Monthly Archives: August 2013

Around The Home

7 Simple Steps To Finish Your Basement This Holiday Weekend

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7 Simple Steps To Finish Your Basement This Holiday WeekendNot only does the Labor Day weekend signal a little time off work, but it also indicates a close to the summer season, which means it’s time to get ready for colder weather.

So get in the spirit of the long weekend and put the labor of love into your home by creating a cozy hideaway that your family can retreat to once the outdoors become too chilly.

One of the best places to create this snug space is to mimic hibernating animals and go under ground — to the basement.

Whether your lowest level needs a facelift or is completely unfinished, Labor Day weekend is the perfect time to make a game plan and get started on remodeling your basement.

Step 1 – Obtain A Permit

Before you can just slap up insulation and drywall, you need to make sure your basement is even fit to dwell in.

Check with your city to ensure there aren’t any permits you need to obtain and that the space is up to code. If you don’t do it right, then this update could haunt you when it comes time to sell.

Step 2 – Get The Air Flowing

You’ll want this space to be warm in winter and cool in the summer. Contact a contractor to see if getting air to this lower level will be as easy as tapping into your current HVAC system and whether or not your existing appliance can handle the extra space.

Step 3 – Design And Frame

Now comes the fun part. Decide what you want down there! A bedroom or two, a man cave, or TV room; a blank slate provides all sorts of exciting options. Once you’ve got a plan, start framing it out.

Step 4 – Add Emergency Exits

This underground level needs exit points that go directly outside. So, install a back door or windows that someone could fit through in case of emergency. If there are bedrooms in the design, they also each need their own exit point.

Step 5 – Insulate And Drywall

While the ground surrounding your home provides some insulation, you’ll want to properly insulate around the perimeter and in between rooms to provide a noise barrier. Then put up the drywall.

Step 6 – Install Flooring

Pick out your flooring, such as wood, tile, carpet or vinyl. It mostly depends on what type of rooms you’re planning to create. Make sure your floors are level before you lay anything down. It’s especially common to find slanted floors in older homes.

Step 7 – Paint And Decorate

You’re almost finished! Pick out your paint colors, move in your furniture and enjoy your new cozy hideaway. Colder weather will be here before you know it, so use the long Labor Day weekend to get this project started.

Housing Analysis

Pending Home Sales Indicates That The Housing Recovery Is Progressing

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Pending Home SalesThe National Association of REALTORS reported Wednesday that pending sales of existing homes fell by 1.30 percent in July.

According to the organization’s Pending Home Sales Index, this was the second straight month that pending home sales dropped. July’s Pending Home Sales Index reading was 109.50.

Signed Purchase Contracts For Existing Homes Tracked In The U.S.

  • ·Northeast:  – 6.60 percent
  • ·Midwest:    – 1.00 percent
  • ·West:        – 4.90 percent
  • ·South:       + 2.60 percent

Pending home sales were 6.70 percent higher year-over-year on a national basis. This indicates that the housing recovery is progressing, but at a slower pace.

Short supplies of available homes have also impacted sales. In some areas homebuyers are facing competition from multiple buyers for individual homes.

Another report released earlier in the week showed that the pace of rising home prices also slowed. This connects with fewer pending home sales, as when demand for homes cools, prices are likely to fall as well.

Pending home sales serve as an indicator for future home sales, as purchase contracts typically lead to completed home sales within two to three months.

Housing Market Developments Could Delay Fed Stimulus Decision

The Federal Reserve has indicated that it may begin reducing its stimulus program of buying $85 billion per month in U.S. Treasury bonds and mortgage-backed securities.

The Fed has repeatedly stated that continued monitoring of economic trends would weigh heavily on its decision if and when to modify its current stimulus program.

Mortgage rates have risen more than a percentage point since May when the Fed began discussing potentially “tapering” its monthly bond purchases.

The Fed may interpret the slower pace of rising home prices and pending home sales as a sign that it’s not yet time to reduce its stimulus program. This could help with lowering mortgage rates, which are expected to rise when the Fed reduces its monthly securities purchases and eventually ends its stimulus plan.

Housing has led the economic recovery; faltering indicators in the housing sector suggest that the overall recovery is a fragile process.

Housing Analysis

Case Shiller Price Index Shows Home Prices Are Still Increasing

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Case Shiller Price Index Shows Home Prices Are Still IncreasingHome prices are still rising, but at a slower pace according to the S&P Case-Shiller Home Price Indices for June.  Home prices for the cities surveyed in the HPI rose by 12.10 percent on an annual basis as compared to May’s reading of 12.20 percent.

This is the highest rate of monthly growth for home prices since the peak of the housing bubble in 2006. 

June’s home prices remained approximately 23 percent lower than peak prices, but economists consider the bubble peak an anomaly and caution against comparing current home prices to the peak prices seen in 2006.

Overall Housing Price Increase Strongly

Regional home prices reported in June’s HMI were mixed. Case-Shiller publishes a 10-city Index and a 20-city Index of home prices. 13 of 20 cities saw their rates of rising home prices decline from May to June.

Atlanta posted the highest month-to-month gain in home prices at 3.40 percent. Washington, D.C. posted the slowest month-to-month gain in home prices at 1.00 percent.

New York City posted a monthly gain of 2.10 percent in home prices in June; this was its highest rate of increase since 2002.

Both S&P Case-Shiller Home Price Indices for June showed annual growth in home prices. The 10-city index posted an annual gain of 11.90 percent and the 20-city Index posted an annual growth rate of 12.10 percent. Las Vegas enjoyed the highest annual rate of home price growth at 24.90 percent.

In year-over-year price gains, Las Vegas and San Francisco’s gains exceeded 20.00 percent, while Atlanta, Detroit and Phoenix posted year-over-year gains of 19.00 percent, 16.40 percent and 19.80 percent respectively.

These figures suggest there’s plenty of room before prices begin to fall, but David M. Blitzer, chairman of the Index Committee and S&P Dow Jones Indices, noted that “the monthly city-by-city data show the pace of price increases is moderating.”

Rising Mortgage Rates, Limited Supply Of Homes Slowing Home Price Growth

Mortgage rates remain historically low, but have risen sharply over the last few weeks. This trend, coupled with persistently low inventories of available homes is seen as a significant reason for slower growth in home prices. 

Investors and would-be home buyers are also waiting to see if the Federal Reserve reduces its monthly stimulus program; such a reduction would likely cause mortgage rates to rise further.

The Fed has not set a date for “tapering” its monthly stimulus, but has indicated it will do so soon if economic conditions continue to improve.

 

FHFA

Existing Home Sales Report Shows Highest New Home Inventory Since January 2012

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Existing Home Sales: Highest New Home Inventory Since January 2012The National Association of REALTORS reported that existing home sales for July came in at 5.39 million on a seasonally adjusted annual basis. July’s reading exceeded both expectations of 5.21 million existing homes sold and June’s reading of 5.06 million homes sold.

This suggests good news for home buyers who’ve been constrained by limited supplies of homes for sale.

As home prices continue increasing in many areas, more homeowners are likely to list their homes for sale. Existing home sales for July rose by 6.80 percent year-over-year.

The Federal Housing Finance Agency Home Price Index reported a 7.70 percent year overyear increase in prices for homes financed by Fannie Mae or Freddie Mac.

This reading was slightly higher than May’s year-over-year reading of a 7.60 percent increase in home prices.

New Home Sale Inventories Also Growing

New home sales for July dropped by 13.40 percent to a seasonally adjusted annual reading of 394,000; this was lower than expectations of 485,000 new homes sold, but this expectation was based on June’s original reading of 497,000 new homes sold. June’s reading has been adjusted to 455,000 homes sold, which likely would have resulted in a lower expectation.

New home sales were lower in all four U.S. regions:

-16.1 percent in the West

-13.4 percent in the South

-12.9 percent in the Midwest

– 5.7 percent in the Northeast

While this isn’t great news for developers and home builders, supplies of new homes for sale jumped from a 4.30 month supply of new homes in June to a 5.20 month inventory of available new homes in July. This was the highest inventory of available new homes since January 2012.

Monthly New Home Sales Continue Upward Trend

Month to-month sales of new homes tend to be volatile, but July’s year-over-year home sales were 6.80 percent above new home sales in July 2012.

Higher mortgage rates likely stifled sales, but slower sales would increase inventories of available homes. More homes available would help ease constraints on buyers and level then playing field for home buyers who have been competing for few homes in strong seller’s markets.

Rising mortgage rates could continue, especially if the Federal Reserve begins tapering its $85 billion in monthly bond purchases, a program known as quantitative easing. The Fed has announced that it may start reducing the QE program before year-end.

When QE purchases are reduced, securities prices can be expected to fall due to less demand, and mortgage rates can be expected to rise.