back into a recession.

The road ahead
Of course, analysts say, there’s a chance that legislators could extend those cuts to keep the economic recovery on a firm footing or replace them with something else to help low- and moderate-income Americans.

But the economic uncertainty will keep many buyers on the sidelines, says Alex Villacorta, director of research and analytics at Clear Capital. Debt-ceiling brinksmanship pushed down consumer sentiment 14.3% last year, the largest amount since the end of the recession, and uncertainty over taxes could “throw a wrench into the recovery.”

The Federal Reserve did its part recently by announcing a third round of monthly mortgage-backed securities purchases, a stimulus designed to increase employment and keep mortgage rates low so more people will want to buy homes.

If consumer confidence can survive the weak economic news, Clear Capital predicts a strong market through the start of the spring buying season.

With prices rising in most markets, growing numbers of people who already own a home may be nudged into moving up to a larger one. First-time buyers will still need to be making enough money at their jobs to qualify for loans.

But with the large number of low-down-payment FHA loans available, and lower mortgage rates bringing down the cost of homes, would-be buyers won’t have to spend as much to get one.

Indeed, Diggle sees the high home-contract cancellation rate as a positive rather than negative for the housing market in the months ahead. The cancellations, he says, “reflect would-be buyers’ willingness to buy increasing at a faster pace than the bank’s willingness or ability to lend.”

In other words, you have an eager pool of buyers who might have less than perfect credit — good news if credit loosens a bit.

As far as supply goes, inventory should grow as more homeowners gain equity in the next year or two. CoreLogic says that just a 5% jump in annual home prices would be enough to get a significant number of those underwater homeowners into an equity position.

Still, that might not happen, he says, at least not in the next year. Local Market Monitor predicts values in the U.S. will remain relatively flat in the next year, with a larger increase — up to 7% — in the next 36 months.

“It seems as if we have a long recovery in order, given the slow economic growth and pace of hiring,” says Ingo Winzer, president of Local Market Monitor.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: Melinda Fulmer of MSN Real Estate

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From what to plant to what to harvest, here’s everything you need to know to prepare your garden for autumn.

 

There’s a snap in the air, the songbirds are looking at their calendars, and trees are exploding in hues of yellow, pink and red. But don’t think that means you can spend the weekends in your jammies. Make haste while the weather is still gardener-tolerant; you’ll be happy for those shorter to-do lists come late fall and winter.

Perennials
Keep planting spring-flowering bulbs, all the way up until the ground becomes frozen, and prepare tender perennials for winter.

  • Holes for planting crocuses, daffodils, tulips and other spring-flowering bulbs should be about three times deeper than the diameter of the bulbs. Add peat moss, fertilizer and bulb dust to the soil as you plant; then give them a good watering.
  • In milder climates, bulbs can still be divided and transplanted.
  • Before the first frost, move tender plants such as begonias, geraniums, gerbera daisies and impatiens indoors for the winter.
  • Buy hardy garden mums to plant in well-drained soil in a sunny location; fertilize now, and again in the spring. Color spots of winter pansies and flowering kale and cabbage can also be planted early in the month, or until the ground freezes.
  • Gladioluses, dahlias, tuberous begonias and fuchsias should be prepared now for winter storage.
  • Hold off on mulching perennials until the ground has frozen.

Trees and shrubs
October is a great month to shop for trees and shrubs, as they’re showing their true colors at the nursery. Planting can take place now and over the next several months, letting strong, healthy roots develop over the winter.

  • Make your last selections of trees for planting this month and later, even if you hold off on buying.
  • Tie up and prune raspberries.
  • Mid-autumn is a perfect time for planting grapevines.
  • Take hardwood cuttings.

Lawn care
In most areas, lawn care can continue until about mid-October.

    • Aerate lawns now while grass can recover easily; if you core aerate, make cores 3 inches deep, spaced about every 4 to 6 inches. Break up the cores and spread them around.
    • If your lawn needs it, thatch and follow with a fall or winter fertilizer.
    • Even if thatching isn’t necessary, your lawn will be happy for a dusting of fertilizer now to help roots gain strength before the spring growing season.
    • Overseed bald patches or whole lawns as needed.
    • Rake and compost leaves as they fall, as well as grass clippings from mowing. If left on the ground now, they’ll just make a wet, slippery mess, inviting to pests.

Watering
It’s easy to forget about watering duties in the middle of fall, but proper moisture now is key to your plants’ successful survival over the cold winter months.

  • Check the moisture of all plants, especially those in dry, sheltered areas such as under eaves and around tall evergreens.

Composting
Autumn leaves must fall — but what to do with them?

  • Rake or otherwise gather all the little fallen ones, from leaves to grass clippings to spent plants and vegetables, and either give the compost pile a good feeding or spade them directly into the ground. Exception: If your grass has been treated with herbicides, it might be safer to compost than to blend into the soil.
  • As an alternative to raking, if you have drifts of piled leaves, mow over them in the grass to break them up and make a great brown-and-green composting combo.
  • Save some whole leaves for piling around roses after the ground has frozen

Pest control
Slugs don’t slow down as the weather gets cooler; in fact, you’ll likely find them at all life stages in October, from eggs to youngsters and adults.

  • Take whatever measures you prefer — salt, slug bait, saucers of beer — to eliminate slugs. It’s best to catch them at early stages, to stop the reproduction cycle.
  • Keep the ground raked and tidied to reduce their habitat.
  • Keep staying ahead of weeds this month; they serve as homes for pests and bugs, and destroying them before they flower and seed will save you work in the future.

Harvesting
In many areas, October is the month to harvest.

  • Do a taste test on vegetables, and harvest them when flavor is at its peak. If you’d like to extend the harvest of carrots, turnips and other root vegetables, leave some in the ground to mulch as the weather gets colder. They can handle cold snaps!
  • Early in the month, before temperatures drop too much, seed cover crops such as clover, peas or vetch to enrich the soil. It will serve as a natural fertilizer, stifle weed growth and help loosen up the soil for next year’s crops.

Houseplants
If your September was mild enough that your houseplants and geraniums are still outdoors, be sure to make them cozy inside before the first frost takes a bite out of them.

  • Take geranium cuttings of 2 to 4 inches to root indoors.
  • If you treat houseplants chemically, after treating be sure to keep them warm and away from direct sunlight.
  • Fertilize houseplants now; they shouldn’t need it again until March.
  • Get poinsettias and Thanksgiving and Christmas cacti ready for well-timed holiday color. Give them a daily dose of 10 hours of bright daylight or four hours of direct sun, and 14 hours of night darkness. Christmas cacti need a cool environment of 50 to 60 degrees F, while poinsettias prefer a warmer 65 to 72 degrees. Let cacti dry out between waterings.

Compliments of: Martha Small | Austin Portfolio Real Estate | 512.587.0308

Original Article by: Sally Anderson of MSN Real Estate

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While we find ourselves celebrating love on St. Valentine’s Day (Valentine’s day cards, hearts and flowers)- our house has even more to celebrate: my daughter’s FIRST birthday!! It is amazing to think a year has gone by…so many wonderful changes have come into my life.  I had the best year EVER in my career this past year, am HONORED to be included in Austin’s ELITE 25 (group of top producing agents in the city) and have the two best kids and husband on top of it all!  Phew- makes me tired just reading it!

If you are like me (type-A, planner, looking forward to summer) and have children, you are already looking at the calendar and thinking “What will my kids DO all summer?” Independence Title Company has an AMAZING list of Austin Summer Camps and Programs.  Click HERE to check out many options and opportunities for your kids to learn, have fun and beat the inevitable heat this summer. I have my son signed up for Spring Break camp at Champions School of Austin for play, gymnastics and all around good fun.

So enjoy this SWEET day, but don’t let too much longer get away from you before signing your kids up for a little time away from the house this summer.  If you wait too long…you might regret it.

 

xoxo

 

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