The recent massive data breach of up to 70 million customers’ credit and debit cards at stores such as Target could have a spill-over effect that might derail real estate transactions. Victims may face damaged credit files and lower credit scores in the coming months that could disqualify them from a mortgage – at least until they are able to fully document the problem, the Los Angeles Times reports.
Even more customers are at risk too, with recent data breaches reported at Neiman Marcus affecting 1.1 million customers, and at least six other retailers also reporting breaches.
Target and Neiman Marcus are offering their customers free credit-monitoring services. But credit experts say many people have not yet taken advantage of it, possibly because they’re not aware of the offer.
The data thefts could put some consumers at risk for identity theft. While victims won’t likely be held liable for any unauthorized debts made on their credit cards, their credit reports and credit scores can be damaged for weeks or even much longer if they fall victim to identity theft.
These data thefts have the potential to create “havoc on credit files for as long as it takes for the consumer to document [that] the accounts are due to identity theft and get them removed from the file,” says Terry Clemans, executive director of the National Consumer Reporting Association, a trade group that represents independent credit-reporting companies that serve the mortgage industry. “The impact on credit scores, although short term, is devastating because they are current defaults and [trigger] a big hit to the score. With the sizes of the breaches, this could be painful for a long time."
Credit experts say that home sales could be derailed by the sudden appearance of new debts on buyers’ credit reports. Even if borrowers say they are a victim of identity theft, they may still find the transaction put on hold as bureaus attempt to repair and verify the reports. That could cause buyers to miss contractual deadlines with the home seller, and possibly even prevent the transaction from going through, the Los Angeles Times reports.
source: Los Angeles Times
In 2013, home flips snagged sellers a tidy profit. But the trend may not continue.
RealtyTrac's Home Flipping Report for the fourth quarter of 2013 showed single-family home flips were up 16 percent from 2012 and up 114 percent from 2011. The average gross profit for a home flip—defined as a home being purchased and subsequently sold again within six months—was $58,081 for all U.S. homes flipped in 2013, up from an average gross profit of $45,759 in 2012. The average gross profit for homes flipped in the fourth quarter was even greater, at $62,761.
But while profits are strong in flipping right now, according to Housingwire, "the market may be peaking." Flips accounted for 3.8 percent of all sales in the fourth quarter, down slightly from the third quarter and down from 7.1 percent year-over-year. Housingwire reports that the diminishing availability of foreclosures may make it difficult for investors to find properties to flip in the coming year.
Major markets with big year-over-year decreases in home flipping included Philadelphia (down 43 percent) and Phoenix (down 32 percent).
Investors have a new target in real estate: undeveloped land. They're snatching up undeveloped land heavily discounted in bankruptcy proceedings from developers and banks that foreclosed on the builders once they ran out of money for their projects, Reuters reports.
The investors then resell the land for up to 20 percent or more returns on their investment. Or, in a buy-and-hold strategy, the investors partner with homebuilders to develop the land.
"We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery," Michael Barr, a Paulson & Co. portfolio manager, told Reuters. "Land is the highest-returning component of the homebuilding equation."
Investors find the most attractive land to buy is a parcel that already has all the planning permissions in place to start construction. Otherwise, the approval process for building on the land from local and state agencies can be costly and timely.
The percentage of young adults ages 18 to 34 living with parents or parents-in-law has risen sharply since the late 2000s, according to the most recent American Community Survey. One in three young adults – or more than 24 million – lived in homes of their parents or their parents-in-law in 2012. In 1990 and 2000, only one in four young adults lived with parents.
“Young adults aged 25 to 34 traditionally represent about half of all first-time home buyers,” notes the National Association of Home Builders in its blog, Eye on Housing. “Their delayed willingness and ability to leave parental homes and strike out on their own undoubtedly contributed to suppressing housing demand further during the Great Recession.”
Rising college costs, high unemployment, and unstable incomes are all sending and keeping more young adults home.
States with largest unemployment rates tend to have the most young adults living with their parents, according to the study. But even as unemployment rates began to decline, the percentage of young adults living at home remains high in states such as California and Florida.
Three Northeast states have the nation’s highest share of young adults living with their parents: New Jersey (45 percent); Connecticut (42 percent); and New York (41 percent). California and Florida follow with just slightly under 40 percent.
Meanwhile, the District of Columbia – known for having a stable job market – and North Dakota have some of the lowest percentages of young adults living at home, both under 20 percent.
“Declining shares of young adults living with parents in some states – Rhode Island, Montana, Wyoming, Maine, Delaware and New Mexico among others – could be one of the early signs that pent-up housing demand may finally start turning into realized housing demand,” the NAHB notes.
source: National Association of Builders’ Eye on Housing
The number of homes sitting empty across the country remains high. The year-round vacancy rate reached 10.2 percent of total housing units, the Department of Commerce’s Census Bureau data shows.
In the fourth quarter, the national vacancy rate for rental housing was at 8.2 percent, while 2.1 percent for home-owner housing. Vacancy rates are highest in Detroit, Las Vegas, several Florida metros, and other Sunbelt markets.
The Census Bureau also reported the home ownership rate reached 65.2 percent in the fourth quarter of 2013 – 0.2 percentage points lower than year-ago levels.
The home ownership rate is rising in the Midwest and South; both regions have home ownership rates above the national average. For example, the Midwest saw its home ownership rate grow the most, increasing by 2.2 percent in the fourth quarter of 2013. That follows a 1.8 percent increase in the fourth quarter of 2012.
Meanwhile, the West is seeing home ownership rates fall and the Northeast is seeing its home ownership rate fluctuate greatly from quarter to quarter.
source: HousingWire and Economists’ Outlook blog
Cash buyers are sending home values down much lower than they otherwise would be, suggests a new survey by Campbell Inside Mortgage Finance, which polled more than 2,500 real estate agents nationwide.
In its Housing Pulse Tracking Survey, the company found that investors accounted for one out of three real estate transactions last month, and about 74 percent of those purchases by investors were made using all cash.
“Investors have an over-sized command on the market since their ability to pay cash in the majority of transactions puts undue downward pressure on home prices,” an article at Housing Predictor notes about the study.
Cash buyers can be attractive to home sellers, banks, and mortgage companies, since they do not usually come with contingencies, require extra time to secure financing, and tend to move more quickly to closing. As such, cash buyers tend to make purchases at lower prices than those who may need financing or come with contingencies.
source: Housing Predictor
Sinkholes are a lot more common than many home owners realize—particularly in Florida, according to CoreLogic, a real estate analytics firm.
In an analysis, Florida appears to be most at risk for sinkholes, with 15,000 verified sinkholes. Pasco County—along the West Coast of Florida—has about 6,000 of those sinkholes, according to CoreLogic.
Across Florida this time of year, it's the start of what's unofficially considered the "sinkhole season," state geologist Jonathan Arthur said. It coincides with the beginning of the state's rainy season and usually lasts until the end of summer.
"Florida is famous for bugs, alligators, pythons, hurricanes and now sinkholes," said Larry McKinnon, a Hillsborough county sheriff's office spokesman. "I think our salvation is that for most of the time, our weather is picture-perfect."
But it's also the weather — along with man-made factors — that exacerbate sinkholes, experts said.
Arthur said February is usually when the state is at its driest, but it's also the start of the rainy season. Acidic rain can, over time, eat away the limestone and natural caverns that lie under much of the state, causing sinkholes. Both extremely dry weather and very wet weather can trigger sinkholes, he said.
"An extensive drought can cause soil and sediment over a cavity to be extremely dry and collapse," said Arthur.
On the other hand, following Tropical Storm Debby in 2012, dozens of sinkholes formed in counties north of Tampa because of the rain.
"It's important to note that not all sinkholes are prone to a sudden collapse like this, and they all obviously represent various levels of risk to people in the area," CoreLogic writes. "It's also interesting to know, however, that general homeowners insurance often does not cover sinkhole losses."
source: HousingWire, MSNnews.com