Washington, DC, April 20, 2011
Sales of existing-home sales rose in March, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7 percent to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3 percent below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.
Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13 percent of gross household income, the lowest since records began in 1970.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84 percent in March, down from 4.95 percent in February; the rate was 4.97 percent in March 2010.
Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.
“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.
A parallel NAR practitioner survey2 shows first-time buyers purchased 33 percent of homes in March, compared with 34 percent of homes in February; they were 44 percent in March 2010.
All-cash sales were at a record market share of 35 percent in March, up from 33 percent in February; they were 27 percent in March 2010. Investors accounted for 22 percent of sales activity in March, up from 19 percent in February; they were 19 percent in March 2010. The balance of sales were to repeat buyers.
The national median existing-home price3 for all housing types was $159,600 in March, down 5.9 percent from March 2010. Distressed homes – typically sold at discounts in the vicinity of 20 percent – accounted for a 40 percent market share in March, up from 39 percent in February and 35 percent in March 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said some renters are looking to home ownership as a hedge against inflation. “The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” he said. “As buyers gain more financial security, the advantages of home ownership become more obvious. Rents will continue to trend up, especially in comparison with a fixed-rate loan which provides financial stability and gradual accumulation of equity over time.”
Total housing inventory at the end of March rose 1.5 percent to 3.55 million existing homes available for sale, which represents an 8.4-month supply4 at the current sales pace, compared with a 8.5-month supply in February.
Single-family home sales rose 4.0 percent to a seasonally adjusted annual rate of 4.45 million in March from 4.28 million in February, but are 6.5 percent below the 4.76 million level in March 2010. The median existing single-family home price was $160,500 in March, down 5.3 percent from a year ago.
Existing condominium and co-op sales increased 1.6 percent to a seasonally adjusted annual rate of 650,000 in March from 640,000 in February, but are 4.1 percent below the 678,000-unit pace one year ago. The median existing condo price5 was $153,100 in March, which is 10.1 percent below March 2010.
Regionally, existing-home sales in the Northeast rose 3.9 percent to an annual level of 800,000 in March but are 12.1 percent below March 2010. The median price in the Northeast was $232,900, down 3.0 percent from a year ago.
Existing-home sales in the Midwest increased 1.0 percent in March to a pace of 1.06 million but are 13.1 percent lower than a year ago. The median price in the Midwest was $126,100, which is 7.1 percent below March 2010.
In the South, existing-home sales rose 8.2 percent to an annual level of 1.99 million in March but are 1.0 percent below March 2010. The median price in the South was $138,200, down 6.6 percent from a year ago.
Existing-home sales in the West slipped 0.8 percent to an annual pace of 1.25 million in March and are 3.1 percent below a year ago. The median price in the West was $192,100, which is 11.2 percent lower than March 2010.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
Thursday, April 21, 2011
Wednesday, April 20, 2011
March Housing STATS
`
Contact IAR Communications:
• Home sales in Illinois rose for the second consecutive month in March showing some
momentum heading into the spring market, while sales remain lower than last year’s
heightened totals from the tax credit. (IAR)
• March 2011 home sales are up 40.0 percent from the previous month’s totals in February;
sales are down 17.9 percent year-over-year compared to March 2010. (IAR)
• More than one-third of Illinois homes sold in March closed under $100,000 and 69 percent
under $200,000; this combined with the continued impact from distressed property sales
contribute to the lower median price. (IAR)
• It’s worth repeating that market conditions today are optimal for buyers. Interest rates remain
below five percent and home prices are lower making affordability at an all-time high for
investors and buyers with strong credit and the financial wherewithal. (IAR)
• Sellers have an opportunity now to use the spring market when buyer interest is higher and
the weather more cooperative to set the right price to sell. (IAR)
• “In March the Illinois and Chicago housing markets were warming up as expected and as the
sales forecast reveals, the housing sales volume is expected to increase for the next three
months with a monthly growth in the 10-15 percent range for Illinois and 7-23 percent range
for the Chicagoland region. (Regional Economics Applications Laboratory, University of
Illinois, April 2011)
• Comparing the housing market in 2011 with 2010 and 2009, the sales volume is recovering;
however, the housing prices remain well below prior year levels although the trend suggests
some modest price recovery. The removal of foreclosed properties from the inventory will
have long-term positive benefits to the housing market. However, in the near-term the
presence of these properties serves as a significant break on any upward trend in prices.”
(Regional Economics Applications Laboratory, University of Illinois, April 2011)
• The five-year swoon in home prices has done little to shake the confidence of the American
public in the investment value of homeownership. Fully eight-in-ten (81%) adults agree that
buying a home is the best long-term investment a person can make. (Pew Study, 4/12/11)
• Most experts expect rates to continue to increase through the year. Interest rates along with
price determine the overall cost of a home. Even with prices softening, if interest rates rise, it
may be less expensive to buy now rather than wait. (KCM blog, 4/12/11)
IAR Economic Talking Points
Illinois Statewide – March 2011
Home sales up +40.0% from February; -17.9% from March 2010
7,833 sales in March compared to 5,596 in Feb 2011, 9,538 in March 2010
Median price +1.6% from February, down -12.2% from March 2010
$130,000 March 2011; $128,000 February 2011; $148,000 March 2010
SF/Condo median price trending back to 1999-2000 levels
42/98 counties reported median home sale price increases or no change
37/98 counties reported sales increases or no change compared to last year
Chicago PMSA (Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will)
Home sales +41.3% from February; -15.6% from March 2010
5,324 sales in March compared to 3,769 in Feb 2011; 6,309 sales in March 2010
Median price +3.6% from February, down -14.1%
Will County – median price increase +.6.3% to $170,000 year-over-year
Kendall County – sales increase +14.7% year-over-year
SF/Condo median price trending back to 2000
• Forecasts for the next three months (April, May and June 2011) for Illinois and Chicago
suggest that while annual sales are expected to be negative (still because of the effect of
the tax credit), the month-to-month sales are expected to be positive for all three months.
• The housing price forecasts for both Illinois and Chicago show month-to-month increases
for the next three months. However, the forecasted prices are still 13-16% lower than last
year during the same period.
• Illinois added 17,600 jobs at a rate of 0.31% in February 2011, compared to a revised
24,200 job gain in January 2011. The three-month moving average of jobs, a more stable
measure of the labor market, was up by 12,200 jobs.
• The February shadow unemployment rates for the Illinois, The Rest of the Midwest and
the Nation were 11.2%, 13.6% and 12.3%, compared to the official unemployment rates
of 8.9%, 9.0% and 8.9%
• Four great financial reasons why you should not wait before taking the plunge into
homeownership. 1) Interest Rates Are Increasing. 2) The 30-Year Mortgage May Disappear
(There are several experts who believe If Fannie Mae and Freddie Mac’s roles are
eliminated, or even limited, it may be the end to the 30-year mortgage. 3) QRM
Requirements Could Be Much More Stringent (Certain mortgage types would be eliminated,
You would need to put a minimum of 20% down, You would need a minimum 690 FICO
score, The ratios of income to both the mortgage payment and overall debt would become
much more conservative (28% and 36%). And 4) Rents Are Expected to Increase. (KCM
blog, 4/12/11)
• "Mortgage rates edged up following a light week of economic data releases. Although rates
on 30-year fixed mortgages have risen four weeks in a row, they have remained below 5
percent for eight straight weeks now, helping to maintain affordability in the housing market.
(Freddie Mac, 4/14/11)
• “We may not see notable gains in existing-home sales in the near term, but they’re expected
to rise 5 to 10 percent this year with the economic recovery, job creation and excellent
affordability conditions providing confidence to buyers who’ve been on the sidelines.”
(Pending Index, 3/28/11)
• The faster pace of incoming distressed inventory into the marketplace does not necessarily
mean a further slump in the housing market. The key is demand. If these distressed
inventories are quickly picked up by buyers, then no worries. But if distressed inventories
linger in the marketplace then we can expect a notable further decline in home values. All
indications point to plenty of ready buyers for foreclosed homes, not uncommonly with
multiple offerings. So housing demand appears to be present at the moment and could grow
as the economy turns for the better. (NAR Real Estate Insights, 4/11)
• Last year the demand arose from the home buyer tax credit. This year the demand will come
from improving job market conditions. (NAR Real Estate Insights, 4/11)
• The job market continues to provide some positive signs. In March, the national
unemployment rate declined for the fourth month in a row to 8.8%, and the national nonfarm
payroll expanded by 216,000 jobs, according to the Bureau of Labor Statistics. The
state of Illinois added 17,600 jobs at a rate of 0.31% in February 2011, compared to a revised
24,200 job gain in January 2011. (U of I REAL Forecast, 4/11)
• The three-month moving average of jobs, a more stable measure of the labor market, was up
by 12,200 jobs. The February unemployment rate in Illinois fell to 8.9 percent; this rate fell
for the 13th consecutive month, and the last time the state rate was below 9.0 percent was
two years ago in February 2009. (U of I REAL Forecast, 4/11)
• “Housing affordability conditions have been at record levels and the economy has been
improving, but home sales are being constrained by the twin problems of unnecessarily tight
credit, and a measurable level of contract cancellations from some appraisals not supporting
prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a
gradual but uneven recovery. (NAR release, 3/21/11)
GSE Reform Talking Points (NAR)
• Owning a home contributes to the strength of the nation’s economy and is still one of the best
ways for individuals to build long-term wealth; therefore, we need public policies that
support home ownership. Making it harder for families to afford safe mortgages does not
further the goal of a housing or economic recovery.”
• Housing creates jobs. Housing accounts for more than 15 percent of the national Gross
Domestic Product, or $2 trillion, a key driver in our national economy. For every additional
1,000 home sales this year over last, about 500 new jobs are added to the economy.
• Without the government’s role in housing finance, mortgage rates would rise unnecessarily
and become unaffordable for many Americans. In addition, an inadequate secondary market
would impede housing and economic recovery and prevent many young middle-class
families from owning a home.
• NAR is actively engaged on behalf of Realtors® and the nation’s home owners to protect the
flow of affordable mortgages to home buyers.
• For a vast number of consumers, access to affordable, simple 30-year fixed rate mortgages
requires government backing.
• Foreclosures: Despite record affordability and buyer incentives, rising foreclosure rates and
concerns about proper foreclosure procedures led some to question whether owning a home
was a good personal decision. Home ownership didn’t create the foreclosure crisis – Wall
Street greed and irresponsible lending practices did. The decision to own a home is a very
personal one, but over the long term, owning a home is one of the best ways to build longterm
wealth, in addition to providing numerous social benefits that include reduced crime
rates, improved childhood education, and increased stability. After all, a fixed-rate mortgage
might last 15 to 30 years; renting is forever. (NAR)
• NAR practitioner survey: First-time buyers purchased 34 percent of homes in February, up
from 29 percent in January; they were 42 percent in February 2010. All-cash sales were a
record 33 percent in February, up from 32 percent in January; they were 27 percent in
February 2010. Investors accounted for 19 percent of sales activity in February, down from
23 percent in January; they were 19 percent in February 2010. The balance of sales were to
repeat buyers. (NAR, 3/28/11)
• Foreclosure impact: Distressed homes – sold at discount – accounted for a 39 percent
market share in February, up from 37 percent in January and 35 percent in February 2010.
“The decline in price corresponds to the record level of all-cash purchases where buyers –
largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be
seeing greater numbers of traditional home buyers if mortgage credit conditions return to
normal.” (NAR 3/28/11)
• Shadow inventory: The continuing concerns center on the size and impact of the “shadow
inventory;” estimates of the impact range from minor to very profound. In large part, the
magnitude of the impact centers on the way in which homeowners react to continuing price
declines and the realization that they may owe more their home than the property’s is current
value. Negative equity becomes a problem when a homeowner attempts to sell the
property—but it can also have an impact on consumption, potentially depressing
consumption or at least delaying purchases of major items (such as automobiles, appliances
and so forth). A further concern centers on the degree to which negative equity in a home
influences the operation of the labor market by limiting job mobility; this concern will
become more important as the job market rebounds and opportunities for advancement in the
labor market present themselves. (U of I REAL, 3/2011)
• MID: Government support of programs and initiatives that encourage home ownership have
also been called into question. The deductibility of mortgage interest is one example, with
critics suggesting that the mortgage interest deduction primarily benefits the wealthy, while
in fact, the MID benefits primarily middle- and lower income families – almost two-thirds of
those who claim the MID are middle-income earners. (NAR)
• MID: Sixty-five percent of families who claim the MID earn less than $100,000 per year,
and 91 percent who claim the benefit earn less than $200,000 annually. The ability to deduct
the interest paid on a mortgage can mean significant savings at tax time. For example, a
family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming
an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next
year. That’s money they could use to pay down other debts, supplement their children’s
college savings account, or put into savings themselves. (NAR)
• The typical homeowner’s net worth ($205,200) was 49 times that of a typical renter ($4,200)
in 2008. (NAR calculations using stats from the Federal Reserve Board).
NAR Homeownership Matters Campaign
http://www.realtor.org/topics/homeownership
• The economic benefits of the housing market and homeownership are immense and well
documented. The housing sector directly accounted for approximately 14 percent of total
economic activity in 2009. Less than half of Americans owned their homes at the beginning
of the 20th century. By 2004, 69 percent of Americans owned their homes – a record high.
The homeownership rate has since declined to 66.9 percent as of the second quarter 2010.
Still, that figure indicates that two thirds of U.S. households own their own home.
-Add 5-
IAR Economic Talking Points
NAR Surround Sound Talking Points
www.realtor.org/press_room/surroundsound
The basics
• Home ownership is an investment in your well-being and future.
• Today’s market offers great opportunities for buyers and sellers.
• The supply and choice of homes for sale is plentiful in most markets.
• Mortgage interest rates are low.
• Home prices are affordable.
• Homeownership offers immediate benefits and long-term value.
• REALTORS® add value to the real estate transaction.
• REALTORS® are the most trusted resource for real estate information.
ECONOMIC DATA
Homeownership Rates (U.S. Census)
4Q10 3Q10 3Q09 2008 2007 2006 2005 2004 1985
U.S. 66.5 66.9 67.6 67.8 68.1 68.8 68.9 69.0 63.8*
Midwest 70.5 71.1 71.6 71.7 71.9 72.7 73.1 73.8 *1986, 1988
Illinois 68.3 68.7 69.3 68.9 69.4 70.4 70.9 72.7 60.1
Interest Rates at a Glance – Average North Central Region (which includes Illinois)
4.86 – March 2011 5.0 – Feb 2011 5.03 – March 2010
16.63 – 1981 (high)
National Unemployment Rate – www.bls.gov
8.8% March 2011
Illinois Unemployment Rate – www.ILWorkingInfo.com
8.9% March 2011
Consumer Confidence - www.conference-board.org
63.4 March
70.4 Feb
60.6 Jan
(1985=100)
“The sharp decline in confidence was prompted by a sharp decline in expectations. Consumers’
inflation expectations rose significantly in March and their income expectations soured, a
combination that will likely impact spending decisions. On the other hand, consumers’
assessment of current conditions improved, indicating that while the short-term future may be
uncertain, the economy continues to expand.” (3/29/11)
Contact IAR Communications:
• Home sales in Illinois rose for the second consecutive month in March showing some
momentum heading into the spring market, while sales remain lower than last year’s
heightened totals from the tax credit. (IAR)
• March 2011 home sales are up 40.0 percent from the previous month’s totals in February;
sales are down 17.9 percent year-over-year compared to March 2010. (IAR)
• More than one-third of Illinois homes sold in March closed under $100,000 and 69 percent
under $200,000; this combined with the continued impact from distressed property sales
contribute to the lower median price. (IAR)
• It’s worth repeating that market conditions today are optimal for buyers. Interest rates remain
below five percent and home prices are lower making affordability at an all-time high for
investors and buyers with strong credit and the financial wherewithal. (IAR)
• Sellers have an opportunity now to use the spring market when buyer interest is higher and
the weather more cooperative to set the right price to sell. (IAR)
• “In March the Illinois and Chicago housing markets were warming up as expected and as the
sales forecast reveals, the housing sales volume is expected to increase for the next three
months with a monthly growth in the 10-15 percent range for Illinois and 7-23 percent range
for the Chicagoland region. (Regional Economics Applications Laboratory, University of
Illinois, April 2011)
• Comparing the housing market in 2011 with 2010 and 2009, the sales volume is recovering;
however, the housing prices remain well below prior year levels although the trend suggests
some modest price recovery. The removal of foreclosed properties from the inventory will
have long-term positive benefits to the housing market. However, in the near-term the
presence of these properties serves as a significant break on any upward trend in prices.”
(Regional Economics Applications Laboratory, University of Illinois, April 2011)
• The five-year swoon in home prices has done little to shake the confidence of the American
public in the investment value of homeownership. Fully eight-in-ten (81%) adults agree that
buying a home is the best long-term investment a person can make. (Pew Study, 4/12/11)
• Most experts expect rates to continue to increase through the year. Interest rates along with
price determine the overall cost of a home. Even with prices softening, if interest rates rise, it
may be less expensive to buy now rather than wait. (KCM blog, 4/12/11)
IAR Economic Talking Points
Illinois Statewide – March 2011
Home sales up +40.0% from February; -17.9% from March 2010
7,833 sales in March compared to 5,596 in Feb 2011, 9,538 in March 2010
Median price +1.6% from February, down -12.2% from March 2010
$130,000 March 2011; $128,000 February 2011; $148,000 March 2010
SF/Condo median price trending back to 1999-2000 levels
42/98 counties reported median home sale price increases or no change
37/98 counties reported sales increases or no change compared to last year
Chicago PMSA (Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will)
Home sales +41.3% from February; -15.6% from March 2010
5,324 sales in March compared to 3,769 in Feb 2011; 6,309 sales in March 2010
Median price +3.6% from February, down -14.1%
Will County – median price increase +.6.3% to $170,000 year-over-year
Kendall County – sales increase +14.7% year-over-year
SF/Condo median price trending back to 2000
• Forecasts for the next three months (April, May and June 2011) for Illinois and Chicago
suggest that while annual sales are expected to be negative (still because of the effect of
the tax credit), the month-to-month sales are expected to be positive for all three months.
• The housing price forecasts for both Illinois and Chicago show month-to-month increases
for the next three months. However, the forecasted prices are still 13-16% lower than last
year during the same period.
• Illinois added 17,600 jobs at a rate of 0.31% in February 2011, compared to a revised
24,200 job gain in January 2011. The three-month moving average of jobs, a more stable
measure of the labor market, was up by 12,200 jobs.
• The February shadow unemployment rates for the Illinois, The Rest of the Midwest and
the Nation were 11.2%, 13.6% and 12.3%, compared to the official unemployment rates
of 8.9%, 9.0% and 8.9%
• Four great financial reasons why you should not wait before taking the plunge into
homeownership. 1) Interest Rates Are Increasing. 2) The 30-Year Mortgage May Disappear
(There are several experts who believe If Fannie Mae and Freddie Mac’s roles are
eliminated, or even limited, it may be the end to the 30-year mortgage. 3) QRM
Requirements Could Be Much More Stringent (Certain mortgage types would be eliminated,
You would need to put a minimum of 20% down, You would need a minimum 690 FICO
score, The ratios of income to both the mortgage payment and overall debt would become
much more conservative (28% and 36%). And 4) Rents Are Expected to Increase. (KCM
blog, 4/12/11)
• "Mortgage rates edged up following a light week of economic data releases. Although rates
on 30-year fixed mortgages have risen four weeks in a row, they have remained below 5
percent for eight straight weeks now, helping to maintain affordability in the housing market.
(Freddie Mac, 4/14/11)
• “We may not see notable gains in existing-home sales in the near term, but they’re expected
to rise 5 to 10 percent this year with the economic recovery, job creation and excellent
affordability conditions providing confidence to buyers who’ve been on the sidelines.”
(Pending Index, 3/28/11)
• The faster pace of incoming distressed inventory into the marketplace does not necessarily
mean a further slump in the housing market. The key is demand. If these distressed
inventories are quickly picked up by buyers, then no worries. But if distressed inventories
linger in the marketplace then we can expect a notable further decline in home values. All
indications point to plenty of ready buyers for foreclosed homes, not uncommonly with
multiple offerings. So housing demand appears to be present at the moment and could grow
as the economy turns for the better. (NAR Real Estate Insights, 4/11)
• Last year the demand arose from the home buyer tax credit. This year the demand will come
from improving job market conditions. (NAR Real Estate Insights, 4/11)
• The job market continues to provide some positive signs. In March, the national
unemployment rate declined for the fourth month in a row to 8.8%, and the national nonfarm
payroll expanded by 216,000 jobs, according to the Bureau of Labor Statistics. The
state of Illinois added 17,600 jobs at a rate of 0.31% in February 2011, compared to a revised
24,200 job gain in January 2011. (U of I REAL Forecast, 4/11)
• The three-month moving average of jobs, a more stable measure of the labor market, was up
by 12,200 jobs. The February unemployment rate in Illinois fell to 8.9 percent; this rate fell
for the 13th consecutive month, and the last time the state rate was below 9.0 percent was
two years ago in February 2009. (U of I REAL Forecast, 4/11)
• “Housing affordability conditions have been at record levels and the economy has been
improving, but home sales are being constrained by the twin problems of unnecessarily tight
credit, and a measurable level of contract cancellations from some appraisals not supporting
prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a
gradual but uneven recovery. (NAR release, 3/21/11)
GSE Reform Talking Points (NAR)
• Owning a home contributes to the strength of the nation’s economy and is still one of the best
ways for individuals to build long-term wealth; therefore, we need public policies that
support home ownership. Making it harder for families to afford safe mortgages does not
further the goal of a housing or economic recovery.”
• Housing creates jobs. Housing accounts for more than 15 percent of the national Gross
Domestic Product, or $2 trillion, a key driver in our national economy. For every additional
1,000 home sales this year over last, about 500 new jobs are added to the economy.
• Without the government’s role in housing finance, mortgage rates would rise unnecessarily
and become unaffordable for many Americans. In addition, an inadequate secondary market
would impede housing and economic recovery and prevent many young middle-class
families from owning a home.
• NAR is actively engaged on behalf of Realtors® and the nation’s home owners to protect the
flow of affordable mortgages to home buyers.
• For a vast number of consumers, access to affordable, simple 30-year fixed rate mortgages
requires government backing.
• Foreclosures: Despite record affordability and buyer incentives, rising foreclosure rates and
concerns about proper foreclosure procedures led some to question whether owning a home
was a good personal decision. Home ownership didn’t create the foreclosure crisis – Wall
Street greed and irresponsible lending practices did. The decision to own a home is a very
personal one, but over the long term, owning a home is one of the best ways to build longterm
wealth, in addition to providing numerous social benefits that include reduced crime
rates, improved childhood education, and increased stability. After all, a fixed-rate mortgage
might last 15 to 30 years; renting is forever. (NAR)
• NAR practitioner survey: First-time buyers purchased 34 percent of homes in February, up
from 29 percent in January; they were 42 percent in February 2010. All-cash sales were a
record 33 percent in February, up from 32 percent in January; they were 27 percent in
February 2010. Investors accounted for 19 percent of sales activity in February, down from
23 percent in January; they were 19 percent in February 2010. The balance of sales were to
repeat buyers. (NAR, 3/28/11)
• Foreclosure impact: Distressed homes – sold at discount – accounted for a 39 percent
market share in February, up from 37 percent in January and 35 percent in February 2010.
“The decline in price corresponds to the record level of all-cash purchases where buyers –
largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be
seeing greater numbers of traditional home buyers if mortgage credit conditions return to
normal.” (NAR 3/28/11)
• Shadow inventory: The continuing concerns center on the size and impact of the “shadow
inventory;” estimates of the impact range from minor to very profound. In large part, the
magnitude of the impact centers on the way in which homeowners react to continuing price
declines and the realization that they may owe more their home than the property’s is current
value. Negative equity becomes a problem when a homeowner attempts to sell the
property—but it can also have an impact on consumption, potentially depressing
consumption or at least delaying purchases of major items (such as automobiles, appliances
and so forth). A further concern centers on the degree to which negative equity in a home
influences the operation of the labor market by limiting job mobility; this concern will
become more important as the job market rebounds and opportunities for advancement in the
labor market present themselves. (U of I REAL, 3/2011)
• MID: Government support of programs and initiatives that encourage home ownership have
also been called into question. The deductibility of mortgage interest is one example, with
critics suggesting that the mortgage interest deduction primarily benefits the wealthy, while
in fact, the MID benefits primarily middle- and lower income families – almost two-thirds of
those who claim the MID are middle-income earners. (NAR)
• MID: Sixty-five percent of families who claim the MID earn less than $100,000 per year,
and 91 percent who claim the benefit earn less than $200,000 annually. The ability to deduct
the interest paid on a mortgage can mean significant savings at tax time. For example, a
family who bought a home this year with a $200,000, 30-year, fixed-rate mortgage, assuming
an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file next
year. That’s money they could use to pay down other debts, supplement their children’s
college savings account, or put into savings themselves. (NAR)
• The typical homeowner’s net worth ($205,200) was 49 times that of a typical renter ($4,200)
in 2008. (NAR calculations using stats from the Federal Reserve Board).
NAR Homeownership Matters Campaign
http://www.realtor.org/topics/homeownership
• The economic benefits of the housing market and homeownership are immense and well
documented. The housing sector directly accounted for approximately 14 percent of total
economic activity in 2009. Less than half of Americans owned their homes at the beginning
of the 20th century. By 2004, 69 percent of Americans owned their homes – a record high.
The homeownership rate has since declined to 66.9 percent as of the second quarter 2010.
Still, that figure indicates that two thirds of U.S. households own their own home.
-Add 5-
IAR Economic Talking Points
NAR Surround Sound Talking Points
www.realtor.org/press_room/surroundsound
The basics
• Home ownership is an investment in your well-being and future.
• Today’s market offers great opportunities for buyers and sellers.
• The supply and choice of homes for sale is plentiful in most markets.
• Mortgage interest rates are low.
• Home prices are affordable.
• Homeownership offers immediate benefits and long-term value.
• REALTORS® add value to the real estate transaction.
• REALTORS® are the most trusted resource for real estate information.
ECONOMIC DATA
Homeownership Rates (U.S. Census)
4Q10 3Q10 3Q09 2008 2007 2006 2005 2004 1985
U.S. 66.5 66.9 67.6 67.8 68.1 68.8 68.9 69.0 63.8*
Midwest 70.5 71.1 71.6 71.7 71.9 72.7 73.1 73.8 *1986, 1988
Illinois 68.3 68.7 69.3 68.9 69.4 70.4 70.9 72.7 60.1
Interest Rates at a Glance – Average North Central Region (which includes Illinois)
4.86 – March 2011 5.0 – Feb 2011 5.03 – March 2010
16.63 – 1981 (high)
National Unemployment Rate – www.bls.gov
8.8% March 2011
Illinois Unemployment Rate – www.ILWorkingInfo.com
8.9% March 2011
Consumer Confidence - www.conference-board.org
63.4 March
70.4 Feb
60.6 Jan
(1985=100)
“The sharp decline in confidence was prompted by a sharp decline in expectations. Consumers’
inflation expectations rose significantly in March and their income expectations soured, a
combination that will likely impact spending decisions. On the other hand, consumers’
assessment of current conditions improved, indicating that while the short-term future may be
uncertain, the economy continues to expand.” (3/29/11)
Wednesday, April 6, 2011
IAR Spring Captiol Conference
As a Realtor we do many things to protect private property rights. On April 5, myself as president of the Illinois members of the Quad City Area Realtor Association and Realtor's from all over the state of Illinois went to Springfield to make sure our legislature knows where we stand on certain bills that are on the floor right now. I just wanted to inform my readers of what Realtors are doing to protect your private property rights. Below is a synopsis of the issues and where the Illinois Associationof Realtors stand.
FORECLOSURE ISSUES-Vacant/Abandoned Property-Unlimited Municipal Powers-OPPOSE
Illinois already has an extensive body of law to give municipalities extraordinary powers to clean up and secure abandoned property, and they have a superior lien to recover their costs. If necessary, they can even take over the property, and pass i to n to a non-profit or other entity to redevelop. The IAR has helped craft these laws over the years , with a balanced approach that allows local governments to address the blight of abandoned property, but provides a uniform scope and process for these local powers so that property rights are preserved and parties are offered due process.
OPPOSE House Bill 1109 (Yarbrough), as amended by House Amendment #3, which provides an unlimited, blanket grant of authority to all municipalities to pass whatever rules, regulations,and fees they see fit regarding vacant property. This legislation has none of the protections or limitations provided in existing laws on vacant property, and would throw out the uniformity of current laws in lieu of a patchwork of whatever municipalities decide to put in there ordinances.
House Bill 1109 would also make lenders, certain prior owners,trustees, and other beneficiaries responsible for whatever rules the municipality enacts, and grants all of the entities and their agents complete immunity from civil and criminal liability while entering premises to enforce or comply with the actual or potential violations of the rules and regulations of the municipality. We think this is a dangerous precedent fraught with potential abuses, particularly when there is not limitation or guidance as to what will be in these local rules and regulations.
WORK WITH the sponsor, lending groups, and other interested parties on another concept included in HOUSE BILL 1109,which would shorten the redemption period on foreclosed properties hen property is deemed to be abandoned. The idea here is to find ways to enable action to be taken on abandoned properties sooner.
Allow municipalities to Create Separate LAND BANKS-OPPOSE
OPPOSE House Bill 760 (Yarbrough), as proposed in House Amendment #3, creates a new law to allow ALL municipalities to establish a new entity called a Land Bank Authority (LBA). These LBA's are essentially a separate real estate corp. that may acquire, buy, sell, rent, hold, manage, and develop any real estate within its jurisdiction (municipalities could create their own LBA, or partner with others to create a regional LBA. The IAR does not believe that this is a necessary or wise tool to deal with foreclosure issues.
This LBA concept differs from other redevelopment tools (TIFS, etc...) in that the government becomes the owner, developer, and speculator. The IAR does not believe this is a proper role for local governments, nor one they can afford to b particularly successful in.
Work with the sponsor and proponents to identify and correct any problems or inefficiencies in existing abandoned property laws to make them more usable and effective for municipalities.
LOCAL GOVERNMENT AND TAXATION ISSUES
OPPOSE HB1384 (GORDON)/HB 3407 (COlVIN),which would enable local governments to collect on liens for property maintenance and nuisance clean-up by putting the charges on the owner's property tax bill. We oppose this ongoing effort by local unites to collect debts on the tax bill.
OPPOSE HB 1323 (RILEY), which would allow ALL municipalities to license and regulate ALL businesses. This flies in the face of state license laws, like the Real Estate License Act, that preempt home rule units and reserves such licensing to the state to ensure a statewide standard. This bill would also allow municipalities to enact landlord and rental property licensing without any limitations.
SUPPORT SB 1230(LAUZEN) which expands to Cook county the new provision in the Property Tax COde (also advocated by IAR) that require boards of review to consider (compulsory sales) of comparable properties for the purpose of revising and correcting assessments.
RENTAL PROPERTY ISSUES
OPPOSE HB 1607 (DAVIS) WHICH WOULD ENACT UNCLEAR AND UNNECESSARY REGULATIONS ON THE CHARGING OF "APPLICATION FEES' BY LANDLORDS. Subjects the landlord to monetary penalties, court costs, and attorney's fees if the new rules aren't followed. There has been no case made that this is a problem, and this is unnecessary regulation that exposes good landlords to lawsuits.
SUPPORT HB 1309 (DELUCA)/SB 1766 (WILHELMI), which are works in progress, and seek to amend the eviction provisions for criminal activity in the Code of Civil Procedure to provide both local governments and landlords a more clear and effective tool to deal with tenants that are engaging in criminal activity and other disruptive behavior on the premises. This is an alternative approach to the 'landlord licensing' approach we have seen in the past.
OPPOSE HB 1008 (YARBROUGH), amended by House Amendment #1, which would require any person or business that obtains personal information to check the credit of a consumer to carry a bond of at least $250,0000. This bond would indemnify the consumer for any theft , loss, or unauthorized sharing of the personal information of the personal information used in the credit check. The bill makes violation of the requirement a violation of the Consumer Fraud Act.
limitation on developers Contracting for 'Retainage'
OPPOSE HOUSE BILL 1292 (LANG) which prohibits a developer of a non-residential property from contracting for more than 5% "retainage". A retainage provision enables a developer to withhold a certain portion of the contracted amount until completion to ensure that work is completed satisfactorily, passes inspections, and liens are released. The IAR opposes the state inserting itself into this private contractual matter between two business entities. (I do believe this bill was shut down today (April 6).
These are just some of the issues that Realtor's and there lobbyists deal with on a annual basis.Feel free to call, e-mail or text me if you have any questions regarding real estate.
FORECLOSURE ISSUES-Vacant/Abandoned Property-Unlimited Municipal Powers-OPPOSE
Illinois already has an extensive body of law to give municipalities extraordinary powers to clean up and secure abandoned property, and they have a superior lien to recover their costs. If necessary, they can even take over the property, and pass i to n to a non-profit or other entity to redevelop. The IAR has helped craft these laws over the years , with a balanced approach that allows local governments to address the blight of abandoned property, but provides a uniform scope and process for these local powers so that property rights are preserved and parties are offered due process.
OPPOSE House Bill 1109 (Yarbrough), as amended by House Amendment #3, which provides an unlimited, blanket grant of authority to all municipalities to pass whatever rules, regulations,and fees they see fit regarding vacant property. This legislation has none of the protections or limitations provided in existing laws on vacant property, and would throw out the uniformity of current laws in lieu of a patchwork of whatever municipalities decide to put in there ordinances.
House Bill 1109 would also make lenders, certain prior owners,trustees, and other beneficiaries responsible for whatever rules the municipality enacts, and grants all of the entities and their agents complete immunity from civil and criminal liability while entering premises to enforce or comply with the actual or potential violations of the rules and regulations of the municipality. We think this is a dangerous precedent fraught with potential abuses, particularly when there is not limitation or guidance as to what will be in these local rules and regulations.
WORK WITH the sponsor, lending groups, and other interested parties on another concept included in HOUSE BILL 1109,which would shorten the redemption period on foreclosed properties hen property is deemed to be abandoned. The idea here is to find ways to enable action to be taken on abandoned properties sooner.
Allow municipalities to Create Separate LAND BANKS-OPPOSE
OPPOSE House Bill 760 (Yarbrough), as proposed in House Amendment #3, creates a new law to allow ALL municipalities to establish a new entity called a Land Bank Authority (LBA). These LBA's are essentially a separate real estate corp. that may acquire, buy, sell, rent, hold, manage, and develop any real estate within its jurisdiction (municipalities could create their own LBA, or partner with others to create a regional LBA. The IAR does not believe that this is a necessary or wise tool to deal with foreclosure issues.
This LBA concept differs from other redevelopment tools (TIFS, etc...) in that the government becomes the owner, developer, and speculator. The IAR does not believe this is a proper role for local governments, nor one they can afford to b particularly successful in.
Work with the sponsor and proponents to identify and correct any problems or inefficiencies in existing abandoned property laws to make them more usable and effective for municipalities.
LOCAL GOVERNMENT AND TAXATION ISSUES
OPPOSE HB1384 (GORDON)/HB 3407 (COlVIN),which would enable local governments to collect on liens for property maintenance and nuisance clean-up by putting the charges on the owner's property tax bill. We oppose this ongoing effort by local unites to collect debts on the tax bill.
OPPOSE HB 1323 (RILEY), which would allow ALL municipalities to license and regulate ALL businesses. This flies in the face of state license laws, like the Real Estate License Act, that preempt home rule units and reserves such licensing to the state to ensure a statewide standard. This bill would also allow municipalities to enact landlord and rental property licensing without any limitations.
SUPPORT SB 1230(LAUZEN) which expands to Cook county the new provision in the Property Tax COde (also advocated by IAR) that require boards of review to consider (compulsory sales) of comparable properties for the purpose of revising and correcting assessments.
RENTAL PROPERTY ISSUES
OPPOSE HB 1607 (DAVIS) WHICH WOULD ENACT UNCLEAR AND UNNECESSARY REGULATIONS ON THE CHARGING OF "APPLICATION FEES' BY LANDLORDS. Subjects the landlord to monetary penalties, court costs, and attorney's fees if the new rules aren't followed. There has been no case made that this is a problem, and this is unnecessary regulation that exposes good landlords to lawsuits.
SUPPORT HB 1309 (DELUCA)/SB 1766 (WILHELMI), which are works in progress, and seek to amend the eviction provisions for criminal activity in the Code of Civil Procedure to provide both local governments and landlords a more clear and effective tool to deal with tenants that are engaging in criminal activity and other disruptive behavior on the premises. This is an alternative approach to the 'landlord licensing' approach we have seen in the past.
OPPOSE HB 1008 (YARBROUGH), amended by House Amendment #1, which would require any person or business that obtains personal information to check the credit of a consumer to carry a bond of at least $250,0000. This bond would indemnify the consumer for any theft , loss, or unauthorized sharing of the personal information of the personal information used in the credit check. The bill makes violation of the requirement a violation of the Consumer Fraud Act.
limitation on developers Contracting for 'Retainage'
OPPOSE HOUSE BILL 1292 (LANG) which prohibits a developer of a non-residential property from contracting for more than 5% "retainage". A retainage provision enables a developer to withhold a certain portion of the contracted amount until completion to ensure that work is completed satisfactorily, passes inspections, and liens are released. The IAR opposes the state inserting itself into this private contractual matter between two business entities. (I do believe this bill was shut down today (April 6).
These are just some of the issues that Realtor's and there lobbyists deal with on a annual basis.Feel free to call, e-mail or text me if you have any questions regarding real estate.
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