August construction spending is up 7.1 percent over last year

For Release at 10:00 A.M. EDT, Tuesday, October 22, 2013

Joseph Huesman, Linnet Holland, or Trent Langley (301) 763-1605

AUGUST 2013 CONSTRUCTION AT $915.1 BILLION ANNUAL RATE

The U.S. Census Bureau of the Department of Commerce announced today (October 22, 2013) that construction spending during August 2013 was estimated at a seasonally adjusted annual rate of $915.1 billion, 0.6 percent (±2.1%) above the revised July estimate of $909.4 billion. The August figure is 7.1 percent (±2.3%) above the August 2012 estimate of $854.0 billion.
During the first 8 months of this year, construction spending amounted to $581.9 billion, 5.9 percent (±1.5%) above the $549.4 billion for the same period in 2012.

PRIVATE CONSTRUCTION Spending on private construction was at a seasonally adjusted annual rate of $640.5 billion, 0.7 percent (±1.2%) above the revised July estimate of $636.1 billion. Residential construction was at a seasonally adjusted annual rate of $340.2 billion in August, 1.2 percent (±1.3%) above the revised July estimate of $336.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $300.3 billion in August, 0.1 percent (±1.2%) above the revised July estimate of $299.9 billion.

PUBLIC CONSTRUCTION In August, the estimated seasonally adjusted annual rate of public construction spending was $274.5 billion, 0.4 percent (±3.3%) above the revised July estimate of $273.4 billion. Educational construction was at a seasonally adjusted annual rate of $63.8 billion, 1.3 percent (±5.9%) below the revised July estimate of $64.6 billion. Highway construction was at a seasonally adjusted annual rate of $80.6 billion, 0.1 percent (±7.4%) above the revised July estimate of $80.5 billion.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

What to do to apply for a mortgage

You don’t have to be a first time home buyer to wonder what needs to be done to apply for a mortgage.  If you haven’t owned a mortgage before, the application process may seem like a mystery.  If you have, some of the rules have changed.  They are going to change again after the first of the year.

Particular lenders may not need everything mentioned here, but it would be safe to assume that they will.  So build a file to collect all the documents and information.  

1. Credit self check:  They say knowledge is king and it is no less true here.  About three months before you apply for a mortgage, find your credit score and detailed history online with one of the many online services.  Check for erroneous information on the report, or items that are more than seven years old (10 with bankruptcy).  This will give you time to challenge the report and get the corrections made before you apply for a mortgage.  Keep all the paperwork in case the lender asks about it.  

2. Income: Roundup three years of income tax returns and W2s as well as pay stubs for the last three or four months. Most lenders will only require two years of tax returns.  With three years, if the loan officer wants more information, you are ready.  It is also the same with pay stubs, have three or four months worth instead of just two.  A year to date profit and loss statement might be required if you are self-employed.  

Keep the file up to date.  As the weeks progress, add the new documents, even after approval.  When you finally settle on a home and return to the bank, the lender will want to see an update on all documents.

3. Debts: Make sure all of your debts are listed and documented.  When the lender pulls your credit report, they will most likely find all of them.  It is up to you to provide account names and numbers, the amount owed and the what the monthly payment is on each account.  Remember to include not just credit cards, but car loans, student loans and other mortgages.  Have at least three months statements for each and, again, keep the file up to date.

4. Assets: Lenders love to see assets.  In this case, the more the merrier.  Pull together the last three statements for such things as retirement accounts, stock brokerage accounts, mutual funds, savings, checking, etc.  Don’t forget other property, business holdings and rental properties that you may own.

5. Gifts:  Many people receive money from family and friends to help them pay for a new home.  Lenders have less problems with that if it is a gift and not a loan.  Any money that shows up in your assets 60 - 90 days before appling, such as savings and checking accounts, document.  A letter from the provider that it is a gift and not a loan is the first step in documentation.

6. VA Loans: A Certificate of Eligibility (Form DD 214) is need if you are applying for a VA loan and not currently in the military.  For those that are still active, a letter from your commanding officer is needed.  

7. Divorce: Child support and alimony should be reported as income for the recipient and a debt for the provider.  Qualifying documents need to be provided on both sides.

8. Bankruptcy: Sometimes you can get a mortgage two years after bankruptcy if it is caused by a hardship such as a job loss or medical emergency.  That is, if you have establish good credit since.  Lenders require that all the documents for the bankruptcy be fully disclosed.  

9. Foreclosure: After a foreclosure you will need to wait at least two years and maybe as many as five before a lender will approve a mortgage.  Longer if you “walked-away” from a home loan.  As with other issues, lenders will want full documentation.

11.  Approval:  When you are approved, the lender should do two things.  First, they should issue a letter or memo stating that you are approved for a loan with the maximum amount indicated.  (When making an offer, have another stating that you are approved for only the amount of the offer.  But, that is for another blog post.)  Second, they should provide a good faith estimate of the cost of the loan and the worst case estimate on the closing cost.  This part is important.  Not only do you need to come up with whatever the down payment is at closing, you also need to come with cash for the closing cost.

11. Finally: Once you are approved, and have the letter from the bank, don't make any changes in your financial situation until you close on your home.  Don't purchase a car, take out another charge card or run up a balance on another.  Of course, unless an emergency comes up, then document it.  Any changes might just mean that you will fall out of formula and need to start over, or worse, get denied.

This is not a complete explanation of the application process.  There will be many things that come up that are specific to your individual situation.  But, the outline provides you with a great start to a both nervous and exciting time.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page. 

Should a home be renovated to improve selling price?

A question that comes up often when a client is considering placing their home on the market is should something be replaced or renovated in the home to improve the selling price?

The answer in the short run is yes to replace a broken or worn out item, but don’t renovate just to sell the home.

When buyers consider a home, they want to make sure everything is in working order.  If the water heater is making noises, if the garage door is bent and off track or, if the faucet in the bathroom is leaking then repair or replace it.  In some cases you can do this with a quality that may be less than the one that is being replaced, saving a little money.  If it is broken when buyers walk through the home during a showing, it will pull down the price of the home when an offer is made and provide a negotiating edge to the buyer.  Keep in mind, even if the buyer didn't notice it when they made the offer, the home inspector will pick it up - or at least should.  This will give the buyer a chance to submit a lower offer, or back out of the agreement altogether.

But, when it comes to renovating, don’t.  That is, unless you are going to live in the home after the renovation is completed for at least five years.  The National Association of Realtors (NAR) each year studies the issue.  They have found that of the top ten renovation projects, the best you can get in return is about 85% of the cost of renovation or major replacement back in the selling price.  As you can see from the graph below, sometimes you may only get back about 68%.

1. Entry Door Replacement (Steel) – 85.6%
2. Deck Addition (Wood) – 77.3%
3. Garage Door Replacement – 75.7%
4. Minor Kitchen Remodel – 75.4%
5. Window Replacement (Wood) – 73.3%
6. Siding Replacement (Vinyl) – 72.9%
7. Attic Bedroom – 72.9%
8. Window Replacement Vinyl – 71.20%
9. Basement Remodel – 70.3%
10. Major Kitchen Remodel – 68.9%

If you live in the home for about five years after you complete the project, you can consider the difference between the cost of the renovation and the resulting effect on selling price as your enjoyment return.  Living with the improvement makes for a better living space for the time that you stay.  Then, when you sell the home, the additional value makes sense, or in this case, dollars.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Will a bank write a mortgage with no money down? YES!

Every buyer wants to know how much money they need to get a mortgage.  It is a fair question. Lending institutions want to be confident that the home buyer will do everything they can to stay current on their mortgage payments.  One of the things that raise their confidence is for the buyer to have some “skin” in the game.  In other words, if the buyer has his own money invested in the home, it is more likely that they will stay current.

That is not to say that lending institutions will not take a risk when there is good reason.  Such as with government back mortgages from the Federal Housing Administration (FHA).  If the lender follows a few simple rules, the government will back a mortgage with as little as 3% down.

Well, will a bank write a mortgage for nothing down?

“Our bank has a mortgage called, ‘Destination Home Loan’,” Jason Stiltner from Charter One Bank told me.  “Charter One each year offers a certain number of them to home buyers in the communities we serve,” Stiltner continued.

Stiltner told me that the product enables clients to purchase a home without a down payment.  What is even better, if the buyer’s agent gets the seller to provide concessions at closing, the buyer could pay nothing at closing.  Even getting their earnest money deposit back.

Here are Charter One’s details for qualification:

Either;

• earn less than the average income for the area that you are buying; or,

• purchase a home in an area that is in a low or moderate income area, regardless of income;

Additionally, have;

• a credit score of 660 or better; and,

• a debt to income ratio at or below 45%.

What’s the catch?  Stiltner said Charter One has no catch.  The bank does this because they are dedicated to the communities they serve.  One of the ways they can illustrate this to the community and the government is by providing these mortgages.  

To find out if you qualify, contact Jason Stiltner from Charter One Bank.  He will then review your personal situation and options.  If you qualify, he will start you on the path to homeownership when you might have thought you were out of range.  His phone number is 248-928-6213 and his email is jason.stiltner@charteronebank.com. If you reference this blog post, he will know how you found out about it.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

There isn't a real estate bubble in southeast Oakland County

There are some concerns that the current rise in the housing market is an indication of a "bubble" in real estate.

Here is what Daily Real Estate News wrote on October 8, 2013...

"Robert Shiller... recent(ly) comment(ed) that the housing market was starting to look “a little bubbly.” Shiller, who co-developed the S&P/Case-Shiller Composite 10 Home Price Index, has said he’s concerned some markets across the country may be over-correcting and starting to resemble a housing bubble. "

The average sale price of homes in Berkley, Ferndale, Royal Oak, Madison Heights and Berverly Hills have risen 20 to 40 percent in second quarter over last year.  That is very strong growth year over year. (Follow the links for details on each community: Berkley, Ferndale, Royal Oak, Madison Heights and Berverly Hills).  No market can sustain that kind of growth for long and not burst.

But, Daily Real Estate News continues...

"However, a group of housing experts disagreed during the ABS East 2013 conference. Price appreciation is slowing, says Mark Fleming, CoreLogic’s chief economist. Fleming says that the rapid growth in appreciation in previous months was a correction after an overshoot in prices falling during the housing crisis."

That follows in the local market also.  The average sale price for all the communities mentioned above have experienced a slow down in growth over third quarter last year.  While still maintaining the gains made over last year, the growth is showing signs of leveling off at a more sustainable growth rate.

There are other reasons real estate will avoid the bubble that was so destructive to families and communties a few years ago, at least in the short and medium run.  There are changes in rules for lending institutions, the economy is improving at a more reasonable pace and, of course, there is the collective memory that make all of us a little more cautious; to name a few.

As I say every time because it is true, no one can know what is going to happen for sure.  But, indicators make this market look like it is going to last.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Ferndale Real Estate Market Report for Third Quarter 2013

Ferndale Real Estate Market Report, Third Quarter 2013

By the numbers:

	3rd Qrt 2012	2nd Qrt 2013	3rd Qrt 2013
Average Sale Price	$72,642	$107,304	$110,447
Average Sq Foot	1108	1202	1185
Cost per Sq Foot	$65	$89	$93
Number of sales	132	147	129

• The 3rd quarter real estate market in Ferndale Berkley is up a very big 52% over the same period last year
• There was a modest 2% increase over last quarter as the market begins to normalize
• The number of houses sold is down over last year and the square footage is up indicating that those with larger homes were taking their profit

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Beverly Hills Real Estate Market Report, Third Quarter 2013

Beverly Hills Real Estate Market Report, Third Quarter 2013

By the numbers:

	3rd Qrt 2012	2nd Qrt 2013	3rd Qrt 2013
Average Sale Price	$277,341	$300,890	$314,639
Average Sq Foot	2,145	2,110	2,110
Cost per Sq Foot	$129	$142	$149
Number of sales	61	43	102

• Like other communities in southeast Oakland County, the real estate market in Beverly Hills continues to improve
• Average sale price over last year is up 13% over last year
• Average sale price is up almost 5% over last quarter
• The growth of the market has been more modest because it didn’t fall as far over the last couple of years
• While the number of homes sold in Beverly Hills fell in 2nd quarter this year over last, it more than double in 3rd quarter

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

Madison Heights Real Estate Market Report, Third Quarter 2013

Madison Heights Real Estate Market Report, Third Quarter 2013

By the numbers:

	3rd Qrt 2012	2nd Qrt 2013	3rd Qrt 2013
Average Sale Price	$53,267	$71,858	$75,234
Average Sq Foot	1,062	1,130	1,111
Cost per Sq Foot	$50	$63	$67
Number of sales	115	117	109

• The real estate market in Madison Heights is up a big 41% over last year
• There was a 5% increase over last quarter
• The number of houses sold stayed near the same over all three quarters in the report
  If you would like more details about the Madison Height's report or about the numbers for any community, please leave a comment.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.