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Phoenix Homeownership Rate Surpasses National Average for First Time in 6 Years

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City hit hard by housing crisis makes its comeback


Phoenix’s homeownership rate increased to 63.4% in the second quarter, surpassing the national average from the first time since 2010, according to the Second Quarter 2016 Economic and Single-Family Housing Market Outlook Report for Phoenix released by Ten-X, an online real estate transaction marketplace.

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(Source: Ten-X, U.S. Census Bureau)

“Phoenix continues its remarkable recovery from the volatility of the housing market boom and bust cycle, where it was one of the hardest hit cities in the country,” Ten-X Executive Vice President Rick Sharga said.

“The city’s strong underlying economic fundamentals, high employment, growing wages and increasing population, bode well for continued growth in the housing market,” Sharga said.

Existing home sales in the city increased 12.5% from last year to 123,600 during the second quarter, according to the report. This is a new cyclical peak, and passed up the national average for the first time since early 2015.

While home sales are increasing, available inventory remains tight even after an increase of 7.2% from last year. New home construction remained weak, with both housing starts and permits down on a year-over-year basis, and lagging well below historical levels.

Home price appreciation slowed, but continues to increase in the metro. In the second quarter the median home price in Phoenix increased 8.4% from last year to $222,194.

“Compared to other major metropolitan areas, Phoenix real estate remains relatively affordable, even as prices continue to rise,” Sharga said.

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How to Adapt Your Home as You Age

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An average of 10,000 baby boomers retire each day, and while some may decide to downsize or relocate, others choose to adapt their homes for enjoyment into their golden years. A large part of aging in place is ensuring that everything is within reach and easy to use. Here are some ideas that can help you prepare to age well in your home.

Add Small, Important Features
Think convenience and accessibility when selecting new appliances, like a front-load washer and dryer, and adding fixtures, such as adjustable shower-heads, lever-style door handles and handrails on both sides of a staircase. Even small adjustments like lower light switches and higher electrical outlets can have an impact on the functionality of your home later in life.

Make Thoughtful Renovations
If you’re budgeting for a larger remodel, consider some of the more common aging-in-place improvements:

  • Increase the width of doorways to at least 36 inches.
  • Add a step-free exterior entrance or ramp.
  • Install a bathroom on the ground floor, complete with a walk-in shower and low-rise tub.
  • Opt for pocket doors where possible.
  • Outfit the kitchen with shallow sinks, multilevel countertops and a bottom-freezer fridge.

Consider Technology
Smart technology in the home has practical uses for those looking to age in place. Smart bath monitors can turn the water off before a tub overflows, and detection alarms on stoves can now alert homeowners to a potentially dangerous situation before toxic gases are even present. Motion-activated lights, smart doorbells with a video monitor and smart home security systems give seniors who live independently more peace of mind.

Even if you’re nowhere near retiring, it’s important to make a plan. When it comes to aging in place, it makes sense to have the fixes complete before you need them



Home Flipping Hits Six-Year High

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A total of 51,434 U.S. single family home and condo sales were completed flips in the second quarter of 2016, according to a new RealtyTrac Q2 2016 U.S. Home Flipping Report. These numbers are up 14 percent from the previous quarter and up 3 percent from a year ago to the highest number of home flips since Q2 2010 – a six-year high.

For the report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties accounting for more than 80 percent of the U.S. Population.

Homes flipped in Q2 2016 accounted for 5.5 percent of all single family and condo sales during the quarter, down from 6.7 percent of all sales in the first quarter but up from 5.4 percent of all sales in Q2 2015.

A total of 39,775 investors (including both individuals and institutions) completed at least one home flip in Q2 2016, the highest number of home flippers since Q2 2007 – a nine-year high.

“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 benefitting 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.

“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 continues. “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.”

Of the 51,434 homes flipped in the second quarter, 68.3 percent were purchased with cash by the flipper, down from 71.1 percent in the previous quarter and down from 69.6 percent in Q2 2015 to the lowest level since Q3 2008 – a nearly eight-year low.

“The single family real estate sector is becoming more institutional, which means that more financing is available and more attractive,” says Varun V. Pathria, CEO at Asset Avenue, a company that provides investor rehab, bridge and rental loans. “The entrepreneurs are also becoming savvier and as a result are looking to leverage their capital more. There continues to be a fringe group of people who enter and exit the sector based upon opportunity and those people are hard to predict but generally look to take maximum leverage.”

Pathria noted that 79 percent of the rehab loans Asset Avenue has originated so far in 2016 have been purchase loans while the remaining 21 percent have been refinance – typically an investor who purchases with cash at a foreclosure auction or some other auction and subsequently finances the property.

Gross Flipping Profit Increases to New All-Time High
Homes flipped in Q2 2016 sold on average for $189,000, $62,000 more than the average purchase price of $127,000, according to ATTOM data. That $62,000 average gross profit was up from an average $59,250 gross flipping profit in the previous quarter and up from an average $57,900 gross flipping profit in Q2 2015 to the highest average gross flipping profit since Q1 2000, the earliest quarter tracked in the report.

The average loan amount for rehab loans originated by AssetAvenue so far in 2016 was $193,786, according to CEO Pathria.

The $62,000 average gross flipping profit represented an average 48.8 percent return on the original purchase price, down from a 49.3 percent average gross flipping ROI in the previous quarter but up from a 47.5 percent average gross flipping ROI in Q2 2015.

Average Days to Flip at 10-Year High
Homes flipped in Q2 2016 took an average of 185 days to flip, up from 180 days from the previous quarter and up from 182 days in Q2 2015 to the highest level since Q2 2006 – a 10-year high.

Among 100 metropolitan statistical areas with at least 90 home flips in Q2 2016, those with the longest average time to flip 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).

Markets with Highest Home Flipping Rate
Among 100 metropolitan statistical areas with at least 90 homes flipped in Q2 2016, those with the highest flipping rate were Memphis (11.1 percent); Visalia-Porterville, Calif. (10.1 percent), Tampa (10.0 percent); York-Hanover, Penn. (9.7 percent); and Mobile, Ala. (9.6 percent).

Other metro areas in the top 10 for the highest flipping rate in Q2 2016 were Fresno, Calif. (9.5 percent); Lakeland-Winter Haven, Fla. (9.5 percent); Deltona-Daytona Beach-Ormond Beach, Fla. (9.4 percent); and Clarksville, Tenn. (9.3 percent).

Along with Memphis and Tampa, major markets with a population of at least 1 million where the Q2 2016 flipping rate was above 7 percent were Miami, Orlando, Baltimore, New Orleans, Phoenix, Jacksonville, Florida, Nashville, and Las Vegas.

Markets with Highest Gross Flipping Profits
Among the 100 metropolitan statistical areas with at least 90 home flips in Q2 2016, those with the highest gross ROI for homes flipped in Q2 2016 were Pittsburgh (133.3 percent), Allentown, Pa. (117.9 percent); New Orleans (111.5 percent); Cleveland (102.6 percent); and Philadelphia (98.9 percent).

There were nine metro areas where the average gross flipping profit in Q2 2016 was more than $100,000: San Jose, Calif. ($161,000); San Francisco ($146,000); Los Angeles ($125,000); New York ($124,160); San Diego ($111,250); Oxnard-Thousand Oaks-Ventura, Calif. ($110,000); Baltimore ($105,000); Washington, D.C. ($104,500); and Seattle ($102,900).

Thirty-five percent of all homes flipped in Q2 2016 were sold by the flipper for between $100,000 and $200,000, the biggest share of any price range, but the biggest year-over-year increase in terms of price range was homes flipped in the $200,000 to $300,000 range – up 10 percent from a year ago.

Homes flipped for more than $5 million yielded the highest average gross ROI (73 percent), followed by the $50,000 to $100,000 price range (58 percent) and the $100,000 to $200,000 price range (58 percent).

Homes that were flipped in Q2 2016 were purchased by the flipper at a 25.7 percent discount below full “after repair” market value on average and sold by the flipper for a 9.2 percent premium above market value on average.

5 Maintenance Skills Every Homeowner Should Know

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Maintaining a home, especially an older one, can be expensive – in fact, experts say homeowners should be prepared to spend roughly 1 percent of their home’s value every year on maintenance.

The good news is, you can save on maintenance by completing simple tasks yourself. According to the experts at Underwriters, Inc. these include:

Cleaning the Gutters – To prevent costly damage to your home’s foundation, landscaping and siding, remove debris and leaves from the gutters at least twice a year. Don’t forget gloves and eye protection!

Open Garage Doors Manually – Don’t call a garage technician the next time your power’s out – simply locate the (usually red) cord, suspended from the ceiling-mounted operator, in your garage, and pull it to disconnect the cord from the motor.

Removing Stripped Screws – Avoid causing more damage when screws slip from a screwdriver. Place a rubber band or piece of steel wool over the screw and then try to remove it – if that method fails, use a screw extractor.

Repairing a Leaky Faucet – Leaks can cost hundreds in wasted water. Before you call a plumber, try DIY-ing by shutting off the main water supply, removing the faucet’s knobs, and checking the washers, stems and O-rings for signs of damage. Take these pieces to the hardware store to find exact replacements.

Stop a Running Toilet – Another plumber job you can do yourself! Remove the lid to the tank behind the toilet, and check the flush lever, rubber flapper, lift chain, float ball, pump and overflow tube. A running toilet usually requires just a simple adjustment or replacement to fix.

If you can master these essential homeowner skills, you’ll not only save money on maintenance, but also the expense of more costly fixes in the future.

October Checklist for a Smooth-Running Home

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From the first crisp mornings spent raking leaves, to the last exciting days preparing for trick-or-treaters, October is usually a busy month around the house. Work your way through the tasks on our checklist, and by the end of the month you’ll have your home winter-ready—and a bit more beautiful, to boot.

1. Clean rain gutters after leaves fall. Leaves and other debris that clog your rain gutters can cause leaks, so it is best to get to this chore as soon as possible after most of the autumn leaves have fallen. If your home is more than one story, hire a pro.

2. Repair roof and siding. If you see any damaged areas to your roof, siding or shingles, it is important to take care of the problem before winter storms come through.

3. Scrub and store outdoor furniture and tools. Rather than leave furniture out in bad weather, put it away in a shed or the basement. This month, also aim to clean your gardening tools and put them away neatly.

4. Give your porch a makeover. Sweep away the summer sand, refresh pots with fall flowers, clean front windows and use a broom or soft brush to clean up siding. An armful of decorative gourds and pumpkins makes an easy display that will last all month.

5. Shut off outdoor faucets and roll hoses. Freezing temperatures can damage hoses and water pipes, so be sure to shut off faucets and empty hoses of water before the first big freeze.

6. Check safety devices. Every home should have a carbon monoxide detector, as well as smoke detectors positioned throughout the house. Take a moment to test that yours are in working order, and change batteries if needed.

7. Sort and store clothing. Shift warm-weather clothes and accessories to an out-of-the-way closet in bins with tight-fitting lids. And be sure to store only freshly laundered items—bugs are attracted to dirty clothes but usually leave clean garments alone.

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Homeowners Ask: Is It Too Early for an End-of-Season Cleanup?

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The answer is no!

Summer is coming to a close, and for homeowners, now is the time to conduct property maintenance ahead of the change of season. Get a head start on winter weather with these end-of-season projects:

Remove thatch build-up. Thatch prevents moisture, oxygen and sunlight from reaching soil, potentially inhibiting the growth of (and harming) the lawn.

Perforate the lawn to allow air, fertilizer and water to strengthen its roots and reduce compacted soil.

Feed the lawn with a slow-release fertilizer to allow grass to soak up nutrients that will help it recover from summer heat and stress.

Store the lawn mower. Consult the owner’s manual for best practices when disposing of unused gasoline and storing.

Plant spring bulbs, like daffodils and tulips, if the climate permits. (Planting too early can cause them to sprout before winter!)

Water shrubs and trees once they go dormant (but before the ground freezes). Use a root irrigator or soaker hose.

Stow hoses. Inspect the hoses thoroughly before putting them away for the winter – check for leaks around connectors, and drain all water out of the hose.

High-Tech Homes One of Most Requested Changes

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Powered by convenience, houses are turning high-tech and wired with the latest options for contemporary living. Many homeowners are requesting the ability to access their homes’ security and services from a tablet or smartphone, even when they are miles away.

There are a number of ways to turn your home today into the house of the future.

Connect everything. The first step to a high-tech home takes place behind the scenes by adding low-voltage wiring. Telephone, intercom, alarm systems, audio, video, data, HVAC and networking capabilities can all be connected through wiring and cabling infrastructure within the home.

Enhance security. Many high-tech homeowners are replacing costly security systems and monitoring services with surveillance cameras that can be controlled, along with entry and garage doors, with a single system via smartphone.

Lighten up. LED lights are extremely energy efficient and a great product for a great price. Many companies have created cool lighting systems that provide solutions, such as geofencing technology, to provide lighting control with just a tap on a smartphone screen.

Control the kitchen. A number of appliance manufacturers have joined the wireless trend by providing apps that allow for wireless control, one of which a homeowner can use to start and pre-heat the oven. Another recently announced technology can even check the contents of the refrigerator while the homeowner is still at the grocery store.

Take it outside. Smartphone-operated flat-screen televisions and surround-sound systems continue to be popular outdoor living upgrades. Embellish it all with a fire table or an outdoor fireplace.

Credit Confused? What to Know About Your Score

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Credit-confused? You’re not alone. Most of us have trouble understanding the impact some actions may have on our credit scores, though many of us do know the basics.

Just half of those surveyed recently by the Consumer Federation of America (CFA) and VantageScore Solutions know that their lender must inform them about the lender’s use of a credit score in the mortgage application process, for instance, and less than half of those surveyed wrongly believe that marital status is a factor in the calculation of credit scores.

Many of us also underestimate the consequences of a low credit score, the survey found: only one-fifth of those surveyed know a low score can increase the cost of a loan.

Some of us are even in the dark when it comes to non-creditor use of our credit scores. Half of those surveyed did not know that utility companies may factor scores into the decision on the initial deposit for service, and one-third did not know that home insurance providers and landlords might also factor scores into their decisions.

“The good news is that consumers understand the basics of credit scores, such as the importance of making loan payments on time,” said Stephen Brobeck, CFA’s executive director, in a statement. “The bad news is that this knowledge is limited and, each year, can cost them hundreds of dollars in fees on services and additional interest on consumer loans.”

In addition to making loan payments consistently and on time, checking credit report(s), keeping credit card balances low and refraining from opening new credit accounts are all credit-wise actions, according to CFA.

Source: Consumer Federation of America (CFA)

Report: Investment Home Prices Beat Traditional Home Prices in July

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Median prices for investment housing are growing at a faster rate than owner-occupied home prices in July, according to the new home sales reports. Prices for investment housing – both financed and all-cash – jumped 7.1 percent to $213,300, while the median price for owner-occupied homes increased 4.0 percent to $274,500 in July.

“Investor demand for single-family rentals (SFRs) remains strong, as evidenced by the overall decline in cap rates in July,” explains Steve Hovland, a real estate research analyst. Cap rates for all types of investment housing dropped 50 basis points to 5.1 percent, cash cap rates retreated 60 basis points to 6.0 percent and leveraged investment cap rates declined 20 basis points to 4.4 percent.

“Overall, the housing market remains solid, although we’ve started to see evidence of moderating price growth nationwide,” says Hovland. “This slower price growth is correlated to the seasonality of the housing market: we are coming off a frenzied spring buying season that is beginning to cool.” Although home prices are expected to decline in the fall months, the overall supply/demand imbalance will keep values elevated and many first-time buyers on the sidelines. As a result, downward pressure on the already record-low home-ownership rate will persist through the end of the year.

Freddie Mac Sees Home Prices Rising in 2016 and 2017

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yellow bungalow

Despite the stock market recovering all of its losses — oh and hitting new all-time highs — Freddie Mac believes that the international concerns from the slowing growth in China and the U.K.’s Brexit vote have played a major role in driving mortgages lower.

Freddie Mac’s most recent Primary Mortgage Market Survey showed that the average 30-year fixed-rate mortgage fell to a rate of 3.41%. This is within striking distance of an all-time low. Freddie Mac also said that this should boost housing activity, particularly refinancing activity.

Freddie Mac’s latest economic and housing price outlook is still calling for growth on both fronts (housing and economy). The forecast calls for growth to rebound in the second half of 2016, with gross domestic product (GDP) rising 1.9% in 2016 and then rising 2.2% in 2017.

Where this gets interesting for new home buyers is that Freddie Mac now forecasts lower-than-expected mortgage rates. The monthly forecast said:

In light of recent global pressures, the 30-year fixed-rate mortgage forecast has been revised down for both 2016 (by 30 basis points) and 2017 (by 50 basis points) to 3.6 percent and 4.0 percent, respectively. … Based on these low mortgage rates, expect the refinance share of originations to rise to 49 percent for 2016, 8 percentage points above last month’s forecast. This translates to about $100 billion more in originations, bringing the total for 2016 to $1,825 billion. The house price appreciation forecast for 2016 remains at 5.0 percent, and in 2017, 4.0 percent.

Sean Becketti, chief economist at Freddie Mac, said:

With the U.K.’s decision to exit from the European Union, global risks increased substantially leading us to revise our views for the remainder of 2016 and all of 2017. Nonetheless, the turbulence abroad should continue to create demand for U.S. Treasuries and keep mortgage rates near historic lows; thereby, allowing home sales to have their best year in a decade, along with a boost in refinance activity.

Freddie Mac’s forecast for unemployment, factoring in June versus May data, is now called to average 4.9% in 2016 and 4.8% in 2017.

All in all this is one of those reports that could have been titled “Let The Good Times Roll.”

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