this month in real estate feb 2011

Brought to you by:KW Research

Commentary 2

The Numbers That Drive Real Estate 3

Recent Government Action 10

Topics for Home Buyers, Sellers, and Owners 13

Released:February 8, 2011

KW Research 2

Gradual improvement in the housing market continues at a steady pace without government support. Six months after two consecutive years of tax incentives for buyers; starting in July 2008 with a $7,500 repayable first-time buyer tax credit, extending to a $8,000 nonrepayable first-time buyer tax credit in January 2009, and ending in June 2010 with the expanded credit to repeat buyers; the market has shown remarkable improvement from the initial drop this past July. With mortgage rates remaining near historic lows and home prices having generally stabilized, economists are expecting further strength in 2011.

Consumers are showing some signs that they’re feeling better: a significant boost in the food and services industry implies they are eating out more, vacations are back on the rise as spending on travel and tourism increased 8% in the third quarter, and household net worth has risen notably thanks to a strong stock market even as they continue to shrink their debt.

As the economy improves, current stimulus efforts by the government and the Federal Reserve Board are expected to gradually wind down, which typically means rising interest rates. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers enjoy increased stability in the market.

Commentary


Home Sales 4

Home Price 5

Inventory 6

Mortgage Rates 8

Affordability 9

The Numbers That Drive Real Estate

KW Research 4Latest Data Release: January 20, 2011Source: National Association of Realtors

Home SalesIn Millions

The uptrend in existing home sales activity continued through December, increasing by a substantial 12.3% from a month ago. This marks the fifth monthly increase in the past six months and indicates a recovery that’s gaining a firmer footing. While home sales remained 2.9% below the level seen last year, the market’s upward momentum, despite the absence of the tax credit, is a welcoming sign.

Extended and Expanded Home Buyer Tax CreditRenewed November 7, 2009

Must have contract signed by April 30, 2010Must close by June 30, 2010

Second Tax

Credit Expired

Gradual Recovery WithoutTax Credit

December ’09-’10


KW Research 5

Home PriceIn Thousands

Home prices softened in December: median home prices edged down slightly to $168,800, 1% below the year-ago level. Contributing to this is a larger share of distressed homes sales which accounted for 36% of sales in December. This is compared to 33% in November 2010 and 32% in December 2009. Prices continue to hold steady and mortgage rates remain historically low, offering favorable buying opportunities.

Latest Data Release: January 20, 2011Source: National Association of Realtors



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Inventory -In Millions

The number of homes on the market continued to shrink. There are now 3.56 million homes on the market, down 4.2% from 3.72 million in November. More and more buyers are taking advantage of today’s exceptional affordability conditions. Expected improvements in lending standards and job growth will present consumers with great opportunities to buy their first home, move up, or invest.

Number of homes available for sale




KW Research 7

Supply of InventoryIn Months

The surge in home sales and a shrinking inventory pared down the month’s supply to 8.1 months. This is down 1.4 months from November but remains 0.9 months above last year at this time. While still at a relatively high level historically, months of inventory has declined steadily from its peak of 12.5 months in July and is now back to pre-tax credit expiration levels.




KW Research 8

Mortgage rates are inching up but remain historically low. This trend continues to support home buying, as it translates to significant savings for buyers. As overall economic recovery remains on track, rates are expected to rise to keep inflation in check.

Mortgage Rates30-Year Fixed

Source: Freddie Mac

KW Research 9

Affordability -Percentage of Income

Housing affordability was near the record in December. The relationship between mortgage rates, home prices, and family income is the most favorable on record for buying. The home price-to-income ratio continues to remain well below the historical standard. Stabilizing home prices and rising interest rates are expected to reverse the recent affordability trend.

Affordability as of December every year. Calculations assume a 20% down payment.Source: National Association of Realtors

The percentage of a median family’s income required to make mortgage payments on a median-priced home


Recent Government Action ‘Anti-Flipping’ Waiver Extended 11

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‘Anti-Flipping’ Waiver ExtensionIn 2003 the Federal Housing Administration (FHA) feared that flipping homes was the cause of the skyrocketing home prices throughout individual neighborhoods. Because of this, the FHA no longer approved property loans that were resold within 90 days of the original purchase, with the exception of foreclosures owned by government sponsored enterprises (GSEs) such as FHA, Fannie Mae, and Freddie Mac. The anti-flipping rule is designed to help protect the FHA’s mortgage insurance program and federally chartered financial institutions from losses.

In February 2010, the FHA initiated a one-year suspension on the regulation that prevented “flippers” from purchasing single-family homes and releasing them into the market within 90 days. Since then, the FHA says it has insured 21,000 loans that had exchanged hands within the previous 90 days. The loans are worth more than $3.6 billion and would not have qualified for financing before suspension. An analysis of these loans suggest they do not present a greater credit risk than other loans, which lent support to the suspension’s extension.

The government sent a notice to banks in mid-January of 2011 in which it announced the extension of the waiver through the end of the year. According to FHA Commissioner David Stevens, the purpose of the extension was to accelerate the resale of REO properties in neighborhoods where there is a high rate of foreclosure. This will facilitate the purchase of homes that have recently been “flipped.” As a result, foreclosed properties will be moved off the market faster, reducing the amount of vacant homes in neighborhoods throughout the United States.

Sources: Inman News, realtytimes.com

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‘Anti-Flipping’ Waiver ExtensionLimitations considered by the FHA consist of the following:1. 20% Rule

If resale is higher than 20% of the original price, one must show proof of justified price. For example, if a $200,000 house is purchased and the resell price is $245,000, the house must undergo additional underwriting guidelines, which is considered a double appraisal.

2. Title HoldNo simultaneous closings are allowed when the seller holds a property. In other words, back-to-back, same-day closings to an FHA end-buyer is prohibited.

3. Short-term FundingInvestors must come up with short-term funding of the 30-to-60-day variety if their desire is to buy/fund and in order to sell to an FHA end-buyer.

4. Previous FlipsA property cannot show signs of prior flipping activity. If so, the FHA has the right to object.

5. Transactions at Arm’s LengthTransactions must show no identity of interest between the buyer and the seller or other parties that participate in the sale of a property.

Overall, this will help lower holding costs for investors/flippers allowing them to continue flipping more properties. In return, this will help bring more desirable homes to the market for first-time home buyers.


Topics for Home Buyers, Sellers, and Owners Distressed Properties 14

KW Research 14

Tax Deduction 60%

Closer to Family/Friends/Desired Location 40%

Equity 29%

Space 24%

Location 19%

Distressed Properties

Source: KW Market Navigator: Vision and Opportunities 2011

Bank-owned foreclosures (REOs) and short sales both present great value for buyers. Prices can be as much as 30%below market in some areas—and in other areas distressed properties are the market. Either way, experts agree there’s value for a buyer who wants to own 5 years or more. Rental rates are advancing too—great news for investors who want to buy and rent. REO transactions move quickly, but short sales are still slow.

Profile of Who’s Buying Distressed Properties

Motivations for Buying Distressed Properties

First Time Buyers Flippers Rentals

Foreclosures 32% 4% 13%

Short Sales 41% 2% 10%

KW Research 15

Understanding BuyersPurchase Location

• Suburban (69%)• Within Same City (50%)• Urban (18%)• Rural (13%)

What Buyers Want• Attractive Price (43%)• Low Mortgage Rates (36%)• Able to Afford (28%)• Tired of Paying Rent (21%)

Types of Homes Purchased• Single-Family Detached (82%)• Condominium (9%)• Town House (7%)• Duplex (1%)

Importance of House Condition• 69% short sales & 55% foreclosures are in

good/excellent condition• 50% of first-time buyers buy in good condition• 78% of investors intending to flip the property

typically buy homes in fair, poor, or very poor condition

• 50% of move-up buyers buy in excellent condition

Buying distressed properties can open up great opportunities, but in order for an investment to be successful, understanding the buyers’ needs is essential. KW Research reveals the following facts among buyers of distressed properties.

KW Research 16

Although it is important to stay informed about what is going on in the national economy and housing market, many different factors impact the real estate market in your own area.

Talk to Paul W. Drury for assistance interpreting the conditions in your local market. The following graphs are general and covers most of the broad market area he serves. For detailed information about your own neighborhood, call him or send him an email today.

KW associates are equipped with the knowledge and information to help you navigate the home-buying or selling process in this challenging market.

Your Local Market

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Local Market Absorption Rate

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Number of Homes “in play”

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Avg Price per sq ft

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Sold to List Price Comparison

KW Research 21

Avg Price For Sale VS Sold

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About Keller Williams RealtyFounded in 1983, Keller Williams Realty, Inc., is an international real estate company with more than 80,000 associates and 686 offices across the United States and Canada. The company began franchising in 1991 and, after years of phenomenal growth and success, became the third-largest U.S. residential real estate firm in 2009. The company has succeeded by treating its associates as partners and sharing its knowledge, policy control, and company profits on a systemwide basis. By focusing on helping associates realize their fullest potential, Keller Williams Realty is known as an industry leader for its family culture, unmatched education, profit-sharing business model, phenomenal coaching programs, and technology offerings.

www.kw.com

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About Paul W. Drury• Originally licensed as an agent in Ohio in 1986, Paul began with Lehman Johnson Real Estate in Elyria. He acquired his Real Estate Brokerage License in 1992 and became an Associate broker with West Shore Realty. In 1995 he moved his brokerage license to Continental Realty Investment where he began to focus on additional work with commercial and investment real estate. During these years he also performed professional appraisals with The Appraisal House.• In 2001 he began Drury Realty Consulting and worked as an independent Real Estate Consultant and worked on his own until 2009 when he joined Keller Williams Realty, Greater Cleveland West. “Being a part of the Keller family provides me with tools and serves unachievable strictly on my own, provides me with the tools and networking of a huge national network, while still enabling me to work, act, and function as the manager of my own business. It’s the best of both worlds.” – Paul• Paul's Home Page

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What we have to offer sellers• Sellers now have access to tools unimaginable just a few years earlier. Keller Williams Realty doesn’t spend valuable resources promoting its own name. Instead it puts resources into the best tools and resources for education and training, providing the highest quality real estate professionals into local communities.• Properties put up for sale by Paul are also listed in KWLS, a national MLS, implemented by Keller Williams, now the 2nd largest company in the US; local MLS; NEOHREX (Northern Ohio Real Estate Exchange); and on national sites such as Trulia, Zillow, CyberHomes, and others.• Free Real Estate Informational Webinars available by logging onto this link… http://budurl.com/druryvideos

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What we have to offer sellers ( Cont’d)• Other tools brought to bear by Paul include branding using unique web addresses with a virtual tour that can be emailed or the link can posted anywhere, to include Craig’s List and Back Page. Recent listed homes sold.

– 37101 Hunter’s Trail in Avon – http://37101hunterstrail.com– 2815 West River Road South in Elyria – http://2815WRiverRdS.com

• Not Planning to sell in the near future? – Would you still like to monitor what is happening in your neighborhood or area?– Contact Paul now for a free periodic market update. No cost. No obligation.

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Properties currently for sale• Properties currently for sale:

– 3307 Sandy Lane in Avon – http://3307SandyLn.com– 19593 Whitehead Road in Wellington - http://19593whiteheadrd.com/– 13951 Diagonal Road in Lagrange – http://13951DiagonalRd.com– 1 Grover Court in Grafton – http://1groverct.com– 416 Winckles Street in Elyria – http://416wincklesst.com– 149 Woodview Drive in Elyria – http://149woodviewdr.com

• Would you like to see one of these homes? Click on the link for a visual tour.• Check out Paul’s YouTube Channel at

http://www.youtube.com/user/Mrpdrury• Would you like your home or property promoted like these?

– Contact Paul for a free, no obligation, consultation today at 440-385-5650.

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What we have to offer buyers• Buyers of Real Estate also have access to tools unimaginable just a few years before. Since Keller Williams doesn’t spend its money promoting its own name, it puts its resources into providing the best tools and resources to its systems, education, and training, thus providing the most professional real estate team members back into the communities.• Free Real Estate Informational Webinars available by logging onto this link… http://budurl.com/druryvideos• If you wish to conduct your own Multiple Listing Home Searches, you may do so using this link….

http://bit.ly/aDE5XP

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What we have to offer buyers (Cont’d)• Buyers can access Paul’s website at www.druryrealty.comand conduct their own searches as well as create their own search profiles for searching for properties anywhere in Ohio. If relocating out of Ohio, Keller Williams offers one of the finest relocation referral networks in the nation. Greater Cleveland West now sells more properties than any other office in the entire regional MLS.• Paul’s website is easy to manage and he can set up search profiles for you so you get notified at about 8:30 am of any new properties that come available. He also has profiles set up on national websites such as Trulia providing for greater access to search tools. http://bit.ly/aDE5XP

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Investors & Shoppers – Foreclosure Watch• Are you shopping for the deal of a century for your new home?• Are you in the market to buy a home at a steep discount and try and fix it up and “flip it”?• Are you looking for a home for someone else?• Want to know what is happening in your marketplace?• Send Paul an email today and request free market updates at [email protected]• Call Paul directly at 440-385-5650.• No cost. No commitments. No obligations. No fuss. No kidding.

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Follow Paul’s Real Estate updates online…Home Web Page• www.druryrealty.comOn Zillow• www.zillow.com/profile/PaulWDruryOn Trulia• www.trulia.com/profile/paulwdruryOn the Real Estate Global Network• www.realestateglobalnetwork.com/profile/PaulWDru

ryOn YouTube• www.youtube.com/user/MrPDrury

On Twitter• - www.twitter.com/PaulWDruryOn FaceBook• - www.facebook.com/paul.w.druryOn LinkedIn• www.linkedin.com/in/paulwdruryFree Real Estate Webinars• http://budurl.com/druryvideosSpecial Deal Links• http://bit.ly/ffvZOr

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Paul’s special vendor deals of the month…Now advertising his properties on• http://www.communityohio.com• Featuring outstanding deals from the following vendors• GoDaddy Domain Sale• ESET Internet Security Software• NewEgg Electronics Superstore• E-fax Electronic Fax Service• TomTom GPS Poducts• DocuSign Electronic Document Service

• Franklin Covey Supplies• Intuit Quickbooks• Executive Book Summaries• RubberMaid Products• Build my Move Moving Services• eBatts discount battery services• Bulb America Light Bulb Supplier• Magazine Mall

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The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents, and other expert sources. You should not treat any opinion expressed in This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve somedegree of risk. Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.

this month in real estate feb 2011

Documents

home buyers

median home prices

stabilizing home prices

thousands home prices

months of inventory

existing home sales

months supply

tax tax creditmust