CHICAGO, June 5 (UPI) -- Psst. Wanna buy a house? This just may be the weekend to find one.
The National Association of Realtors is sponsoring its first Realtor Nationwide Open House, pushing open houses across the country to try to drum up interest in buying real estate.
"This started maybe the last couple of years, primarily done by state associations," said Leanne Jernigan, a spokeswoman for the Realtors. "It started in Washington, Florida and New Jersey. The communications directors of all these state and local associations got together to make it a nationwide event."
This is the first year the national association is participating along with some 350 state and local associations.
"It's hard to tell how many houses will be showing," Jernigan said. "It's hard to quantify. Hundreds of thousands, maybe? I know Washington state is estimating 7,000 alone but I can't really get a clear picture."
The push, which began Saturday, comes at a time when Realtors are hopeful the market is about to turn around.
"We're trying to spread the word homeownership is a good thing," Jernigan said.
It's been a tough couple of years for the real estate industry, and nobody is sure when things will get back to normal.
A recent report by RealtyTrac indicated there's a three-year inventory of foreclosed homes, the prices of which are depressing values for undistressed properties. Add to that reluctance by the banking industry to make loans, and you've got a tough market made tougher, NAR spokesman Walter Molony said.
"The market is struggling," Molony said.
Overall property values are down 22 percent from where they were at the height of the housing boom, but many deals are being scuttled by appraisals that are coming back below the prices negotiated between buyer and seller.
"We really have to get back to common sense in the lending community and the appraisal community," Molony said. "Thirty-five percent of appraisals are coming back low. Eleven percent of deals were canceled, 10 percent delayed and 14 percent were renegotiated for a lower sales price. …
"It's the unintended consequences of the code of conduct implemented two years ago (to eliminate) undue influence" on appraisers by banks.
Another problem, he said, is the use of out-of-area appraisers who do not have full access to market data. In the past, loan underwriters sought sales data on three comparable properties. Now they're asking for as many as 10 and lumping foreclosures properties that have been stripped of fixtures and copper wire in with properties that are in good condition. New construction is coming back valued at less than it took to build.
"For a buyer and seller to negotiate a price and have the valuation come back not worth it -- that is crazy," Molony said, adding it will be a few more years before the market returns to normal.
The typical undistressed seller has been in his or her home for eight years, Molony said, and the value of that property is still an average 24 percent above the original purchase price.
"It's not as much as a few years ago, but it's still a net gain," he said.
The home sales pace overall is lower than NAR projections of 5.5 million to 6 million units annually and likely won't return to that level before next year. April's estimate was 5 million.
Molony admitted the pace set in 2004 when 6.78 million homes were sold and 2005 when 7.08 million were sold was unsustainable.
"We had actually expected them to begin to decline then. We had seen so much demand in 2001 to 2003, we were expecting a decline. What we didn't understand was the extent these risky mortgages would affect the market."
He called "unconscionable" the trend to put consumers into loans that reset after a few years to an unaffordable payment with the expectation market appreciation would enable the property to be flipped quickly at a profit. When that didn't happen, people were forced into foreclosure.
Molony blamed the current slower sales pace on banks. A decade ago, loan officers would look at a credit score of 720, look at an applicant's income and spending habits, and make an evaluation based on creditworthiness.
That's not happening now, he said. Instead, banks are making the decision based almost entirely on credit score -- and they've raised the acceptable level to 760. The result is 20 percent of loans being turned down, Molony said, citing an analysis by the Federal Reserve Bank.
"Banks really need to loosen the purse strings so housing can contribute to the economic recovery," he said.
|Additional Consumer Corner Stories|
REYKJAVIK, Iceland, June 19 (UPI) --Iceland's new prime minister this week cited the country's mackerel fishing dispute with the European Union as a prime example of the value of sovereignty.
PARIS, June 18 (UPI) --Engine-maker Pratt & Whitney has announced delivery of its 100th F135 propulsion system to the U.S. government for the F-35 Lightning II fighter.