Real Estate New York
Market Update December 2008
2008 Cost vs. Value Report
Despite home price drops in many cities, remodeling projects are holding their own as a way for owners to add value.
Many people are wondering where their money will be safest during these uncertain economic times. When home owners turn to you for your expert advice, counsel them that some things never change: Investing in their home still pays off.
NATIONAL ASSOCIATION OF REALTORS® statistics show that home prices have fallen by an average of 7 percent nationally in the past year. But the value of home owners' investment in remodeling projects has declined only 3.86 percent on average between 2007 and 2008, according to Remodeling's 2008–2009 Cost vs. Value Report.
Remodeling produces the Cost vs. Value Report each year in cooperation with REALTOR® magazine. REALTORS® responding to a survey in midsummer said home owners could expect to recoup a national average of 67.3 percent of their investment in 30 different home improvement projects. At the height of the housing boom in 2005, home owners could expect to recoup a national average of 86.7 percent on projects.
Remodeling remains hot in 10 cities, where, on at least some projects, home owners can recover 100 percent of their costs. In Charlotte, N.C., for example, decks, midrange kitchen remodels, vinyl siding, and window-replacement projects all would net more than they cost, in respondents' estimation. High rates of recovery were seen in both strong real estate markets and weak ones.
Many cities with the highest rates of recovery were smaller—Jackson, Miss., and Billings, Mont., for example—which may point to lower labor and materials costs that are easier to recoup.
Seattle also made the list of cities with a cost recovery of more than 100 percent on decks and minor kitchen remodels. In fact, Pacific Coast cities recorded the best payback on remodeling by a wide margin, as they did in 2007. Although construction costs on the Pacific Coast are nearly 17 percent higher than national averages, the value of renovations at resale more than makes up for those higher prices.
The result is an average cost-recouped percentage that's 14.8 percent higher than in the rest of the country. The toughest place to get your money back: Midwestern cities such as Chicago, Cleveland, Indianapolis, and Milwaukee.
Top 10 Project Paybacks
Once again, exterior remodeling projects lead the way for recovery on dollars spent in this year's Cost vs. Value survey. When you compare the national averages, replacement projects that boost curb appeal —siding, windows, and decks—give you the greatest chance of recouping your money. Inside, only kitchen remodels can compare, at least on a national level.
1. Upscale fiber cement siding (86.7%)
2. Midrange wood deck (81.8%)
3. Midrange vinyl siding (80.7%)
4. Upscale foam-backed vinyl (80.4%)
5. Midrange minor kitchen remodel (79.5%)
6. Upscale vinyl window replacement (79.2%)
7. Midrange wood window replacement (77.7%)
8. Midrange vinyl window replacement (77.2%)
9. Upscale wood window replacement (76.5%
10. Midrange major kitchen remodel (76.0%)
Read more from G.M. Filisko of National Association of Realtors
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Foreclosure Prevention Law Enacted
The NYSAR-supported Subprime Lending Reform Bill (Ch. 472 of 2008) was signed into law by Gov. David Paterson. The measure revamps the state's foreclosure laws and implements a series of reforms to prevent a similar crisis in the future. Under the parameters of the law, lenders must give homeowners at least 90 days warning prior to initiating foreclosure proceedings, and provide homeowners with a list of local, state-approved housing counselors. Additionally, lenders must make a “reasonable and good-faith” effort to determine whether an applicant can repay a loan, and must meet with borrowers that have defaulted and face foreclosure. New consumer protections to require loan brokers to act in the borrower's interest and present loans that are best suited to the borrower's financial situation are also included as part of the package.
For a detailed overview of the Subprime Lending Reform Bill, click here . For additional resources, click here .
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Green Building Could Triple in Five Years
BOSTON, Mass. -- A new study from McGraw-Hill Construction says the potential for continued growth in the green building market is huge and projects a possible tripling in the value of eco-friendly construction starts to reach as much as $140 billion.
The firm released its 40-page report, "Green Outlook 2009: Trends Driving Change," yesterday on the eve of the Greenbuild International Conference and Expo in Boston. The seventh annual conference of the U.S Green Building Council officially opens today.
The report follows two other highly optimistic reports on the industry from McGraw-Hill in the past two months.
In September, the firm's study "Global Green Building Trends: Market Growth and Perspectives from Around the World" forecast a big jump in growth and profits in green construction worldwide.
Last month, McGraw-Hill released a report that took a look at the residential side of the market. "The Green Home Builder: Navigating for Success in a Down Economy" said green building remains on an upswing despite the down market.
Green Outlook 2009 said the value of green building construction starts has grown five-fold and rose from $10 billion to an estimated range of $36 billion to $49 billion from 2005 to 2008. In possibly tripling by 2013, the value could attain a range of $96 billion to $140 billion, according to the report.
"Green growth is phenomenal across the globe," Harvey M. Bernstein, McGraw-Hill Construction's vice president of Industry Analytics, Alliances and Strategic Initiatives, said in statement announcing the report. "The business opportunities afforded by green building, even in the midst of a global economic crisis, are real and recognized by industry players."
Realtors® Tell Congress Increased Housing Demand
Will Stabilize the Market
WASHINGTON,
November 18, 2008
In a statement to the House Financial Services Committee today, the National Association of Realtors ® recommended a four-point plan to stimulate home sales and stabilize housing valuations.
“The only way to overcome today's economic turmoil is to motivate and encourage worried or cautious housing consumers to enter the marketplace,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “Stabilizing the housing market will lead to a quicker and greater economic recovery. Our goal is to ensure there is a healthy market and sufficient capital to support mortgage lending to qualified borrowers.”
NAR developed the plan for consideration by the current lame-duck session of Congress, and for the 111th Congress and the new administration. The four-point plan's principles are consumer-driven to help foster a housing recovery to support an economic rebound. The plan calls for eliminating the repayment of the first-time home buyer tax credit that was passed in the February stimulus bill, and to expand the tax credit to include all home buyers. The plan also recommends making the increased FHA and conventional loan limits permanent to stimulate home sales and stabilize prices. In addition, the plan urges that the Troubled Asset Relief Program be put back on track by targeting the funds for mortgage relief through a mortgage interest rate buy-down. Finally, the plan recommends finalizing legislation to prohibit banks from entering into the business of real estate brokerage and property management.
“The federal government must ensure there is sufficient capital to support mortgage lending not only in strong markets but also in tumultuous ones,” said McMillan. “Realtors ® are frustrated with the current mortgage lending environment that places a variety of barriers on families who wish to buy a home, impeding sales and price stabilization. We look forward to working with the Congress and the new administration to transition out of current instabilities and move toward strong and stable financial and housing markets.”
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Fed, Treasury Announce Plan to Jumpstart Lending
The Federal Reserve and Treasury Department on Tuesday unveiled hundreds of billions more in money they are pumping into the struggling U.S. economy, trying to jumpstart lending by the nation's banks for mortgages and consumer debt.
Together, the programs from the Federal Reserve and the New York Fed aim to dump $800 billion in additional funds into the struggling U.S. economy, more than Congress approved in October for a bailout of the nation's banks and Wall Street firms.
The NATIONAL ASSOCIATION OF REALTORS® said the actions will free up money on main street and lower long-term interest rates, which in turn will boost home sales.
"This is great news for home buyers and sellers and we applaud the Fed for taking this historic step,” said NAR President Charles McMillan. “Housing recovery is the key to economic recovery in this country and it always has been.” ( Read the full NAR statement. )
Under the plan, the Federal Reserve announced it will purchase up to $500 billion in mortgage-backed securities that have been backed by Fannie Mae, Freddie Mac, and closely held Ginnie Mae, the three government-sponsored mortgage finance firms set up to promote homeownership. It will also buy another $100 billion in direct debt issued by those firms.
"This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally," said the statement from the Fed.
By putting money in the hands of holders of consumer and mortgage loan securities, the government hopes more money will flow to consumers than has occurred so far in previous bailout plans.
The moves came as the Commerce Department announced that gross domestic product, the broad measure of the nation's economy, fell at an annual rate of 0.5% in the third quarter, the biggest drop in economic activity in seven years. Economists believe that the economy is likely to continue to contract in the current quarter and into early next year.
Source: Chris Isidore, CNNMoney.com (11/25/08), NAR
3rd Quarter 2008 Capital Region Appreciation
As the graphs above show, the Capital Region has generally experienced an increase in home values for most areas in the last year. In addition, the upward trend towards homes selling at a loss has mitigated. click here or the maps for larger images.
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Market Statistics as of December 1, 2008
This graph represents average sale versus list prices 
Looks like the November sales figures are once again affirming the stability of our Capital Region real estate market.
Both the average sold and list prices are significantly above levels for both 2006 and 2007.
In a balanced market such as the one we now have, homes are affordable and the threat of a declining market is aliviated.This can provide an excellent buying opportunity due to reduced competition typically seen between Thanksgiving and March plus increased willingness on the part of sellers to negotiate based on their perception of a declining market.
In addition, the average asking price to sale price has risen from 96.99% in October to 97.39% for November.
Mortgage Rates and Trends
The link to up to the minute New York State mortgage information seems to work better than presenting the actual graph.
Click for up to the minute mortgage rate information
Buyers' versus Sellers' Market Report
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The graph above shows the number of sales in a given month divided by the number of homes on the market in the four main counties of the Capital Region. After a brief dip into seller territory in July the market has once again returned to favor buyers.
As you can see, the market is now in solid buyer territory with only 392 sales in the month of November. This indicates an excellent buyer opportunity while sellers labor under the false assumption that the real estate market is down everywhere.
*This ratio can be used to determine whether we are in a buyers' or sellers' market as indicated in Dennis Maier's article on Market Timing featured in eZine Real Estate. In general, if it would (theoretically) take less than 6 1/2 months to sell the current inventory it's a sellers' market. If it would take more than 9 months to sell all the homes on the market it's a buyers' market.
Sharp Decline in Mortgage Rates This Week
Mortgage rates declined Tuesday after the Federal Reserve said it would spend $600 billion to support the mortgage securities market.
Rates fell to 4 7/8 percent, a 1 1/8 percentage point decline. David Beadle, president of BestInfo, said it was the sharpest one-day decline since 1988.
"I hope that the effect is that it brings more investors home to investing in housing," said Alfred DelliBovi, president of the Federal Home Loan Bank of New York. “[Investors] have had a sense in the markets that anything connected with a mortgage is bad" even though most people pay their home loans, he said.
Source: Reuters News, Al Yoon and Lynn Adler (11/25/2008)
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