Owners Clueless About Home Equity: Study

Despite three years of a solid recovery in home prices, a surprising number of homeowners don't realize what they've gained.

Most underestimate what their home is worth and, consequently, the amount of home equity that they could draw upon. Even more striking, just more than half of homeowners with a mortgage don't expect to gain any equity in 2016, despite rising home prices. It may be why home equity lines of credit are far less popular today than they were even before the housing boom.

"Homeowners who bought during the housing boom are regaining equity many thought was lost forever, yet too many are not aware of the equity they have gained or they are unclear about how to determine changes in their equity," said Bryan Sullivan, chief financial officer at loanDepot, an independent, nonbank lender.

Fifty-seven percent of homeowners said they believe their home value has improved in the last three years, but the majority, 80 percent, underestimated the amount of value it has gained, according to a new survey conducted by Omniweb and commissioned by loanDepot. The survey was based on interviews with 1,000 borrowers, split evenly between men and women.

More than a quarter of those surveyed, who do believe their homes have gained value, said it had increased between 1 and 5 percent since 2013. While that may be the case in certain local markets, nationally home values have gained about 10 percent in that time, according to the S&P/Case Shiller Home Price Index.

This misperception may be behind a still very low volume of new home equity lines of credit. These second loans allow borrowers to draw from their home equity, beyond their primary mortgages, much like a checking account. A recent survey by TD Bank found just 9 percent of borrowers surveyed would definitely consider applying for a HELOC. Sixty-one percent would not consider it at all.

During the first three quarters of 2015, lenders originated 976,000 new HELOCs, the most since 2008, but dollar volumes are still barely a third of what they were at the last peak in 2005, according to a new report from CoreLogic.

Those who are taking money out of their homes are doing so at a very conservative rate. Total home equity nationwide has increased by nearly $1 trillion in just the last year, the highest since 2007, according to Black Knight Financial Services; borrowers, however, are not tapping it. Those who are taking out home equity lines of credit, are not withdrawing as much cash from their homes as is available to them.

"There is no question that HELOCs being originated today are of exceptional credit quality," said Ben Graboske, Black Knight Data & Analytics senior vice president. "In fact, HELOC originations in Q1 2015 had the highest weighted average credit score on record. In addition, HELOC delinquency rates are at the lowest level since April 2007."

The epic housing crash of the last decade has divided perceptions among borrowers as well. Those who purchased a home after the crash (2009 and beyond) are more inclined to believe their home values have gone up. Those who weathered the crash are less. Newer buyers are also more bullish on the prospects for their home values over the next year than those who lost considerable equity during the housing crash.

Site Plan Approved for New Irmo Subdivision

Irmo Planning Commission members approved plans Monday night for a new housing subdivision in Irmo. The vote was held over from the January meeting as members wanted to require a second access point.

Plans call for 162 homes to be built on the 8000 block of Irmo Drive near the Murray Landing shopping center at the intersection of N. Lake Drive. Robert Wilder of real estate investor Blake Whitney Thompson Co. is representing the developers and said the community has been named Shoals Landing.

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Planning commission members are requiring another access point on the back side of the property for emergency vehicles only. This will allow fire and EMS personnel a second way into the subdivision during peak travel time. A locked gate will butt up against the adjacent Waterford subdivision.

Wilder said construction is expected to start in about two months. The developer has not yet released the names of the two builders involved as contracts still are being finalized.

The state Department of Transportation also has advised a right deceleration lane for the development.

Lexington Mayor Outlines Plan to Prepare for Next Wave of Growth

Town officials estimate Lexington has grown 83 percent since 2000, making it the fourth-fastest growing municipality in the state with about 20,000 residents in the latest estimate from 2014, according to data from the U.S. Census. New businesses and families still are arriving at a record pace, and Mayor Steve MacDougall presented a plan of action for managing the growth during his 2016 State of the Town address Monday night.

“The town prides itself on being the place where citizens want to live, work, play and learn,” he said.

Since July of 2015, $70 million in new construction has been permitted. There are still five months left in the fiscal year, but the total is 35 percent higher than the construction value for the previous fiscal year.

Officials also are projecting to permit the building of 160 new homes, up from the previous year’s total of 112 homes.

The growth has created a demand on services and roads, and the town already has taken steps to alleviate congestion with installation of the new Adaptive Computerized Signalization System. Designed to “read” traffic flow and adjust signals accordingly, the system now is controlling its first group of intersections.

Traffic in the downtown corridor has experienced an 18 percent decrease in travel time since the first five signals went live Jan. 5. Randy Edwards, the town’s traffic engineer, said commutes have been shortened nearly one minute from Columbia Avenue through Lake Drive.

A total of 19 signals, Phase I of the project, will be controlled by the new system at the end of this year.

“We would be the first municipality in the state to implement this new technology at all traffic signal intersections in town,” MacDougall said. “This is just another way we are being proactive and preparing for the anticipated growth we project for the future.”

Following passage of a 2 percent hospitality tax in 2015, town officials are getting to work on additional traffic improvements continuing in the downtown corridor. The project includes switching Lake Drive and Church Street to one-way streets at Main Street and should be complete by year’s end.

“By pairing the Lake Drive and Church Street corridors, the capacity of this direction is doubled, (and) additional capacity allows significant increase in the amount of green signal time,” MacDougall said.

Town officials also are planning for future growth in the water and sewer department. Lexington recently decommissioned the Coventry Woods Wastewater Plant, the fourth satellite facility closed down in correlation with the regional plan to process and treat wastewater at the City of Cayce Regional Wastewater Treatment Facility.

“The closing of these smaller facilities … eliminates discharge to the Lower Saluda River and provides cleaner outflow by being treated at a state-of-the art regional processing facility,” MacDougall said.

Lexington is using less than one quarter of its total capacity at the City of Cayce Regional Wastewater Treatment Facility, 3.1 million gallons a day of the allowable 12.5 million gallons.

Other capital improvement projects on the horizon include upgrades to pump stations and sewer lines and construction of a regional pump station.

New wayfaring signage throughout the town and beautification projects at Lexington’s entrances will welcome visitors and new residents.

“Our goal is to be aesthetically appealing and preserve our small town charm, while making enhancements that will continue to attract visitors and new economic development,” MacDougall said.

MacDougall thanked town staff and public safety officials for keeping residents safe during the October floods. Employees put in 1,500 hours in the immediate days during and after the historic rain event, and Lexington had no loss of life.

“Mother Nature dealt us a handful but with our outpouring of support from our community, we were able to provide for all the needs we had during this most difficult time,” MacDougall said.

Main Street’s revitalization, a project nicknamed Project Icehouse, continues to move forward as construction crews make progress on the amphitheater at the corner of Church and Main Streets. The venue is expected to open this summer with seating for 900.

10 Hot Real Estate Markets To Watch In 2016

7. Columbia, SC

“Famously Hot” Columbia is home to six colleges, including the University of South Carolina, plus several major hospitals — and affordable housing prices. The state capital is also home to Fort Jackson, the largest military training center in the country.

Although history runs deep in Columbia, an indie spirit is taking root — artisans, foodies, and musicians are bringing new energy to the capital of Southern hospitality. There are nearly 450 restaurants (really!) to choose from after a long day lazing about Lake Murray.

- See more at: http://www.trulia.com/blog/10-hot-real-estate-markets-to-watch-in-2016/#sthash.g5fszUof.dpuf

4 Reasons 2016 is the Year to Buy a Home

If you've been on the fence about buying a home, 2016 is the year to take the plunge.

Mortgage rates have been bouncing around record lows for a while now. But even though they're likely to start going up, you haven't missed your chance to get a deal on a house.

A number of factors are coming together, making next year a good time to buy:

1. Home prices will finally calm down

Real estate values have been on the rise for a while, but are likely to slow their pace next year. Prices are expected to rise 3.5%,according to Zillow's Chief Economist Svenja Gudell.

Buyers who've been stuck behind the wave of rising prices may finally get the chance to jump in.

And that could lead to a flood of buyers, said Jonathan Smoke, chief economist at Realtor.com.

"We have the potential for about six million home sales just through the months of April through September; that is basically impossible to do," he said.

But not everyone will be in a position to take advantage.

Despite the slowdown, Zillow still expects home values to outpace wage growth, which can make it tough to afford a home, especially for lower-income buyers.

Plus, prices in the country's hottest markets -- like San Francisco, Boston and New York City -- aren't expected to pull back as much next year.

2. More homes will hit the market

The slowdown in home prices will prompt more owners to list their homes, Smoke said, giving buyers more choice.

"Because of the price appreciation they have experienced, you will have more sellers put homes on the market next year," he said.

The new home market is also expected to grow in the coming year with builders focusing more on starter and middle-range homes, which will also boost inventory and make it easier for buyers.

With more homes on the market, bidding wars will become less common and prices could ease even more.

3. Dirt cheap mortgages could disappear

The Federal Reserve is widely expected to begin increasing interest rates soon, which means the window for record low mortgage rates is closing.

While rates are expected to go up gradually, higher rates push up borrowing costs and monthly mortgage payments.

"You are likely to get the best rate you will possibly see, perhaps in your lifetimes through the majority of next year, but certainly, the earlier the better," said Smoke.

4. Rents will still hurt
Rent prices are expected to continue to climb in the new year, which means in most cities, buying will be cheaper than renting.

Even though mortgages could get more expensive, buying might still be the better deal.

Interest rates would need to rise to around 6.5% for the cost of buying to equal that of renting on a national level, according to Ralph McLaughlin, housing economist at Trulia.

U.S. Home Prices Rise Faster in August than July

U.S. single-family home prices rose in August at a slightly faster pace than in July and in line with expectations, a closely watched survey said on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 5.1 percent in August on a year-over-year basis compared with 4.9 percent in July and was in line with estimates for 5.1 from a Reuters poll of economists.

"A notable part of today’s economy is the continuing low inflation rate; in the year to September, consumer prices were unchanged," David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices, said in a release.

"One result is that a 5 percent price increase in the value of a house means more today than it did in 2005-2006, the peak of the housing boom when the inflation rate was higher. The rebound from the recent lows was faster than the 1997-2005 housing boom, and also much less driven by inflation.”

October Is the Best Month to Buy a Home?

Sellers are more motivated, and the price is right.

Move over location—there’s a new real estate mantra in town.

It turns out when you buy your home can be as important for your budget as where.

After reviewing more than 32 million real estate sales since 2000, RealtyTrac analysts have discovered October is the best month to close on a home purchase.

“On average, October buyers get a 2.6% discount below estimated market value,” says Daren Blomquist, RealtyTrac vice president. “It’s that middle month between the summer selling season and the holidays [when] people are trying to squeeze in a purchase or a sale.”

And a seasonal price discount isn’t the only motivating factor for buyers to consider.

We turned to real estate and money pros for more insights into why October is the time to sign on all those dotted lines.

Reason #1: Motivated Sellers Willing to Negotiate

“Home prices often drop in October as sellers realize they’re on the shoulder of the home-buying season,” says Sandra O’Connor, a North Carolina-based regional vice president of the National Association of Realtors.

Any sellers whose homes have been on the market since the summer will be especially motivated, adds Blomquist, because they are getting nervous. The result is an environment that gives buyers the upper hand in negotiating a deal.

House hunters also typically run up against less competition come October. Many families avoid the fall buying season because their kids have settled into school, which thins the crowds.

And with all four major professional sports in play, other would-be buyers may be tempted to stay home with their big-screen TVs rather than hit open houses.

Reason #2: The Potential of Rising Interest Rates

This fall, the possibility of a long-awaited interest rate hike is in the crisp air. And if one does occur, it will likely make it less affordable to buy, says Blomquist.

So if a new home is on your radar—and you’ve saved up to cover a down payment and closing costs—he suggests that you make your move sooner rather than later.

After all, as O’Connor notes, “The lower the rate, the more house [you] can afford.”

The 30-year fixed mortgage rate remains near historic lows for now. But keep in mind that the Fed is scheduled to meet again in late October and December 2015.

Reason #3: End-of-Year Tax Perks

The tax code generally incentivizes home ownership, explains O’Connor, who says the benefits are biggest in the early period of your mortgage, when you’re mostly paying interest that can be deducted.

To optimize your taxes, you’ll need to decide whether the standard or itemized deduction approach is best for you, says Ted Kleinman, a CPA in Redmond, Ore., as itemizing can sometimes work in your favor.

So get ready to do a little math.

Add up your new home’s interest and tax payments, and your mortgage insurance premium if you have one.

If you are considering adding energy-efficient upgrades like solar panels, you can write off 30% of the cost, thanks to the Residential Renewable Energy Tax Credit. (But it is set to expire in 2016, so act fast if you want to take advantage.)

Then add your valid housing deductions to your list of other potential write-offs to see how that number compares to your standard I.R.S. deduction: In 2015 it’s $12,600 for a married couple filing jointly, or $6,300 for a single person or a married person filing separately.

If the number is higher for itemizing, it may be a good reason to consider buying before the end of the year. Of course, you’ll want to check with your accountant to make sure this approach is right for you.

Reason #4: Cool Weather Exposes Systems Issues

As temperatures drop it’s easier to notice draftiness and other possible problems with a home’s insulation, heating and drainage systems.

A qualified HVAC inspector can assess not only if the unit is performing, but also evaluate the amount of wear and tear to help predict how much longer you can expect the system to last, adds O’Connor.

Checking systems can also give you an idea of how the property is being maintained. Even taking a look at the gutters to see how the owners deal with fall leaf debris can help you size up whether they are likely to have stayed on top of other types of home care and repair.

If these four reasons aren’t motivation enough, here’s another bonus of closing in October: You are likely to move in time to deck the halls with your favorite decorations.

“Holidays generally are a time for sharing,” says O’Connor, “and what could be better than observing traditions, or making new ones, in a new home!”

US Home Prices Rise Steadily in July, Lifted by Higher Sales

U.S. home prices rose at a solid pace in July, as would-be buyers competed for a diminished supply of available housing.

The Standard & Poor's/Case-Shiller 20-city home price index climbed 5 percent in July from a year earlier. That's up from a 4.9 percent annual pace in June.

Home prices rose in all 20 cities over the past 12 months. San Francisco posted the biggest gain of 10.4 percent, followed by Denver with 10.3 percent.

Steady job growth and an economic recovery in its seventh year have encouraged more Americans to buy homes. That lifted sales to an eight-year high in July. Yet those buyers have bid up prices in many areas because the number of homes for sale remains limited.

The current housing inventory is equal to 5.2 months of sales, below the six months that is typical in a balanced housing market.

Price gains were much smaller in many Eastern and Midwestern cities. Home prices were just 1.7 percent higher in Washington, D.C. compared with 12 months earlier, only 1.8 percent higher in Chicago, and up just 1.9 percent in New York.

Svenja Gudell, chief economist at real estate data firm Zillow, said the housing market is continuing to improve despite some conflicting trends. New home sales jumped to a seven-year high in August even as existing home sales slipped. Mortgage rates remain low, though it can be difficult for first-time buyers to qualify for a loan.

"The market is continuing to heal and find its footing in a new environment, one where highly local factors ... matter more than national trends," she said.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The July figures are the latest available.

Consistent price gains can make homeowners feel wealthier and more likely to spend, providing a boost to the economy. Higher home values also reduce the number of Americans who owe more on their mortgages than their homes are worth, a condition known as being "under water."

Still, housing faces several challenges in the coming months. Prices are rising at more than double the rate of wages, which have increased just 2.2 percent in the past 12 months. That is likely pricing many would-be buyers out of the market.

And while mortgage rates are still low, they could be headed up soon. Federal Reserve Chair Janet Yellen has indicated that the Fed may raise short-term rates for the first time in nine years before the end of the year. That would eventually push up mortgage rates.

Those trends may already be weighing on sales of existing homes. They slid nearly 5 percent in August from July's eight-year high to the lowest level since April, the National Association of Realtors said last week.

And fewer Americans signed contracts to buy homes in August. That suggests sales may slip further in the coming months. A signed contract typically precedes a completed sale by one or two months. Still, existing home sales are 6.2 percent higher than a year ago.

500 or More Houses Possible for Rural Site Near Blythewood

Some 500 houses could be allowed on a rural site near Blythewood. And while the developer and Richland County staff consider the potential subdivision to be an appropriate low-density development, some neighbors have concerns it will change the character of their community.

Drapac Group, a national and international real estate developer, hopes to develop homes on about 202 acres off Heins Road, west of its intersection with Langford Road and just east of Blythewood, near Richland County’s eastern edge.

Earlier this month, the Richland County Planning Commission recommended approval of a rezoning request that would allow the developer to build as many as 529 houses on lots of .45 acres or less. If that many homes were built, the subdivision could be one of the largest added in the area in recent years.

Attempts to reach Drapac officials for further details about the types of homes and how many they are planning were unsuccessful.

The rezoning request now moves to County Council for approval, with the first of three required votes to be taken Tuesday following a zoning public hearing.

The county’s land-use plan and desired development pattern for this area call for lower-density, single-family neighborhoods to act as a transitional area from rural to more medium-density development patterns. This proposed development would fit into the county’s plans for the area, county zoning administrator Geonard Price said.

But neighbors say that’s too dense.

At the Sept. 8 Planning Commission meeting, commissioners voted 6-3 to recommend that County Council approve the rezoning request, after hearing from some neighbors. Among their concerns:

▪ Potential light pollution from streetlights in the planned subdivision

▪ Effects on property values for larger parcel homeowners

▪ Traffic congestion locally and in Blythewood near the interstate

▪ The possibility of this large development being used to justify other large developments nearby.

Tod Little and his wife, Adele, live on seven acres across Heins Road from the proposed subdivision site.

The Littles have seen significant growth in the northeast corner of the county since moving from Lexington about seven years ago to escape traffic and congestion there, Tod Little said.

“(We) just wanted to have a little extra space and not feel like you’re on top of everybody,” he said. “I understand growth, and I understand all that, but I would like to think they would keep it more of a rural feel.”

Little said he’d like to see the developer build houses on larger lots, perhaps one acre or larger, and keep the houses shielded from view along Heins Road. He also worries, he said, that increased residential development could lead to more nearby commercial development.

Little did not attend the Planning Commission meeting but plans to speak at Tuesday’s zoning public hearing, he said.

Councilwoman Joyce Dickerson, who represents the district where the development would be located, said she needs more details about the project and more time to discuss it with the developers and the community. She said she hopes to defer the council’s first-reading vote until after a meeting can be had with the developer and interested community members.

“I know I’m not going to approve no 500 houses, I can tell you that right now,” Dickerson said. “This is really, really rural in that area. I would really have to look at this really, really closely. And I think the community needs to have the opportunity to have input as to the number of homes.”

Read more here: http://www.thestate.com/news/local/article35924130.html#storylink=cpy

Columbia Home Sales Up 19% in July

Greater Columbia home sales climbed nearly 19% in July compared with the same month in 2014, the South Carolina Association of Realtors reported.

The number of residential homes, condos and villas sold last month totaled 1,160 compared with 976 for July of 2014, the trade group said.

For the second quarter, home sales climbed 19.6% to 3,185 units compared with 2,662 for the second three-month stretch of 2014. Through the first half of the year sales are up 20.4% or 6,591 units over the first half of 2014.

Meanwhile, the median price for July rose 5.3% to $176,450 compared with $167,500 for the same month in 2014. Prices for the second quarter rose 9.5% to $174,000 compared with the second quarter of 2014 while for the first half prices rose 7.6% over the first half of 2014.

The sales pace remains brisk as the average number of days a home is on the market dropped 13.3% to 65 days in July compared with July 2014.

Statewide July market data showed new listings rose 6% to 10,141 while pending sales increased more than 7% to 6,502. Inventory shrank almost 6% to 40,625 units.

Prices moved higher as median sales price was up almost 8% to $180,000, while the number of days on market dropped 10% to 99 days and the months’ supply of inventory was down 18% to seven months.

“We're glad to see that many economic trends are continuing, revealing a stable housing market and even more opportunity for South Carolina's citizens to achieve the dream of homeownership,” said Nick Kremydas, CEO of the association.