Friday, December 02, 2011

New Bern Home Inventory down

The inventory of homes for sale in the New Bern area MLS is down substantially. Currently there are 1291 homes for sale. Throughout most of the year that number has been over 1500 homes. Percentage wise this is a decrease of 13%.

Although inventory typically decreases in December, this is more than we normally see. My take is folks are staying put with hopes of selling when the market improves. Whatever the reason, I hope that with less inventory, home prices will start to level off. If this happens we will all be better of in the long run.

Tuesday, November 29, 2011

Real Estate Update.

Steve Tyson’s Real Estate Update

For selected subdivisions

Neuse Harbour

Active homes for sale by price range

Current number of homes on the market=13

Pending sales=1

Active homes for sale by price range





There was 1 home that sold and closed in Neuse Harbour in the last 12 months. The sales price was $232,800

Stately Pines

Current homes on the market=6

Pending sales=1

Active homes for sale by price range





There were 10 homes that sold and closed in Stately Pines in the last 12 months. The most expensive house sold was $214,250.

Carolina Pines

Current homes on the market=22

Pending sales=2

Active homes for sale by price range




There were 18 homes that sold and closed in Carolina Pines in the last 12 months. The highest priced home sold was $265,000.

Tucker Creek

Current homes on the market=4

Pending sales=3

Active homes for sale by price range




There were 15 homes that sold and closed in Tucker Creek in the last 12 months. The highest priced home sold was $275,000.

Total homes sold January 1-Nov. 29 2009=1118

Total homes sold January 1-Nov. 29 2010=1108

During the same time frame in 2011=1107 homes have been sold.

There are currently 1312 homes listed for sale in our multiple listing service. This number is down from about 1550 In prior months. We are selling homes at a rate of about 100 a month so there is still a large inventory on hand. A buyers market is defined as more than 6 months of home inventory. It is definitely a buyer’s market as we currently have 13 months worth of inventory.

On the plus side, interest rates are still incredibly low, prices have become more reasonable, and we have a nice selection of homes to choose from.

Feel free to call or email me if you would like to have a customized absorption rate or a Comparable Market Analysis for your property. Home sales in each neighborhood can vary greatly.

Realtor Steve Tyson

The Tyson Group Realtors

Thursday, October 27, 2011

Steve Tyson’s Real Estate Update

Neuse Harbour

Active homes for sale by price range

Current number of homes on the market=5

Pending sales=1

Active homes for sale by price range



$ 775,000=1


There was 1 home that sold and closed in Neuse Harbour in the last 12 months. The sales price was $232,000

Stately Pines

Current homes on the market=6

Pending sales=0

Active homes for sale by price range





There were 11 homes that sold and closed in Stately Pines in the last 12 months. The most expensive house sold was $214,25s0.

Carolina Pines

Current homes on the market=18

Pending sales=1

Active homes for sale by price range





There were 18 homes that sold and closed in Carolina Pines in the last 12 months. The highest priced home sold was $265,000.

Tucker Creek

Current homes on the market=7

Pending sales=3

Active homes for sale by price range




There were 14 homes that sold and closed in Tucker Creek in the last 12 months. The highest priced home sold was $275,000.

Total homes sold January 1-Oct. 24 2009=982

Total homes sold January 1-Oct. 23 2010=1021

During the same time frame in 2011=981 homes have been sold.

There are currently 1387 homes listed for sale in our multiple listing service. This number is down from about 1550 In prior months. We are selling homes at a rate of about 104 a month so there is still a large inventory on hand. A buyers market is defined as more than 6 months of home inventory. It is definitely a buyer’s market as we currently have 13 months worth of inventory.

On the plus side, interest rates are still incredibly low. I have a customer that got a 3.75% rate in mid October. In the early 1980’s I remember rates went as high as 18% so it is a great time to buy and lock in a great rate.

Feel free to call or email me if you would like to have a customized absorption rate or a Comparable Market Analysis for your property. Home sales in each neighborhood can vary greatly.

 I can be reached at And remember you can always visit me online at www.NewBern-NC.Info

Realtor Steve Tyson

The Tyson Group Realtors

Tuesday, October 18, 2011

U.S. house prices have plunged by nearly a third since 2006, and homeownership rates are falling at the fastest pace since the Great Depression.

The good news? Two key measures now suggest it's an excellent time to buy a house, either to live in for the long term or for investment income (but not for a quick flip). First, the nation's ratio of house prices to yearly rents is nearly restored to its prebubble average. Second, when mortgage rates are taken into consideration, houses are the most affordable they have been in decades.

Two of the silliest mantras during the real-estate bubble were that a house is the best investment you will ever make and that a renter "throws money down the drain." Whether buying is a better deal than renting isn't a stagnant fact but a changing condition that depends on the relationship between prices and rents, the cost of financing and other factors.

.But the math is turning in buyers' favor. Stock-oriented folks can think of a house's price/rent ratio as akin to a stock's price/earnings ratio, in that it compares the cost of an asset with the money the asset is capable of generating. For investors, a lower ratio suggests more income for the price. For prospective homeowners, a lower ratio makes owning more attractive than renting, all else equal.

Nationwide, the ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble, according to Moody's Analytics. The average from 1989 to 2003 was about 10, so valuations aren't quite back to normal.

But for most home buyers, mortgage rates are a key determinant of their total costs. Rates are so low now that houses in many markets look like bargains, even if price/rent ratios aren't hitting new lows. The 30-year mortgage rate rose to 4.12% this week from a record low of 3.94% last week, Freddie Mac said Thursday. (The rates assume 0.8% in prepaid interest, or "points.") The latest rate is still less than half the average since 1971.

Real Estate Tools at SmartMoney

Mortgage Calculator

Should You Refinance?

How Much Can You Afford

.As a result, house payments are more affordable than they have been in decades. The National Association of Realtors Housing Affordability Index hit 183.7 in August, near its record high in data going back to 1970. The index's historic average is roughly 120. A reading of 100 would mean that a median-income family with a 20% down payment can afford a mortgage on a median-price home. So today's buyers can afford handsome houses—but prudent ones might opt for moderate houses with skimpy payments.

For example, the median home in the greater Phoenix market, including houses, condos and co-ops, costs $121,700, according to With a 20% down payment and a 4.12% mortgage rate, a buyer's monthly payment would be about $470. Rent for a comparable house would be more than $1,100 a month, according to data provided by

Of course, all of this assumes mortgages are available—no given now that lending standards have tightened. But long-term data on down payments and credit scores suggest conditions are more normal than many buyers think, according to Stan Humphries, chief economist at Zillow. "If you have good credit, a job and a down payment, you can get a mortgage," Mr. Humphries says. "There's more paperwork and scrutiny than five years ago, but things are pretty much like they were in the '80s and '90s."

Not all housing markets are bargains. Mr. Humphries says Zillow has developed a new price/rent ratio that uses estimates for each individual property rather than city medians, to better reflect the choices facing typical buyers. A fresh look at the numbers suggests Detroit and Miami are plenty cheap for buyers, with price/rent ratios of 5.6 and 7.7, respectively. New York and San Francisco are more expensive, with ratios of 17.6 and 17.2, respectively. The median ratio for 169 markets is 10.7.

For investors seeking income, one back-of-the-envelope way of seeing how these numbers stack up against yields for other assets is to divide 1 by the price/rent ratio, resulting in a rent "yield." The median market's rent yield is 9.3% and Detroit's is 17.9%.

Investors would then subtract for taxes, insurance, upkeep and other expenses—costs that vary widely. But suppose total costs were 4% of the purchase price. That would still leave a 5.3% rent yield in the typical market. With the 10-year Treasury yield at 2.2% and the Standard & Poor's 500-stock index carrying a dividend yield of 2.1%, rents for residential housing in many markets look attractive.

A few caveats are in order. First, not all transactions are average ones. Even in low-priced markets, buyers should shop carefully. Second, prices could fall further. Celia Chen, a senior director at Moody's Analytics, expects prices to drop 3% before bottoming early next year and rising slowly thereafter. "If the economy slips back into recession, however, we could easily see a 10% drop," Ms. Chen says.

Sunday, October 16, 2011

Tips to help your home appraisal

. October 11, 2011, 6:06 PM ET.Ten Tips for High Value Home Appraisals.Article Comments (12) Developments HOME PAGE ».EmailPrintTwitter


+ More

close StumbleUponMySpacedel.icio.usRedditLinkedInFarkViadeoOrkut Text By S. Mitra Kalita


Appraisal forms might not always capture a home’s true value, but there are ways to avoid disappointment.The appraiser was due in an hour. The beds were unmade, breakfast dishes in the sink and toys scattered about the playroom. Would she care?

I got moving—and cleaning. At 34 weeks pregnant, that’s not so easy.

After all, I know lowball appraisals can kill deals, something I’ve written about for The Journal.

They can also kill a refinancing application, which we are in the midst of for our 1920s Georgian-style house in Queens. If it comes in too low, it’s not worth refinancing or you might need to put in a whole lot more equity.

We don’t know how ours turned out yet but after talking to a handful of appraisers, I felt great regret at not doing more to plan and prep. Here are some tips based on those conversations.

Caution: Some of the advice—like home valuations themselves these days—might feel contradictory. But what they all agree on is to keep the look, feel and condition of the property as updated and cared for as possible.

1.Spruce the house up. But appraisers caution that you don’t need to deep clean under couches and that a few dirty dishes won’t hurt your value. Rats, cockroaches and that car you’ve been tinkering on might… “Things like overgrown landscaping, soiled carpeting, marks on walls — those do affect value and are part of the property’s overall condition rating,” said Dean Zibas, the president and chief appraiser for Zibas Appraisal in San Clemente, Calif. In other words, think broom clean, not set design for a home-decorating magazine.

2.Curb appeal also matters so mow the lawn, hack those weeds and trim those hedges. This can also help offset your house from unfair comparisons with foreclosures nearby. “In today’s climate I can’t stress enough condition, condition, condition,” said Doreen Zimmerman, an appraiser in Paradise, Calif. “An hour or two, for the most part, will set your home apart in the actual picture that the lender gets from the appraiser vs. the actual picture that the appraiser will provide of the (foreclosure) down the street.

3.Keep a list of all the updates you’ve made and be ready to hand it over; a sketch plan of the house indicating square footage also helps. “Have a list of updating done within the past 15 years. Itemize each update with the approximate date and approximate cost. Also highlight the notable features of the property,” says Matthew George, the chief appraiser of Eagle Appraisals Inc. in Denver, Colo. Remember the items that an appraiser might not notice, like a new roof or insulation. Don’t forget the minor items. For example, I mistakenly told the appraiser we hadn’t updated one bathroom but actually we had installed a new sink and had the tub sealed. That counts, according to the experts.

4.Have comps on hand. Yes, you say this is the appraiser’s job but every little bit helps, “especially if they are aware of a property that sold without the aid of a Realtor (i.e. for-sale-by-owner),” says Mark T. Smith, the owner and president of Smith Appraisal Services in St. Augustine, Fla. That can mean it wasn’t posted on the Multiple Listing Service, and result in other delays by the time it gets posted through other government data sources.

5.Be mindful of peeling paint. Government-insured loans such as FHA and veterans’ loans will require peeling paint to be removed in houses built before 1978. But don’t worry too much about a child’s scrawling on his bedroom wall, unless it’s going to require a whole new paint job.

6.Focus. “Don’t spend money that won’t yield a return on the investment. The best expenditures for most markets are paint, carpet, light and plumbing fixtures,” says Denver’s Mr. George. Prioritize what you do; if you’re the type of homeowner who has upgraded and fixed items as they broke, you should be fine.

7.Location still matters. If there have been changes to the neighborhood, mention them, from a new playground to a new Whole Foods. If the area’s just been declared a historic or landmark district, let the appraiser know.

8.Keep the $500 rule in mind. Appraisers often value houses in $500 increments so if there’s a repair over $500 that can or should be made, it will count against the property. Fix leaky faucets, cracked windows, missing hand rails and structural damage.

9.Also remember the concept of “effective age,” the age the appraiser can assign to a home after taking into consideration updating and condition. “Say you have a cracked window, thread-bare carpet, some tiles falling off the shower surround, vinyl torn in the laundry room, and the dog ate the corner of the fireplace hearth, these items could still add up to an overall average condition rating as the home is still habitable, however your effective age will be higher resulting in comparables being utilized which will have the same effective age and resulting lower value,” says Ms. Zimmerman, who wrote the book “Challenge Your Home Appraisal” and runs a web site by the same name.

10.Lock up Fido and Fifi. Appraisers say they get annoyed enough by homeowners following them around but a snarling, growling dog is even worse. Along the same lines, try to make the appraiser comfortable — if it’s cold out, put the heat on; hot out, the air conditioning. “If it’s 100 degrees out and you never put the air conditioning on, put it on for the appraiser so they don’t question that your unit is broken,” says Ms. Zimmerman.

With those things in mind, let the appraiser do his or her job. “Questions and banter may make the inspection go slow or make the appraise miss something,” said James R. Gerot, a residential appraiser in Ottumwa, Iowa. “My inspections have a rhythm to them so once I get started interruptions are just that. Save questions until after.”

Appraisal, Doreen Zimmerman, Eagle Appraisals Inc., James R. Gerot, Smith Appraisal Services

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9:37 am October 16, 2011

Dave wrote:

.I feel sorry for Zach, and believe he could benefit from a matchbook course in real estate appraising, as a start. Competent Appraisers are trained to be eyes and ears of the real estate market, listening, seeing, reading, viewing, accepting data from everyone, compiling information about the subject market that relates to the subject, and rejecting all that is not relevant.

Doing proper homework on comps, verifying their “arm’s length” transaction, is not a difficult task, just time consuming. The independence of appraisers arises out of how they treat all the data they receive, investigate, uncover, and analyze. Zach’s tub and sink issue is a micro analysis of a lengthy article with very apparent bias.

I began appraising in New England in 1984. I would have a wonderful time in court testifying in opposition to the comments by Zach. That HVCC is in force or terminated is not the issue. It is the aptitude and unbiased position of each appraiser. The industry is rampant with those that have neither, and lending institutions that use the cost of an appraisal and their own bias to choose appraisers. We cannot legislate morality or ethics.


8:27 pm October 15, 2011

Jon Putnam wrote:

.Zach: I agree with your thoughts on this article, and on HVCC in general. One small thing. It is perfectly acceptable to present comps to an appraiser. The appraiser must decide if the comps (or any other information) is relevant to the assignment.


5:55 pm October 15, 2011

DeeDee Riley, Realtor, El Dorado Hills CA wrote:

.Great input!


1:25 am October 15, 2011

Zach wrote:

.Felipe – Las Vegas poses a big problem to Las Vegas now days The appraisers just report market conditions. This is like saying the weather man makes it 80 degrees and sunny.


1:23 am October 15, 2011

Zach wrote:

.HVCC is not a problem. All of the brokers and lenders that coerced appraisers into inflating values was a problem.

The HVCC does have undeniable unintended consequences and the system could be better. The slant from the broker/lender community is so transparent it’s not even funny…they’re only upset because they can’t push appraisers to grease the wheels on their transactions. Any major lender that tracks their appraisal data will tell you that there is a lot more objectivity in appraisal values than there is in borrower’s estimates. How many borrower’s “estimate of value” is loan balance divided by 0.8? They estimate their home to be worth what they need to get a deal done…any lender has the data to show this.

I don’t know why this author feels so compelled to write about something he is completely unqualified to speak about. This article is absolutely ridiculous.

Added a new sink and sealed the tub? Are you kidding? Sealed the tub??? Ask 10000 appraisers and every single one of them will tell you sealing a bathtub will never make its way on to an appraisal report. Why? Because the appraiser has the luxury of inspecting every nook and cranny in the subject property, but has basic info (age, beds, baths, square footage, amenities, lot size, etc) for the comparables. How is an appraiser to gauge the typical buyer’s reaction to having a bathtub resealed or address the value of a new sink? We’re talking about a couple hundred dollars in general maintenance on a home that could be worth 1000 times that. I’ve heard about every argument, but this one takes the cake as the most ridiculous of all time.

Can you imagine the outrage if an appraiser made a negative adjustment to one of the comparables because they just put in a new sink and sealed their tub? This is where the double-standard of salespeople and borrowers becomes transparent. They want the appraiser to make positive adjustments for these kind of things on their property, but would crucify an appraiser for docking their value because a comparable had these things.

All features of a property are adjusted for relative to the comps. If you just dumped $50k building a 3-car garage on your property but all of your comps also have a 3-car garage, do you know how much that $50k adjustment will equate to in adjustments on your appraisal? Exactly zero.

The author also makes the profound statement that “Location still matters”. Really? Was that ever in doubt? Mention the new playground in the neighborhood? Why? If the comps are from the same neighborhood wouldn’t they benefit the same amount from the new playground?

Have comps on hand? I suggest Mr. Kalita get familiar with the Appraisal Independence Requirements. Suggesting comps to an appraiser is either (a) going to get ignore or (b) cause them to decline the assignment. How is pushing “comps” on them not attempting to influence value? I suppose we’re all to believe that the borrower will have access to local MLS, verify terms of these transactions, and verify with independent third parties? And, of course, the borrower is performing said search of MLS based on an objective analysis of market data and an unbiased view of their home’s physical characteristics? They would never search $300k-$350k and see what pops up and looks “similar”? If banks and investors want borrower-supplied comps, why not just let the borrower send to the underwriter?

The author continues to expose himself as the amateur that he is. Perpetuating these fallacies does more damage to the marketplace than the HVCC ever will. As a leading financial publication, I am shocked and disappointed that the WSJ continues to print these stories. And I say “stories” intentionally.

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Sunday, October 09, 2011

New Homes sales-Bad News

Although existing real estate sales in our MLS have been down this year new home construction has been hammered. I think it is a result of banks not lending for speculative building and buyers finding homes that are almost new for much less than builders can build new homes for. Unfortunately this trend might last for some time. Consider the data below. The data below represents homes sales in each year, Jan.1-Oct.9


In my next post I talk about what builders can do to get a competitive edge.

Wednesday, September 28, 2011

Mortgage News


The number of mortgage applications filed in the U.S. last week rose 9.3% from the prior week, the Mortgage Bankers Association said Wednesday, as interest rates continued to slide following the Federal Reserve's latest stimulus measure.

Refinance activity climbed 11%, according to the MBA's weekly survey, which covers more than three-quarters of all U.S. retail residential mortgage applications. Purchasing grew by a seasonally adjusted 2.6% during the week ended Friday.

Borrowers have reacted cautiously to extremely low interest rates over the past few months, while tighter lending requirements continue to pressure new applications. But mortgage activity picked up last week after the Fed's latest move, dubbed Operation Twist, helped push rates even lower. The move was designed to help lower long-term interest rates by buying up more mortgage-backed securities.

The share of applications filed to refinance an existing mortgage rose to 79.7% of total applications from 78.3% the previous week. It was the highest share since the survey changed its benchmark in January.

The four-week moving average for all mortgage applications is up 1.96%.

Adjustable-rate mortgages made up 6.1% of activity last week, down from 6.7% a week earlier.

The average rate on 30-year fixed-rate mortgages with conforming loan balances edged down to 4.25% from 4.29%, while rates on similar mortgages with jumbo loan balances decreased to 4.51% from 4.55%. The average rate on FHA-backed 30-year fixed-rate mortgages slipped to 4.05% from 4.07%.

Meanwhile, the average for 15-year fixed-rate mortgages ticked up to 3.47% from 3.46%. The 5/1 ARM average decreased to 2.95% from 2.96%.

-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;

Wednesday, September 14, 2011

Bright Spots in Real Estate.



September 14, 2011

5 bright spots in real estate recession

Mood of the Market

By Tara-Nicholle Nelson

Inman News™

Share ThisThe real estate market meltdown was much more severe and has lasted much longer than even the most bearish housing market observer would ever have predicted. Rather than values taking a dip, they've taken a double dip in many places; and the housing sector drama has infected the job market and the entire world's economy.

Yet, there are some very shiny silver linings to this whole mess -- a handful of ways in which our mindsets, habits, behaviors and approaches to money, mortgage and even life decision-making -- have been changed by this real estate market debacle. As I see it, here are the five best things about this otherwise terrible housing recession:

People now buy for the long term. Even Jeff Lewis, that reality TV house flipper extraordinaire, has declared that he's tapped out of the flipping business for the foreseeable future, trading in his real estate wheeling and dealing for the design business.

Recently, he mentioned having lost six homes in the real estate market crash. While Lewis flipped homes as his business, just five years ago, many Americans -- homeowners and investors alike -- took a short-term view on their homes, buying them with the idea that they could count on refinancing, pulling cash out or even reselling them anytime they wanted, at a profit.

Reality check -- those days are gone. Now, buyers know they'd better be prepared to stay put for somewhere between seven and 10 years (shorter in strong local markets, longer in foreclosure hot spots) before they buy if they want to break even. And this is causing them to take mortgages they can afford over time, and make smarter, longer-term choices about the homes they buy.

Dysfunctional properties are being weeded out and creatively reused. Municipalities like Detroit and Cleveland are demolishing blighted and decrepit properties in dead neighborhoods en masse, intentionally shrinking their cities to match their shrinking populations. These efforts are also eliminating breeding grounds for crime, and focusing resources on the neighborhoods that have a better chance of surviving and thriving in the long term.

In the so-called "slumburbias" of central California, Nevada and Arizona, McMansions are being repurposed into affordable housing for groups of seniors, artist communities and group homes.

American housing stock is getting an energy-efficient upgrade. The news would have you believe that every American has lost his or her home, walked away from it, or is now renting by choice. In fact, the vast majority of homeowners have simply decided to stay put.

Instead of selling and moving on up, homeowners are improving the homes they now plan to stay in for a long(er) haul. And this generation of remodeling is focused less on granite and stainless steel, and more on lowering the costs of "operating" the home and taking advantage of tax credits for installing energy-efficient doors, windows, water heaters and more. And while the first-time homebuyer tax credit is a thing of the past, the homeowner tax credits for energy-optimizing upgrades are in effect until the end of this year.

People are making more responsible mortgage decisions, and building financial good habits in the process. Buyers are buying far below the maximum purchase prices for which they are approved. They are reading their loan disclosures and documents before they sign them. And, thanks to the stingy mortgage market, they are spending months, even years, in the planning and preparation phases before they buy: paying down their debt; saving up for a down payment (and a cash cushion, so that a job loss wouldn't be disastrous); being responsible and sparing in their use of credit to optimize their FICO scores; and creating strong financial habits in one fell swoop.

Our feelings about debt and equity have been reformed. Americans no longer use their homes like ATM machines, to pull out cash, pay off their credit cards and then start the whole overspending cycle over again. Many can't, because their homes are upside down and cannot be refinanced in any event -- much less to pull cash out.

Others have been reality-checked by the recession, and are dealing with their non-mortgage debt the old fashioned way: by ceasing the pattern of spending more than they make, and applying the self-discipline it takes to pay their bills off.

Home equity, in general, is no longer viewed as an inexhaustible source of cash. Rather, we see it as a fluctuating asset to be protected and increased -- not so much through the vagaries of the market, but through the hard work of paying the principal balance down. Many of those refinancing into today's lower rates aren't doing it to pull cash out, as was the norm at the top of the market; instead, they are refinancing into 15-year loans to pay their homes off sooner than planned, or reducing their required payment so their extra savings can be applied to principal.

Of course, it remains to be seen how lasting these changes will be if and when home prices go up and mortgage guidelines loosen up. But since neither of these things look likely to happen in the short term, hopefully there's a chance that these behavior shifts will become part of a permanent mindset reset for American housing consumers.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Ask her a real estate question online or visit her website,

Contact Tara-Nicholle Nelson:

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Copyright 2011 Tara-Nicholle Nelson


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Tuesday, September 13, 2011

Time to buy a home?

I started my career in home construction and real estate in 1978. Home sales were brisk until the early 1980's when mortgage interest went up to as high as 18%. Talk about a challenge, try convincing someone that 18% was a good rate to pay for a home loan. Hign interest rates, high unemployment, and high inflation eventually bought the real estate market to a grinding halt.

Consider mortgage rates today, 9-13-11. You can get a 15 year mortgage for 3.33% if you have good credit. In North Carolina you can get a new 2000 square foot home for 200,000. If you borrowed $180,000 for 15 years at 3.33%, your payments, principle and interest, would be around $1271.81. You could rent a home for a comparable amount so which way should you go?

In my opinion, if you are going to be in a home only 2 or 3 years you might want to rent. Any longer buying might be the better option as we all know long term real estate will go up. It might be a few more years before the sub prime meltdown plays out but it will eventually work out and home prices will start to rise again.

Monday, September 12, 2011

Stupid Low interest rates

As someone that has been in the Real Estate business for over 30 years never thought I would see these interest rates.

Freddie Mac's Primary Mortgage Market Survey®

Avg. Fees & Points

Copyright 2011, Freddie Mac. Averages are for conforming mortgages with 20% down.

30YR FRM 4.12 0.7

15YR FRM 3.33 0.6

5YR ARM 2.96 0.6

1YR ARM 2.84 0.6

Saturday, July 30, 2011

Interesting read on housing

RISMEDIA, July 29, 2011—(MCT)—Home prices in major U.S. cities increased in May for the second consecutive month, according to a closely watched index, although experts dismissed the uptick as seasonal while separate reports provided fresh evidence of a weak housing market.

The Standard & Poor’s/Case-Shiller index of home prices in 20 metropolitan areas rose 1 percent from April to May when left unadjusted for seasonal variations.

Prices often rise in spring because of changes in the types of homes selling: Foreclosures make up a higher proportion of sales during the winter as families take a break from home shopping and cash-rich investors dominate the market. Higher sales volumes also push up prices.

But compared with May 2010, home prices slid 4.5 percent, according to the index released Tuesday.

“Year-over-year, prices continue to deteriorate, although there has been a seasonal uptick over recent months,” says Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California-Los Angeles. “This reflects a market that continues to be in search of a bottom.”

Chris G. Christopher Jr., an economist with consulting firm IHS Global Insight, said in a research note that the seasonal kick in prices will probably fade by October.

“Things do not look very favorable on the housing front since the employment situation has taken a turn for the worse in May and June,” he wrote. “The unemployment rate now stands at 9.2 percent, and consumer confidence is at depressed levels. Going forward, the Case-Shiller indexes are likely to post increases during the home-buying season, and then turn down again.”

The housing market began a renewed decline last year after the expiration of federal tax credits and has been limping along ever since. In March, home prices fell below their recession-era low, hit in April 2009, confirming a much-expected double-dip. Values have ticked up slightly since then.

One factor keeping housing weak is the high number of homes in foreclosure or headed into the foreclosure process. Then there’s the stalled jobs market, weak consumer confidence in the economy’s direction and the significant number of people saddled with mortgage debt that exceeds the value of their homes.

A separate report released Tuesday by Santa Ana, Calif., research firm CoreLogic indicated that the nation’s housing market is hampering the broader U.S. economic recovery. The report said that while several temporary factors have contributed to a slowing recovery, including high gas prices, U.S. floods and fading stimulus programs, “fundamentally, the recent slower economic growth illustrates that as the housing market goes, so does the economy.”

Housing influences the economy directly through residential construction, which typically gives a recovery a key boost. But with stiff competition from foreclosures, sales of new homes have been very weak for more than a year.

(c) 2011, Los Angeles Times.

Thursday, June 16, 2011


Foreclosure filings in the U.S. tumbled last month to the lowest in almost four years as banks weighed down by an increasing inventory of seized homes delayed processing defaults, according to RealtyTrac Inc.

A total of 214,927 properties received default, auction or repossession notices in May, the fewest since November 2007, the Irvine, California-based data company said today in a statement. Filings dropped 33 percent from a year earlier and 2 percent from April. One in 605 households got a notice.

Foreclosure filings have fallen for eight straight months on a year-over-year basis as banks rework their documentation procedures following claims they improperly repossessed homes. Weak demand from buyers is making it difficult for lenders to sell the properties that they already have on their books, known as real estate owned, or REOs, according to RealtyTrac.

“Foreclosure processing delays continue to mask the true face of the foreclosure situation,” James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement. “Even at a significantly lower level than a year ago, the new supply of REOs exceeds the amount being sold each month.”

Unemployment and falling home values are limiting property sales and have pushed about 28 percent of mortgage holders underwater on their loans, meaning they owe more than the home is worth, according to Zillow Inc. The U.S. jobless rate rose to 9.1 percent in May from 9 percent the previous month, the Labor Department reported June 3.

Eight-Year Low

Home prices slid 3.6 percent in the first quarter to the lowest level since 2003 in the S&P/Case-Shiller index of values in 20 U.S. cities. Confidence among builders in June was at the weakest in nine months, as executives expressed pessimism about the prospect of higher sales, the National Association of Home Builders/Wells Fargo sentiment index showed yesterday.

The inventory of distressed homes nationwide stands at 1.8 million, which would take about three years to sell at the current pace, Daren Blomquist, RealtyTrac’s communications manager, said in a telephone interview.

Default notices were filed on 58,797 U.S. properties last month, the lowest in more than four years and a 39 percent decline from a year earlier, according to RealtyTrac.

Auctions were scheduled for 89,251 properties, down 33 percent from May 2010. Lenders seized 66,879 homes, a 29 percent decrease from a year earlier.

States where courts oversee foreclosures showed a 45 percent decrease in filings from a year earlier, while non- judicial states had a 25 percent decline and accounted for almost two-thirds of the national total, RealtyTrac said.

Nevada, Arizona

Nevada had the highest rate of foreclosure filings per household for the 53rd straight month, with one in 103 getting a notice. Arizona had the second-highest rate at one in 210 and California was third at one in 259. Michigan, Utah, Georgia, Idaho, Florida, Illinois and Colorado also ranked in top 10.

Five states accounted for more than half of the U.S. filing total, led by California’s 51,906. Florida was second at 19,192 and Michigan third at 14,614. Arizona, Nevada, Illinois, Georgia, Texas, Ohio and Wisconsin rounded out the top 10.

RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S. population.

To contact the reporter on this story: Dan Levy in San Francisco at

Wednesday, June 15, 2011

Real Estate Reports

Timely, local real estate data trumps national reports

Perspective: A call for more useful real estate statistics

By David Charron, Tuesday, June 14, 2011.

Inman News™

Broad housing market reports are a dime a dozen these days, and if you ask me, that's a good approximation of their worth. Markets are sliced and diced and compared across the board, drawing multiple -- and often conflicting -- conclusions with shaky, obsolete data. The market's up, or maybe it's down. It's good, it's bad, and it's confusing.

For most people, even with access to all this information the results are more inconsistent than ever, often dated and out of context. But they don't have to be.

Timely and accurate information, provided on a local level with a real-world perspective, is the real estate market's most important commodity -- and the ability of the public, government, financial institutions, investors and real estate professionals to make informed decisions on local housing markets is the cornerstone of an eventual housing recovery.

Isn't it time we stop trying to drive by, looking in the rear-view mirror, and insist on seeing just the facts, clearly, as they unfold?

Article continues below

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Considering the critical role that real estate statistics play in just about every housing-related decision, it is time for our industry to rally around better data. We owe it to ourselves, our clients and our profession to insist on timeliness and clarity while delving into the motivations and methodologies of every metric we disseminate.

The most recent Case-Shiller Home Price Index of May 31 is a perfect example: It noted, of all the U.S. markets it tracks, the Washington, D.C., metro area as the only market to experience an increase in housing prices for the first quarter of 2011.

While this index may be useful for Wall Street, it hardly constitutes breaking news. Improving market conditions were reported three weeks earlier in an index produced by an MRIS subsidiary.

Metric discrepancies are about more than selling products or securing a reputation in the marketplace -- they go to the heart of how we think about information. The one real estate mantra that has remained unequivocally true through some of the most tumultuous years in the history of our profession is that all real estate is local.

By focusing on broad market-to-market comparisons instead of individual markets, we undercut our value as real estate professionals. Instead of chasing fleeting affirmations that change day in and day out, we should ensure that real estate professionals know how to read and apply local data.

Let's focus more on whether single-family homes or condos are more prevalent in a single area, the variance of seasonal market shifts, or the changes in sales activity that often precede major trends.

Let's talk about the facts as they stand today and refrain from basing decisions on reports that are already five to seven months behind the market when they hit newsstands.

We're never going to move forward as a profession by basing decisions on old data, and we'll never overcome paralysis if we compare our local markets to every other market in the country without considering the context of local driving forces.

Most people won't buy stocks today based solely on six-month-old research, nor will they decide what to wear today based on the average temperature in New York. Why don't the same principles apply to real estate?

David Charron is president and CEO of MRIS, the largest multiple listing service in the nation. MRIS facilitates more than $100 million a day in real estate transactions in the mid-Atlantic region.

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Submitted by Leon d'Ancona, B.T.L., M.T.L. on June 14, 2011 - 1:29pm.

Mr. Charron is very correct. Case-Shiller is a rather narrow index based on the principal variable used for index calculation of the price change between two arms-length sales of the same single-family home. For each sales transaction, a search is conducted to acquire information on any previous sale of the same property. If an earlier transaction is found, the two are paired and considered a “repeat sales transaction”.

In the last 25 years I have found its results very rarely reflect true small city or neighborhood values.

To dispel some of the negativity of this benchmark have a look at a free service we provide to negate the poor press of real estate values.

Leon d'Ancona, B.T.L.,M.T.L.

President/CEO IMS Incorporated

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Submitted by Keith Byrd on June 14, 2011 - 1:53pm.

Consumers want facts. Our industry's image has taken a hit from all the "now is a good time to buy" comments from agents that don't have a clue what's going on in their local market. Guess it's the difference between being a Sales person that will say anything to sell a home vs. providing a Service.

In my area, the local paper writes about the local real estate market using a single piece of data from a stats company. This value is county-wide and lumps all residential properties in one bucket and is missing any foreclosure info. In my county, foreclosure rates of sold properties in cities range from 0% to 60%.

I've been reporting statistics on my website for years but it was a tedious process to gather and report the info. I recently developed an interactive tool that displays detailed info about the local market for the last 11 years. There are over 20,000 graphs of info that I now make available to consumers in an easy-to-use presentation that's updated every month.

Check em' out here:

Keith Byrd

San Luis Obispo, CA

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Submitted by C.H. Naamad on June 14, 2011 - 2:32pm.

I agree with you a 100%!!!

C.H. Naamad

Boston Luxury Residential

Cell: 617-407-9740

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Submitted by Travis Wright on June 14, 2011 - 2:54pm.

Well put, David. I have seen the impressive data reports coming out of ARMLS and I bet yours are awesome, too. Here's hoping your wisdom sinks in to all MLS'. T.

Travis In Texas

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Submitted by Albert Clark on June 15, 2011 - 3:10am.

Tagging on Tip O/Neils line, All Politics is Local we know "All RealEstate is Local" We provide a unique e-newsletter service to agents and see many agents adding their local market data that is fresh and usually zip code specific. I can attest that the local data is the most widely clicked on feature in the newsletters. Everyone wants to know what's going on in their marketplace. Long and Foster provides very attractive and useful Market Minute Reports. MRIS agents (David's area) is really Amp'ing up the availability of local stats with We show agents how to use this data as they become advocates for their clients and prospects. Local stats, at the zip and neighborhood are a powerful marketing and retention tool

Albert Clark

Home Actions Relationship Platform

Scranton, PA

570 510 3507

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Thursday, May 26, 2011

From Steve Tyson-concerned citizen

Bob and Carol Mattocks have put over $1 million of their own money into the Tryon Palace in the last few years. The letter  below was written by Bob Mattocks and was sent to the County County Board of Commission today. To the many that believe the Tryon Palace is a irreplaceable part of New Bern and Craven County, I say if we go down lets go down fighting! Call the folks listed below and let them know the facts.

You may have heard by now that the North Carolina Senate Budget will both seriously compromise Tryon Palace’s operation beginning July 1, 2011 – as well as its very survival in 2012. In all, Tryon Palace’s appropriation will be cut over $1.5 million effective July 1, 2011 and nearly $3.7 million effective July 1, 2012.

Immediate action is needed if we are going have any chance of saving the Tryon Palace that we know and love.* This budget is expected to come up for a vote in the state senate as early as next week.

The budget cuts mean that for the new fiscal year beginnings a month from now, Tryon Palace will shut down most of the majority of its services to the public and close most of the recently opened North Carolina History Center. And, with the proposed 88.8% cut, all of Tryon Palace will close on or before July 1, 2012.

Tryon Palace does not have a source of funding to make up for these draconian cuts. We cannot raise ticket prices enough to recover 88.8% of our budget. Reducing public programs and services and closing exhibition buildings means our admission receipts and private contributions will decline at an alarming and unprecedented rate with the steep decrease in visitor attendance. Any suggestion that we can sustain higher ticket prices is tantamount to suggesting the dismantling of Tryon Palace – and it will mean the end of an investment in North Carolina that the administration of ten governors and hundreds of state legislators of both parties have supported and promoted since 1959.

This is a sad moment in the history of Tryon Palace and North Carolina. For more than 50 years, Tryon Palace has operated as a very successful public-private partnership between the citizens of North Carolina and their government. We are an important state asset in every meaning of the word. We are caretakers of 15 historic buildings and a collection of over approximately 7,000 priceless objects that belong to each and every North Carolinian. Private donors have contributed more than $136.5 million in private funds and earned income over 60 years. We are stewards of North Carolina values and the heritage they represent.

To the citizens of North Carolina, Tryon Palace represents the heart of our state’s cultural patrimony and the financial commitment made by their government to its preservation. To the 30,000 school children that pass through our doors each year, Tryon Palace is a beacon of engaging and stimulating history education – of a kind that is alarmingly missing from American classrooms today. To the more than 140,000 tourists and visitors from around the country and around the world who this year will come to learn about and explore our sites, we are ambassadors for North Carolina and for its greater role in our country’s legacy. To the many small business owners – the shopkeepers, hotel and restaurant owners in our greater community of Eastern North Carolina – the visitation generated by Tryon Palace represents a key part of a $41 million economic engine that enables them to remain in business and keep employing our fellow North Carolinians.

The proposed cuts to Tryon Palace are not targeting spending that is wasteful or expendable; they are unraveling the very fabric of North Carolina’s cultural and historic identity – and we will be paying both a moral and fiscal price for it. When we are forced to close the North Carolina History Center this June, we will not only be abandoning the cutting-edge exhibits and technology that are helping make the state of North Carolina a leader in 21st-century history education outside the classroom, we will be squandering an important investment of $42.7 million in state funds and a promise made to the citizens of our state to preserve their heritage and tell the stories of the deeds and courage of past North Carolinians. When we are forced to shut down Tryon Palace in 2012, we will be abandoning the challenge of passing on to a new generation our state’s history and, along with it, an understanding of the patriotic values that history represents. It is ironic and sad that our legislators seem to be turning against what they so adamantly profess to protect. There are indeed promises to keep and not all of them can be – or should be – measured by dollar signs.

You will find attached a short news release. Please watch your email for detailed talking points coming soon for your use in getting the word out.

*The Senate will vote on the budget next week so there is not much time left for response. I urge you to speak out against these cuts to our state’s heritage and our children’s patrimony. The State budget is on a fast track and it is imperative to contact your local senator and representatives and key House and Senate leadership as soon as possible to voice your position on this far-reaching budget reduction.

Key senators include:

Sen. Phil Berger (Guilford, Rockingham), President Pro Tempore, (919) 733-5708

Sen. Peter Brunstetter (Forsyth), Appropriations Co-Chair, (919) 733-7850

Sen. Neal Hunt (Wake), Appropriations Co-Chair, (919) 733-5850

Sen. Richard Stevens (Wake), Appropriations Co-Chair, (919) 733-5653

Sen. Tom Apodaca (Buncombe, Henderson, Polk), Appropriations Vice Chair, (919) 733-5745

Sen. Linda Garrou (Forsyth), Appropriations Vice Chair, (919) 733-5620

Sen. Don East (Alleghany, Stokes, Surry, Yadkin), NER Appropriations Co-Chair, (919 733-5743

Sen. David Rouzer (Johnston, Wayne), NER Appropriations Co-Chair, (919) 733-5748

Sen. Harry Brown (Jones, Onslow), Majority Leader, (919) 715-3034

Sen. Jean Preston (Craven), Caucus Liaison, (919) 733-5706

Key House members include:

Rep. Thom Tillis (Mecklenberg), Speaker, (919) 733-3451

Rep. Paul Stam (Wake), Majority Leader, (919) 733-2962

Rep. Dale Folwell (Forsyth), Speaker Pro Tempore, (919) 733-5787

Rep. Harold Brubaker (Randolph), Appropriations Chair, (919) 715-4946

Rep. Linda Johnson (Cabarrus), Appropriations Co-Chair, (919) 733-5861

Rep. Jeff Barnhart (Cabarrus), Appropriations Co-Chair, (919) 715-2009

Rep. Normal W. Sanderson (Craven), Craven County Local Representative, (919) 733-5853

Rep. William Wainwright (Craven), Deputy Minority Leader, (919) 733-5995

Every morning when the Palace gates swing open, the voices of generations of great leaders who built this state are heard again. Please, don’t let them be silenced.


Bob Mattocks


The Tryon Palace Commission

Sunday, May 15, 2011

New Bern Home Sales

The Tyson Group Realtors-Steve and Jana J. Tyson want to thank you for the opportunity to market your property for sale. As part of this process, we are keeping you up to date with the current market trends. The tables below represent the closed sales in this market in the last 30 days; sales since the beginning of the year; and current inventory levels.

You will note that since the beginning of the year 87% of the homes sold in this market are under 250K and in the last 30 days 91% of the sales were under 250K.

It is definitely a buyer’s market and quite competitive. And, if you have a home over 250K, it is far more competitive. Sales over 250K represent between 10-11% of the total sales and 33.6% of the inventory. Positioning your home to outperform competitive properties is crucial, no matter what price range of home. As an example, look at sales in the last 30 days and compare to the data in the second table which represents the total percentage of inventory by price range.

Homes Sold in the 400-500K range represented 2% of total sales and 5.6% of total inventory. For that price range it is especially important to outperform the competition in order to get your home sold. The best price range compared to inventory levels is the 150-200K range with only 19.6% of the inventory and 30% of the sales.

It is also important to look at absorption rates. Looking at the best performing price range of 150K-200k, you will note that 30 units sold in the last 30 days and there are currently 312 units on the market. This represents a 10.4 month supply of inventory. This is calculated by taking 312 units on the market for that price range ÷ 30 units sold in a month. Keep in mind this is an average supply. The better-positioned properties might sell in two months while others may take 2 years. So, even in the best performing price-range, it is important to be competitive.

We want your listing to be one of those that sells quickly. Price it better than your competitors, make any necessary repairs, paint it, clean it, declutter it and stage it and we will get it sold!

We hope you find this information to be useful and ask that you compare where you stand in the market. Please call with any questions,

Steve and Jana J. Tyson


PRICE-RANGES 1588 TOTAL Homes On Market 5/15/11 % of Current Inventory

0-100K 196 12.3%

101-150K 335 21.0%

151-200K 312 19.6%

201-250K 207 13.0%

251-300K 161 10.0%

301-350K 75 4.7%

351-400K 85 5.3%

401-500K 89 5.6%

501-600k 57 3.5%

601-700K 28 1.8%

701K & Over 43 2.7%

Monday, May 09, 2011

Home Prices


Home values posted the largest decline in the first quarter since late 2008, prompting many economists to push back their estimates of when the housing market will hit a bottom.

.Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Prices have now fallen for 57 consecutive months, according to Zillow.

Last year, the housing market showed signs of improving as price depreciation slowed in some markets and stabilized in others. In response, a number of economists began forecasting that housing would hit a bottom in late 2011, then begin to recover. But the improvements, spurred by federal programs that gave buyers up to $8,000 in tax credits, proved fleeting. Sales collapsed when the credits expired last summer, and prices in many markets have been falling ever since.

While most economists expected sales to decline after tax credits expired, the drag on the market has been greater than many anticipated. "We expected December and January to be bad" as the market reeled from the after-effects of the tax credit, said Stan Humphries, Zillow's chief economist. But monthly declines for February and March were "really staggering," he said. They indicate "a reflection of the true underlying demand, which is now apparent because most of the tax credit is out of the system, and it's being completely overwhelmed by supply."

Mr. Humphries now believes prices won't hit bottom before next year and expects they will fall by another 7% to 9%. Other economists revised their forecasts. In April, the chief economist at mortgage company Fannie Mae, Doug Duncan, said home prices in the second quarter would be 5.3% lower than the previous-year period, down from his earlier estimate of a 2.6% decline.

Associated Press

An abundance of foreclosed homes on the market are pushing down home values.

.The estimates, which are based on data from the mid-1990s on, come from a proprietary computer program that takes into account sale prices for nearby homes that appear comparable, the size and other physical attributes of the home, its sales history and tax-assessment data, Mr. Humphries says.

Prices are decelerating in large part because the many foreclosed properties that often sell at a discount force other sellers to lower their prices. Mortgage companies Fannie Mae and Freddie Mac have sold more than 94,000 foreclosed homes during the first quarter, a new high that represented a 23% increase from the previous quarter. More could be on the way: They held another 218,000 properties at the end of March, a 33% increase from a year ago.

The companies are bracing for more bad news: On Friday, Fannie reported a $6.5 billion net loss, largely as it boosted loan-loss reserves in anticipation of falling home prices.

View Full Image

.Paul Dales, a senior U.S. economist with Capital Economics, says prices could fall by as much as 10%, down from his previous forecasts of around 5%. A March survey of more than 100 economists by MacroMarkets LLC forecasts a 1.4% drop in prices this year, down from the December estimate of a 0.2% decline.

Other home-price indexes also show weakness. The widely followed Case-Shiller index published by Standard & Poor's showed that prices climbed from April 2009 until last summer, when they started declining as tax credits expired. Today, prices are on the verge of reaching new lows, the index shows. The Case-Shiller index tracks repeat sales of previously owned homes using a three-month moving average.

According to the Zillow index, a handful of California markets and Washington, D.C., saw price appreciation last year, but that has since reversed. Mr. Humphries attributes the "double dip" in those markets, which include Los Angeles, San Francisco and San Diego, to the way in which the tax credit stimulated demand from buyers. When the tax credit went away, markets were left with rising supply from foreclosures but with less demand from buyers.

Detroit, Chicago and Minneapolis posted the largest declines during the first quarter of the top 25 metro areas tracked by Zillow, while Pittsburgh, Dallas and Washington posted the smallest declines.

To be sure, steep declines in home prices along with mortgage rates near their lowest levels in decades have helped make housing more affordable than at any time in the past 30 years, according to Zillow. Markets that have lower levels of foreclosures, such as Dallas, and those with better job-growth prospects, such as Washington, are faring better.

However, credit standards remain tight, posing another challenge for the housing market. Just as many unqualified borrowers received loans during the boom, "there are people today who probably could afford loans but can't get them," says David Berson, chief economist at PMI Group Inc. The average credit score on loans backed by Fannie Mae stood at 762 in the first quarter, up from an average of 718 for the 2001-2004 period.

Joe Sullivan, a real-estate agent in Stockton, Calif., is worried that more traditional buyers are seeing their loan applications canceled late in the process as lenders change qualification terms. If mortgage standards continue tightening, prices are "going to drop down to where only investors can get them, people with cash money," he said. Sales to absentee buyers, primarily investors, accounted for 47% of all Phoenix-area home sales in March, the highest level for any month in more than a decade, according to DataQuick, a real-estate research firm.

Christine Rice spent two years looking to buy a home in Los Angeles but found herself continually losing out to bids from investors offering to pay in cash. In September, she finally made a winning bid, paying $275,000 for a two-bedroom home. The prospect of falling prices "doesn't keep me up at night, but only because it was so cheap," says the 43-year-old tailor, who says she and her husband needed to move to have more space for their family. Her mortgage payments plus taxes are less than the rent she had been paying. "If it had been a stretch, then maybe I'd be worried," she says.

Buyers who qualify for mortgages are demanding bigger discounts as added insurance against further declines in values. Sellers, meanwhile, are balking. "More often, they don't want to take the first offer," says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. "What they don't realize is, in an oversupplied market, the next offer is for less."

While some analysts have argued that home prices need to fall to "clearing prices" that will attract more buyers, price declines could also complicate any recovery by pushing more borrowers under water. Zillow estimates that more than 28% of borrowers owe more than their homes are worth nationally. Those numbers are much higher in hard-hit markets such as Phoenix, where more than two-thirds of borrowers owe more than their homes are worth.

Thursday, May 05, 2011

New Bern Home Sales 2011

2011 Home Sales to date

Total Home Sales thru 4-30-2011=383
Of the 383 (78) were new construction
The average list price was $165,000
The average Sell price was $157,000

Nationally, according to trulia, 40% of home sales were bank owned or short sales. While we are seeing distressed sales in our market, I am guessing it is closer to 25-30%.

Last year through the same time period there were 356 homes sold. So to date we are up around 8%.

Thursday, April 28, 2011

Zoning laws

Frank Graham inherited a 600-acre wooded tract located about a half mile outside a small town in rural North Carolina. With the economy turning around he is considering moving forward with development of the tract. He has been thinking a residential subdivision and shopping center would fit nicely on this tract. He thinks a portion of the land might also be great for some industrial development or maybe even a mobile home park. Frank remembered seeing something in the papers about the county adopting zoning a few years ago. So before setting off on this project, he thinks it would be prudent to run his ideas by his cousin Eddie Graham, who is the long-term county manager for the county where this property is located.

Frank drops by Eddie’s office. After exchanging pleasantries and catching up about their mutual relatives, Frank briefly sketches out his thoughts about development of his tract. “Well,” Eddie says, “sounds like you have some good ideas. A good starting point even if a bit controversial. But I’m afraid I can’t be of much help. You need to go see the folks at town hall. City zoning applies out there.”

Frank is confused. “Eddie, I don’t follow all this government stuff the way you do, but I’m pretty sure this land is still out in the county. The town may be growing out that way, but I think I’d remember if it had been annexed. I’m pretty sure I don’t pay city taxes on that land. Are you sure about city zoning?”

“It’s outside the city,” Eddie explains, “but it has been subject to city planning and zoning a long time. They got ETJ at least a decade ago.” “

“And what, pray tell, is ETJ?” Frank asks.

“ETJ” is shorthand for extraterritorial jurisdiction. In this context, it is the authority of a city to apply its planning and development regulations to adjacent areas outside the city limits. Folks like Frank often want to know if this is legal and, if so, how it came to be.

For many years states have authorized municipal regulation of extraterritorial areas to protect public health and safety. For example in the early 1800′s Georgia allowed Savannah to prohibit rice farms within a mile of the city and Maryland allowed Baltimore to apply health regulations to ships within three miles of the city. Most other states followed suit. The North Carolina supreme court in 1912 upheld a law giving Greensboro authority to impose sanitary regulations in the area one mile beyond the city limits. State v. Rice, 158 N.C. 635, 74 S.E. 582 (1912). The legislature in 1917 gave all cities the authority to adopt similar health and safety regulations for areas within a mile of the city limits, an authority that is found today in G.S. 160A-193.

So how did the municipal authority in North Carolina to regulate nuisances in adjacent areas get extended to allow city planning, zoning, subdivision, and other regulations in extraterritorial areas?

As zoning and other land use regulations first came into widespread use in North Carolina, planning and development regulation were almost exclusively municipal concerns. Most cities of any size had adopted zoning by the late 1940s. By contrast, a handful of urban counties had gotten individual approval to adopt zoning, but most counties in the state had no authority to adopt zoning ordinances until 1959. As the post–World War II development boom took off, a good deal of the development occurred along the urban fringe, often in unregulated areas just outside of city corporate limits. The Institute of Government’s land use law expert, Phil Green, observed in 1953 that most of this fringe area development was taking place in “relatively chaotic fashion.”

To deal with this issue of unregulated development on the urban fringe, several cities sought authority to adopt “perimeter zoning.” Raleigh, Chapel Hill, Gastonia, and Tarboro were granted a one-mile ETJ for planning regulations in 1949. By 1958, nineteen municipalities had secured similar local legislation as extraterritorial zoning authority had been granted to Carrboro, Chapel Hill, Charlotte, Elizabeth City, Farmville, Gastonia, Goldsboro, Greensboro, High Point, Jacksonville, Kinston, Mooresville, Raleigh, Salisbury, Snow Hill, Spencer, Statesville, Tarboro, and Winston-Salem. At this point the legislature decided to look into whether this authority should be extended to all cities.

The Municipal Government Study Commission examined the issue in 1958 and came to this conclusion:

The Commission recognizes that municipalities have a special interest in the areas immediately adjacent to their limits. These areas, in the normal course of events, will at some time be annexed to the city, bringing with them any problems growing out of chaotic and disorganized development. Even prior to that time they affect the city. Health and safety problems arising outside the city do not always respect city limits as they spread . . . . Subdividers of land outside the city commonly wish to tie to city water and sewerage systems. New industrial and commercial development may, for a variety of reasons, take place just outside the corporate limits.

The study commission recommended that all cities with populations at least 2,500 be granted a one-mile area of extraterritorial jurisdiction and that cities with larger populations be granted up to five miles of extraterritorial jurisdiction, provided the county agreed. The commission noted the concern that residents of these areas were not entitled to vote in city elections and recommended mandatory representation of extraterritorial residents on city planning boards and boards of adjustment “to meet this objection in a practical and yet legal manner.” The legislature adopted the bulk of the study commission’s recommendations and granted statewide authority for municipal extraterritorial land use regulation in 1959. The statute on extraterritorial jurisdiction has undergone a number of amendments since its enactment. The current statutory scheme of tiered extraterritorial jurisdiction of one to three miles based on city population was adopted in 1971.

ETJ Boundary Sign

When a city adopts an extraterritorial boundary ordinance, the city acquires jurisdiction for all of its development ordinances and the county loses its jurisdiction for the same range of ordinances. This includes not only zoning and subdivision ordinances but also housing and building codes and regulations on historic districts and historic landmarks, open spaces, community development, erosion and sedimentation control, floodways, mountain ridges, and roadway corridors (though cities and counties can by mutual agreement modify this allocation). The city does not acquire, nor does the county lose, jurisdiction for regulations adopted under the general ordinance-making power of G.S. 160A-174, such as a nuisance lot, junked car, or noise ordinances. G.S. 160A-360 includes a detailed process that must be followed by a city in establishing extraterritorial jurisdiction, including newspaper notice, mailed notice, and public hearing requirements.

In certain instances, county approval must be given for a city to exercise its extraterritorial powers. G.S. 160A-360(a) requires county approval whenever a city with a population of more than 10,000 seeks to extend its extraterritorial jurisdiction beyond one mile. G.S. 160A-360(e) requires that county approval be secured for the extension of city extraterritorial jurisdiction into any area wherein the county is enforcing zoning, subdivision regulations, and the building code. This includes the one-mile area adjacent to cities.

A 2005 survey by the School of Government indicated that 62% of the responding North Carolina cities had adopted extraterritorial zoning. Cites with larger populations are far more likely to have done so than their less populous counterparts. The overwhelming majority (85%) of cities with ETJ only exercise this jurisdiction within one mile of the city limits.

A principal concern with granting municipalities extraterritorial power has been the lack of political representation for extraterritorial residents. The legal aspects of this concern were largely resolved when the U.S. Supreme Court concluded that federal constitutional guarantees of due process and equal protection are not violated when states grant municipalities extraterritorial jurisdiction without extending the right to vote in municipal elections to extraterritorial residents. Holt Civic Club v. City of Tuscaloosa, 439 U.S. 60, 70–75 (1978).

While most cities in the state have had authority to adopt extraterritorial development regulations for over a half-century, controversy remains. Several counties have established policies that limit their approval of new municipal ETJ to those areas that are planned to be annexed within a set time or where the city can show it has plans to extend urban services. Bills have been introduced in the 2011 session of the General Assembly to exempt farms from ETJ areas or farming from coverage by city regulations in the ETJ (H. 168, H. 195, S. 380), to limit ETJ to “urban purposes” (H. 797), and to prohibit ETJ where there is county zoning and to allow ETJ residents to vote in city elections (H. 281).

Frank Graham had straightforward questions. What is ETJ, is it legal, and why was it allowed? Those questions have straightforward answers. The more difficult questions revolve around how the state should state organize its local governments to deal with growth and development on urban fringes. How do we best manage the transition from rural to suburban? Who should plan for orderly and efficient growth in these areas? Which units of government should provide what types of urban services? How should provision of services be coordinated with planning and development regulation? How should cities and counties coordinate their planning efforts? How should we manage for transitions in jurisdiction over time? What is fair, reasonable, equitable, and effective for cities, for counties, and for residents and landowners in these areas? Those questions are likely to be before our city councils, county boards of commissioners, and the legislature for some time to come. As long as they are, we will continue to grapple with the broader implications of Frank’s questions.

Tags: ETJ, Jurisdiction, Planning, Zoning

This entry was posted on Tuesday, April 12th, 2011 at 3:56 PM and is filed under Land Use. You can follow any responses to this entry through the RSS 2.0 feed.

One Response to “Can a City Really Zone Land Outside the City?”

Jamie Wood

April 13, 2011 at 8:56 AMIf the city has a health and safety concern for the ETJ and its establishment does that give the city police power over the ETJ or is that still classified as the county?

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Wednesday, March 30, 2011

Good News for Real estate??????

Real estate: It's time to buy again

Posted by Shawn Tully, senior editor-at-large

March 28, 2011 5:00 am

Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.

A home under construction in Austin. The number of new homes in the pipeline nationwide is quite low.

From his wide-rimmed cowboy hat to his roper boots, Mike Castleman fits moviedom's image of the lanky Texas rancher. On a recent March evening, Castleman is feeding cattle biscuits to his two pet longhorn steers, Big Buddy and Little Buddy, on his 460-acre Bar Ten Creek Ranch in Dripping Springs, a hamlet outside Austin in the Texas Hill Country. The spread is a medley of meandering streams, craggy cliffs, and centuries-old oaks. But even in this pastoral setting, his mind keeps returning to a subject he knows as well as any expert around: the housing market. "I'm a dirt-road economist who sees what's happening on the ground, and in 35 years I've never seen a shortage of new construction like the one I'm seeing today," declares Castleman, 70, now offering a biscuit to his miniature donkey Thumper. "The talking heads who are down on real estate will hate to hear this, but America needs to build a lot more houses. And in most markets the price of new homes is fixin' to rise, not fall."

Castleman is in a unique position to know. As the founder and CEO of a company called Metrostudy, he's spent more than three decades tracking real-time data on the country's inventory of new homes. Each quarter he dispatches 500 inspectors to literally drive through 45,000 subdivisions from Baltimore to Sacramento. The inspectors examine 5 million finished lots, one at a time, and record whether they contain a house that's under construction, one that's finished and for sale, or a home that's sold. Metrostudy covers 19 states, or around 65% of the U.S. housing market, including all the ones hardest hit by the crash: Florida, California, Arizona, and Nevada. The company's client list includes virtually every major homebuilder and bank -- from Pulte (PHM) and KB Home (KBH) to Bank of America (BAC) and Wells Fargo (WFC).

The key figures that Metrostudy collects, and that those clients prize, are the number of homes that are vacant and for sale in each city, and the number of months it takes to sell all of them. Together those figures measure inventory -- the key metric in determining whether a market has a surplus or a shortage of new housing.

Today Castleman is witnessing an extraordinary reversal of the new-home glut that helped sink prices just a few years ago. In the 41 cities Metrostudy covers, a total of 78,000 houses are now either vacant and for sale, or under construction. That's less than one-fourth of the 343,000 units in those two categories at the peak of the frenzy in mid-2006, and well below the level of a decade ago. "If we had anything like normal levels of buying, those houses would sell in 2½ months," says Castleman. "We'd see an incredible shortage. And that's where we're heading."

If all the noise you're hearing about housing has you totally confused, join the crowd. One day you'll read that owning a home has never been more affordable. The next day you'll see news that housing starts have plunged to nearly their lowest level in half a century, as headlines announced in March. After four years of falling prices and surging foreclosures, it's hard to know what to think. Even Robert Shiller and Karl Case can't agree. The two economists, who together created the widely followed S&P/Case-Shiller Home Price indices, are right now offering sharply contrasting views of housing's future. Shiller recently warned that the chances were high for a further double-digit drop in U.S. home prices. But in an interview with Fortune, Case took a far brighter view: "The lack of new home building is a huge help that a lot of people are ignoring," says Case. "People think I'm crazy to be optimistic, but housing is looking like the little engine that could."

To see where real estate is truly headed, it's critical to keep your eye firmly on the fundamentals that, over time, always determine the course of prices and construction. During the last decade's historic run-up in prices, Fortune repeatedly warned that things were moving too fast. In a cover story titled "Is the Housing Boom Over?," this writer's analysis found that the basic forces that govern the market -- the cost of owning vs. renting and the level of new construction -- were in bubble territory. Eventually reality set in, and prices plummeted. Our current view focuses on those same fundamentals -- only now they're pointing in the opposite direction.

So let's state it simply and forcibly: Housing is back.

Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction that so amazes Castleman. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets. The story of this downturn has been an astonishing flight from the traditional American approach of buying new houses to an embrace of renting. But the new affordability will gradually lure Americans back to buying homes. And the return of the homeowner will start raising prices in many markets this year.

Drumming up sales

Of course, home prices are low and home construction is weak for a reason: incredibly low demand. For our scenario to play out, America will need a decent economy, with job creation and consumer confidence continuing to claw their way back to normal.

One big fear is that today's tight credit standards will chill the market. But we're really returning to the standards that prevailed before the craze, and those requirements didn't stop prices and homebuilding from rising in a good economy. "The credit standards are now at about historical levels, excluding the bubble period," says Mark Zandi, chief economist for Moody's Analytics. "We saw prices rising with fundamentals in those periods, and it will happen again."

To see why, let's examine the remarkable shift in home affordability. A new study by Deutsche Bank measures affordability in two ways: first, the share of income Americans are paying to own a home. And second, the cost of owning vs. renting. On the first metric, the analysis finds that homeowners now pay just 9.8% of their income in after-tax mortgage, tax, and insurance payments. That's down from 17.2% at the bubble's peak in 2007, and by far the lowest number in the Deutsche Bank database, going back to 1999. The second measure, the cost of owning compared with renting, should also inspire potential buyers. In 28 out of 54 major markets, it's now cheaper to pay a mortgage and other major costs than to rent the same house. What's most compelling is that in all of the distressed markets, owning now wins by a wide margin -- a stunning reversal from four years ago. It now costs 34% less than renting in Atlanta. In Miami the average rent is now $1,031 a month, vs. the $856 it costs to carry a ranch house or stucco cottage as an owner. (For more, see The top 10 cities for home buyers)

Not all markets will bounce back equally, of course. Housing resembles the weather: The exact conditions are different in every city. But in general the big U.S. markets fall into two different climate zones right now. We'll call them the "nondistressed markets" and the "foreclosure markets." A more detailed look shows why the forecast for both is favorable.

Nondistressed markets: Ready for launch

No cities went untouched by the collapse in prices over the past few years. But markets such as Northern Virginia, Indianapolis, Minneapolis, San Diego, the San Francisco suburbs, and virtually all of Texas held up reasonably well. In those areas prices spiked far less than in bubble cities -- the foreclosure markets we'll get to shortly -- chiefly because they didn't get nearly as many speculators who thought they could flip the homes or rent them to snowbirds.

The nondistressed markets will be able to get prices rising and construction growing far faster than the harder-hit areas for a simple reason: Although some of these markets are still suffering from foreclosures, they don't need to work through the big overhang haunting a Las Vegas or a Phoenix. The number of new homes for sale or in the pipeline is extraordinarily low in nondistressed markets. San Diego is typical. It has just 921 freestanding homes for sale or under construction, compared with 4,425 in late 2005. The challenge for these cities is to generate enough demand to reduce inventories of existing, or resale, homes. In the entire country the resale supply stands at 3.5 million houses and condos. That's a fairly high number, since it would take more than eight months to sell those properties; seven months or below is the threshold for a strong market.

But in the nondistressed cities, the existing home inventory is lower, closer to seven months on average. So a modest increase in demand will translate into strong gains in both prices and new construction. That should happen quickly, because most of those markets -- including Silicon Valley, Northern Virginia, and Texas -- are now showing good job growth.

Zandi of Moody's Analytics expects that prices will rise three to four points faster than inflation for the next few years in virtually all of the nondistressed markets. His view is that prices will increase in line with rents, which are now growing briskly because apartments are in short supply. Those higher rents will encourage buyers to cross the street from an apartment to a home of their own.

In Northern Virginia, Chris Bratz, an engineer, and his wife, Amy DiElsi, a publicist, are planning to leave their rental apartment and become homeowners for the first time. The main reason? Buying has simply become a far better deal than renting. "The market got completely inflated, then it crashed, so prices are coming back to where they should be," says Chris. As the couple have watched prices fall, they have also watched the rent on their apartment spiral upward, reaching $2,700 a month. They calculate that they should be able to purchase a townhouse for between $400,000 and $500,000 and pay less per month for a mortgage.

The nondistressed markets will also lead the way in construction. Zandi predicts that for the nation as a whole, single-family housing "starts" -- measured when a builder pours a foundation for a new home -- will rise from 470,000 in 2010 to as much as 700,000 this year. A large portion of that activity will happen in nondistressed markets where a tightening supply of resale houses will start making new homes look like a good deal. "Our main competition is from resales," says Jeff Mezger, CEO of KB Home. "The prices of those homes have stayed so low, because of low demand, that it's hampered the ability of builders to sell new houses."

But many would-be buyers simply prefer a brand-new house. Eventually they'll move from renters to buyers, and the trend will accelerate now that prices are no longer dropping. In Minneapolis, Yuan Qu and her husband, Xiang Chen, a researcher at the University of Minnesota, just moved from a two-bedroom rental to a new light-blue four-bedroom ranch with a chocolate-colored roof on a spacious corner lot. They paid $400,000, a bargain price compared with a few years ago. The couple, both in their early thirties, moved to Minnesota from China six years ago. "We wanted to buy a house, and we've been waiting and waiting and waiting," says Qu. "The prices went down for so long, we finally thought they couldn't keep falling." For Qu the only choice was new construction. "We're not very handy people," she admits.

Foreclosure markets: The outlook is brightening

A home off the market in Mesa, Ariz.

The true disaster areas for housing since the bubble burst have been Sunbelt cities such as Las Vegas, Phoenix, and Miami -- places that boasted great job and population growth in the mid-2000s, only to suffer a housing crash that swamped them with empty homes and condos and crushed their economies. But people always want to live in those sunny locales, and their job markets are starting to recover, albeit slowly. In foreclosure markets the inventory problem is far greater because it includes not just traditional resale homes but millions of distressed properties. Fortunately those houses are now such a screaming deal that investors, including lots of mom-and-pop buyers, are purchasing them at a rapid pace. To be sure, some foreclosure markets won't rebound for years because they're both vastly overbuilt and far from big job centers; a prime example is California's Inland Empire, a real estate disaster zone 80 miles east of Los Angeles.

But the outlook is brightening for Phoenix, Las Vegas, Miami, and parts of Northern California. A big positive is the tiny supply of new homes entering the market. Phoenix, for example, has a total of just 8,100 new homes that are either for sale or under construction, down from 53,000 in mid-2006. The big test in these cities is absorbing the steady stream of distressed properties. The foreclosures put downward pressure on the market far out of proportion to their numbers because of markdown pricing. "We had levels of inventory even higher than this in 1990 and 1991," says MIT economist William Wheaton. "But they were traditional listings, not foreclosures, so they didn't create the big discounts you get with foreclosures."

Wheaton reckons that we'll see a flow of around 1 million foreclosures a year, at a fairly even pace, from now through 2013. That figure is frequently cited as evidence that the market is doomed for years in most foreclosure markets. Not so. The reason is that the vast bulk of those units, probably over 600,000, according to Gleb Nechayev, an economist with real estate firm CB Richard Ellis (CBG), are being converted to rentals either by investors or their current owners. Those properties are finding plenty of renters, since the rental market is still extremely strong across the country. Remember, the millions who lost their homes to foreclosure still need somewhere to live.

A typical investor is Alex Barbalat, a Russian immigrant who's purchased seven homes east of San Francisco in the towns of Bay Point, Antioch, and Pittsburg. His average purchase price is around $100,000 for homes that once sold for between $300,000 and $500,000. But he has no trouble finding renters, since his tenants can commute to jobs in San Francisco on the BART transit system. Barbalat is pocketing rental yields on the prices he paid of around 12%, and he's in no hurry to sell. "I'm holding them until prices drastically rise," he says.

Investment funds are also entering the game. Dotan Y. Melech looks for bargains in Las Vegas for UnitedAMS, a firm he co-founded that manages apartments and other real estate investments. The firm has raised more than $20 million from outside investors to purchase distressed properties. So far, Melech has bought around 300 houses and plans to purchase another 200 this year. He has no trouble renting the houses he buys, since, he estimates, occupancy rates in Las Vegas are touching 95%. The "cap rate," or return on investment after all expenses, is between 8% and 10% -- twice the rate on 10-year Treasuries. Melech rents to people who lost their homes but are reliable renters. "A lot of people can't be buyers because their credit got hurt," he says.

Even with investors jumping in, buying activity in foreclosure markets hasn't yet increased enough to bring inventories down. It will soon. Zandi thinks prices will fall a couple of percentage points lower in the distressed markets in the short run. "But that will be overshooting," he says. "It's like an elastic band. If prices do drop this year, they will need to bounce back because they'll be far too low compared with rents and replacement cost." Renters will come off the sidelines to purchase homes in the years ahead, precisely the opposite trend of the past few years.

Consider the example of Michael Dynda, a retired Air Force avionics technician who now works for a government contractor in Las Vegas. Dynda, 49, is a first-time buyer who put off purchasing for years, in part because prices were falling so rapidly in Las Vegas, with no bottom in sight. But last year the combination of bargain prices and low mortgage rates became too good to resist. He ended up purchasing a 2,300-square-foot stucco home for $240,000, or about half what it would have fetched in 2007. Dynda got a 4.38% home loan, and pays the same amount on his mortgage as on the rent on the house he left to become a homeowner. "The timing was about as good as it could get," says Dynda.

Mike Castleman's company tracks the inventory of new homes in 19 states across the country. He sees supply getting tight. "Home prices are fixin' to rise," he says.

Back on the ranch, Mike Castleman is lounging in his creek-front mansion, built from "a hundred tons of fine central Texas limestone." As he shows off his collection of custom-made guitars, including one crafted to resemble the skin of a rattlesnake, the homespun housing guru once again returns to his favorite topic.

Castleman claims that this recovery will look like all the others: It will bring a severe shortage of housing. He invokes the livestock business to explain. "It takes three years between the time a bull mates with a cow and when you get a calf ready for market," he says. "That's how it is in housing too. We'll get a big surge in demand and the drywall companies will take a long time to ramp up, and it will take years to get new lots approved. Buyers will show up looking for a house in a subdivision, and all the houses will be sold. The builders will tell them it will take six months to deliver a house." But those folks, says Castleman, will be set on buying a place. "And they'll want it so bad they'll bid the prices up!" In other words: Beat the crowd.

It's a Great Time to Buy a House

Mike Castleman, the Texan with the best realtime view of housing in the U.S., tells editor-atlarge Shawn Tully that the naysayers are about to get a big surprise: rising prices for new homes.