Atlanta Housing Source

I have been telling folks that home demand was down with kids living with parents longer, financial issues and job losses have families doubling up and multiple generations living together to get past the Greatest Depression.  Now the statics that support me are told in this great article from Alan J. Heavens.  We are down at least 2 million households in the last two years according to his material.  Enjoy reading, Mark.

Housing glut blamed on drop in people forming households
By Alan J. Heavens

Inquirer Real Estate Writer

U.S. household formations are at their lowest since 1947, data from the Census Bureau show. And that’s helping to keep the supply of unsold homes at near-record levels nationwide, even though relatively few houses are being added to the inventory.

Between March 2009 and March 2010, the number of households rose just 357,000, according to the census data. In the previous 12 months, the number increased only 398,000, the third-smallest increase on record since World War II.

Between 2002 and 2007, before the economy started on its downward trajectory, household formations averaged 1.3 million a year, U.S. census data show.

“That’s the consequence of the consumer fear of what’s happening with the economy and with the job market,” said Lucien Salvant, a spokesman for the National Association of Realtors.

“When people are afraid of losing their jobs or not being able to get into the job market, they are not thinking about buying a home,” Salvant said. “Many opt to stay at home with parents, or to share rentals with friends.”

The nation’s gross vacancy rate – the proportion of housing units that are vacant – stood at 14.5 percent at the end of the second quarter of 2010, census data show.

In a well-functioning economy, household formations “would be closer to 1.25 million,” said Mark Zandi, chief economist of Moody’s Analytics in West Chester.

During normal times, builders need to add about 1.7 million houses a year to meet underlying demand stemming from, among other things, the need for replacement homes and the desire for second homes, as well as conversions from nonresidential to residential uses and increases in the number of households.

For example, about 250,000 new homes are needed per year to replace houses that are destroyed by fires and natural disasters or that wear out from neglect or old age. Demand for second homes combined with other miscellaneous factors accounts for 50,000 to 100,000 new houses a year.

Household growth typically requires 1.3 million to 1.4 million units.

“The sharp drop in household formation largely explains why the housing glut remains stubbornly high, despite the plunge in housing starts in recent years,” said housing economist Patrick Newport, of IHS Global Insight in Lexington, Mass.

Two major sources of household formation – immigration and marriage – remain well below the averages of recent years.

The National Center for Health Statistics reports that the number of marriages per thousand population fell from 8.2 in 2000 to 6.8 in 2009. Divorces per thousand population fell from 4.0 in 2000 to 3.4 in 2009.

There are no hard data on “doubling up” – young people sharing rentals or moving in with their parents in a tight job market – though anecdotal evidence indicates the latter has become more commonplace in recent years.

During the late 1990s and in the first years of this decade, the housing industry banked on immigration for a good part of its growth.

Between 1990 and 2000, the U.S. population grew by nearly 33 million, with almost half of that gain attributable to immigration, according to data provided in 2003 by James Johnson Jr., a professor at the Kenan-Flagler Business School at the University of North Carolina in Chapel Hill.

In the 1990s, census data show, immigrants accounted for 250,000 household formations a year. Immigrants typically rent for their first few years in this country, housing economists say. Then, after becoming established, they become a major factor in the for-sale marketplace.

Newport believes that a drop in immigration might have played a greater role early in the recession than it did later on. In 2009, census data show, households headed by the native-born under age 35 fell by 338,000, indicating that doubling up was the larger contributor.

The number of households headed by those ages 15 to 24 fell 124,000 (students moving back in with parents), while households with six or more people rose 355,000, an 8 percent increase.

A common misconception, Newport said, is that foreclosures account for the oversupply of houses.

“A foreclosure or a bank taking possession of a home,” he said, “does not by itself add to the housing glut.”

If a household vacates a home and moves into a rental unit, the housing supply is unchanged. Supply increases, however, if one household moves in with another, Newport said, or if its members become homeless.

——————————————————————————–

Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

(c) 2010, The Philadelphia Inquirer.
Distributed by McClatchy-Tribune Information Services.

At the end of the month, there were 39,129 single family residences actively for sale on the FMLS.   In the prior 30 days 2,386 homes had sold for an average sales price of $203,114.  The average sales price represents selling at 93.3% of the average listing price.  The average days the homes were on the market before they sold were 89 days.

Brought to you by Mark Lackey, Assoc Broker, EcoBroker with Atlanta Housing Source at Solid Source Realty – 404.886.8789 – mark@AtlantaHousingSource.com

At the end of the month, there were 5,529 single family residences actively for sale on the FMLS.   In the prior 30 days 391 homes had sold for an average sales price of $230,305.  The average sales price represents selling at 93.7% of the average listing price.  The average days the homes were on the market before they sold were 91 days.

Brought to you by Mark Lackey, Assoc Broker, EcoBroker with Atlanta Housing Source at Solid Source Realty – 404.886.8789 – mark@AtlantaHousingSource.com

In an attempt to be able to manage how properties are maintained and kept up, Dekalb is boldly stepping up, and raising an additional $2.45 million in taxes.   Read the AJC article about the latest regulations.

DeKalb launches foreclosure registry
By Megan Matteucci

The Atlanta Journal-Constitution

DeKalb County has started cracking down on absentee owners of foreclosed properties.

The county launched its foreclosure registry this week as a way to hold property owners accountable. The registry is designed to protect neighborhoods from becoming blighted as a result of a lack of maintenance and security, county spokesman Burke Brennan said.

The registry, which will require a $175 fee, will be online and include owners’ contact information.

Creditors or mortgagees who foreclose on a property have up to 30 days following the foreclosure sale to register the property with the county. They also must be in compliance with all code enforcement regulations.

Anyone who does not registry is subject to a $1,000 fine per day.

DeKalb has more about 14,000 foreclosed properties. Fulton and Gwinnett are the only other counties in Georgia with more foreclosures than DeKalb, Brennan said.

Registration forms are available at www.dekalbcountyga.gov/foreclosureregistry.

Keeping you updated on events around Peachtree Corners check out this article in the AJC Lite.

By David Wickert

The Atlanta Journal-Constitution

Armed with a new study that shows that an incorporated Peachtree Corners would be financially viable, a citizens group plans to launch a new effort to incorporate the neighborhood north of Norcross.

Proponents are drafting a proposed charter for a “city lite” that would provide a few key services such as zoning and code enforcement.

Many details remain to be worked out. And state legislators, voters and Gwinnett County officials must still approve the plans. But the idea of incorporating Peachtree Corners appealed to many of the roughly 150 people who attended a community meeting Monday night.

“I think it’s definitely something we need to put in place,” said resident Nat Burton. “It’s a matter of control. Do we want to control our destiny?”

Residents have talked about incorporating Peachtree Corners for years. Many want to ensure the area maintains its distinctive character and isn’t swallowed up by a neighboring city, like Norcross.

But to date the talk has not led Peachtree Corners to become Gwinnett County’s 16th city.

In 2005 members of the United Peachtree Corners Civic Association voted overwhelmingly against incorporation. And earlier this year legislation that would have allowed communities like Peachtree Corners to provide limited services – a sort of “city lite” – failed to clear the legislature.

Now advocates may try a new tactic. They’re pressing for local legislation in the next session of the General Assembly that would allow Peachtree Corners to incorporate and provide limited services. The local legislation would need the approval of the Gwinnett County delegation, but not the full legislature.

Rep. Tom Rice, R-Norcross, supports the legislation. He said he wants to ensure residents get a chance to vote on incorporation.

If the legislation passes and is signed by the governor, Peachtree Corners residents would vote on incorporation as soon as next year. The final hurdle: approval by Gwinnett County commissioners.

The civic association is drafting a proposed charter that would spell out city services and other particulars.

Association President Mike Mason said Peachtree Corners would provide only land-use planning and zoning services, code enforcement and trash collection, leaving other services such as police and fire protection to Gwinnett County.

On Monday the civic association unveiled a study by the Carl Vinson Institute of Government at the University of Georgia that shows an incorporated Peachtree Corners could generate enough revenue to pay for those basic services and cover other costs like elections and administration.

The study assumed the city would raise money from planning and zoning fees, utility franchise fees and property taxes. Based on the cost of services for similar cities around the region, the study concluded that Peachtree Corners could run a surplus of about $2.3 million annually.

According to the study, Peachtree Corners had an estimated 2008 population of more than 34,000.

Support for incorporation is not universal. Opponents in the past have objected to additional property taxes and have raised other concerns. And on Monday some residents quizzed the study’s author on his financial assumptions.

Mason said a public vote on incorporation will be crucial to its success or failure.

“We want the people to say, we love the idea (or) we don’t want the idea,” he said.

Enough with the doom and gloom about homeownership. Brett Arends explains why owning a home is a good thing.
· By BRETT ARENDS

Enough with the doom and gloom about homeownership.

Sure, maybe there’s more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough. This is what “capitulation” looks like. Everyone has given up.

After all, at the peak of the bubble five years ago, Time had a different take. “Home Sweet Home,” declared its cover then, as it celebrated the boom and asked: “Will your house make you rich?”

But it’s not enough just to be contrarian. So here are 10 reasons why it’s good to buy a home.

1. You can get a good deal. Especially if you play hardball. This is a buyer’s market. Most of the other buyers have now vanished, as the tax credits on purchases have just expired. We’re four to five years into the biggest housing bust in modern history. And prices have come down a long way– about 30% from their peak, according to Standard & Poor’s Case-Shiller Index, which tracks home prices in 20 big cities. Yes, it’s mixed. New York is only down 20%. Arizona has halved. Will prices fall further? Sure, they could. You’ll never catch the bottom. It doesn’t really matter so much in the long haul.

Where is fair value? Fund manager Jeremy Grantham at GMO, who predicted the bust with remarkable accuracy, said two years ago that home prices needed to fall another 17% to reach fair value in relation to household incomes. Case-Shiller since then: Down 18%.

2. Mortgages are cheap. You can get a 30-year loan for around 4.3%. What’s not to like? These are the lowest rates on record. As recently as two years ago they were about 6.3%. That drop slashes your monthly repayment by a fifth. If inflation picks up, you won’t see these mortgage rates again in your lifetime. And if we get deflation, and rates fall further, you can refi.

3. You’ll save on taxes. You can deduct the mortgage interest from your income taxes. You can deduct your real estate taxes. And you’ll get a tax break on capital gains–if any–when you sell. Sure, you’ll need to do your math. You’ll only get the income tax break if you itemize your deductions, and many people may be better off taking the standard deduction instead. The breaks are more valuable the more you earn, and the bigger your mortgage. But many people will find that these tax breaks mean owning costs them less, often a lot less, than renting.

4. It’ll be yours. You can have the kitchen and bathrooms you want. You can move the walls, build an extension–zoning permitted–or paint everything bright orange. Few landlords are so indulgent; for renters, these types of changes are often impossible. You’ll feel better about your own place if you own it than if you rent. Many years ago, when I was working for a political campaign in England, I toured a working-class northern town. Mrs. Thatcher had just begun selling off public housing to the tenants. “You can tell the ones that have been bought,” said my local guide. “They’ve painted the front door. It’s the first thing people do when they buy.” It was a small sign that said something big.

5. You’ll get a better home. In many parts of the country it can be really hard to find a good rental. All the best places are sold as condos. Money talks. Once again, this is a case by case issue: In Miami right now there are so many vacant luxury condos that owners will rent them out for a fraction of the cost of owning. But few places are so favored. Generally speaking, if you want the best home in the best neighborhood, you’re better off buying.

6. It offers some inflation protection. No, it’s not perfect. But studies by Professor Karl “Chip” Case (of Case-Shiller), and others, suggest that over the long-term housing has tended to beat inflation by a couple of percentage points a year. That’s valuable inflation insurance, especially if you’re young and raising a family and thinking about the next 30 or 40 years. In the recent past, inflation-protected government bonds, or TIPS, offered an easier form of inflation insurance. But yields there have plummeted of late. That also makes homeownership look a little better by contrast.

7. It’s risk capital. No, your home isn’t the stock market and you shouldn’t view it as the way to get rich. But if the economy does surprise us all and start booming, sooner or later real estate prices will head up again, too. One lesson from the last few years is that stocks are incredibly hard for most normal people to own in large quantities–for practical as well as psychological reasons. Equity in a home is another way of linking part of your portfolio to the long-term growth of the economy–if it happens–and still managing to sleep at night.

8. It’s forced savings. If you can rent an apartment for $2,000 month instead of buying one for $2,400 a month, renting may make sense. But will you save that $400 for your future? A lot of people won’t. Most, I dare say. Once again, you have to do your math, but the part of your mortgage payment that goes to principal repayment isn’t a cost. You’re just paying yourself by building equity. As a forced monthly saving, it’s a good discipline.

9. There is a lot to choose from. There is a glut of homes in most of the country. The National Association of Realtors puts the current inventory at around 4 million homes. That’s below last year’s peak, but well above typical levels, and enough for about a year’s worth of sales. More keeping coming onto the market, too, as the banks slowly unload their inventory of unsold properties. That means great choice, as well as great prices.

10. Sooner or later, the market will clear. Demand and supply will meet. The population is forecast to grow by more than 100 million people over the next 40 years. That means maybe 40 million new households looking for homes. Meanwhile, this housing glut will work itself out. Many of the homes will be bought. But many more will simply be destroyed–either deliberately, or by inaction. This is already happening. Even two years ago, when I toured the housing slump in western Florida, I saw bankrupt condo developments that were fast becoming derelict. And, finally, a lot of the “glut” simply won’t matter: It’s concentrated in a few areas, like Florida and Nevada. Unless you live there, the glut won’t have any long-term impact on housing supply in your town.

Write to Brett Arends at brett.arends@wsj.com

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September 1, 2010–The Federal Housing Administration (FHA) is giving homeowners and buyers until October 4 to lock in a low monthly insurance premium, according to Gibran Nicholas, chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. “After October 4, the monthly insurance premiums on FHA loans will increase by over 63%.”

What does this mean for home buyers?
A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $148.01.

“In this example, the home buyer would lose $59.55 per month, or $7,146 over a 10-year timeframe,” Nicholas said. “Although the upfront mortgage insurance premium is going down after October 4, the real impact to the home buyer is actually a net increase in their out of pocket costs because the monthly premium is going up by 63%. Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so homebuyers rarely pay the upfront premium out of pocket. On the other hand, the increase in the monthly premiums will be paid right out of the home buyer’s pocket with their mortgage payment each month.”

Ironically, home buyers who plan to be in the mortgage for less than three years and decide to pay the upfront fee themselves (instead of having the seller pay it for them), may actually save money by waiting until after October 4 to apply for an FHA loan.

“Home buyers with a short term time horizon may actually benefit from this change because the upfront premium will be reduced to 1% from 2.25%,” Nicholas said. This change will impact over 30% of the home buyers in today’s market who use FHA-insured financing. Home buyers considering an FHA loan should find and contact a CMPS professional in their area to discuss their options and what this means for their situation.

Also, you can follow CMPS Institute on Twitter to stay updated on these and other mortgage and housing industry developments.

When it was announced that the Rolling Stones were to play Atlanta in the Fox Theatre in the 70′s I spent the night in line to buy tickets with about a hundred folks.   Now, when they announce that there is housing available that someone else pays the rent for you 30,000 show up. Some spent days. Read the article below where riot police and water bottles were dispatched.

The Atlanta Journal-Constitution

Thirty thousand people showed up to receive Section 8 housing applications in East Point Wednesday, suffering through hours in the hot sun, angry flare-ups in the crowd and lots of frustration and confusion for a chance to receive a government-subsidized apartment.

The massive event sometimes descended into a chaotic mob scene filled with anger and impatience. Some 62 people needed medical attention and 20 of them were transported to a hospital, authorities said. A baby went into a seizure in the heat and was stabilized at a hospital. People were removed on stretchers and when a throng of people who had been waiting hours in a line were told to move to another line, people started pushing, shoving and cursing, witnesses said.

Still, officials of East Point declared the day a success. Nobody was arrested and nobody was seriously injured, they said. It was an assessment roundly challenged by many of the people who had to go through it.

Kim Lemish, executive director of the East Point Housing Authority, said the event marked the first time the city has offered Section 8 housing applications since 2002. The waiting list that lasted eight years had depleted, she said, and the agency was beginning a new one. So people braved all the physical difficulties just to get on a waiting list that could keep them waiting for years.

Lemish said the agency had expected about 10,000 people but three times as many showed up. Many were just accompanying those looking for an application. Some 13,000 applications were handed out.

Concern is rising that a similar scene could occur Thursday when the housing authority of this small city begins accepting the completed applications. Wednesday’s event was only to hand out the paperwork. The housing authority will begin accepting applications at 9 a.m.

Some of the crowd waited for two days at the Tri-Cities Plaza shopping center. As the temperature rose Wednesday, people fell ill.

Sgt. Cliff Chandler, spokesman for the East Point Police Department, said a toddler was treated earlier in the morning for “some type of seizure,” Chandler said.

“A lot of it was heat and some was health-related issues” such people not taking their medications, Chandler said.

By the time everyone had left around 2 p.m., the temperature had climbed into the low 90s.

East Point police, some wearing riot helmets, were patrolling the area. Firefighters and EMTs were attending to people who were overheating in the sun. Police from College Park, Hapeville, Fulton County and MARTA assisted in crowd control.

Chandler said there were no arrests.

Felecia McGhee told the AJC she arrived around 6:30 a.m. Wednesday. She said the major problem began when people started breaking into the line and then officials handing out applications started moving those areas and those line breakers. She said she saw at least two small children trampled when the crowd rushed the building where the applications were to be handed out.

“It’s a real mess out here,” she said.

Channel 2 Action News reporter Mike Petchenik said fights were breaking out and police had to stop people who were storming the door.

Channel 2 reporter Tom Jones said, “There are thousands, I mean, thousands of people here. I’ve seen people fall out from the heat.”

By late morning the crowd had thinned considerably and people were walking up and getting their applications without delay. But just before the 1 p.m. deadline, a line of about 200 people had formed. Shortly after 1 p.m., several people ran across the parking lot to get in line but were told by police that the line was closed.

Emergency personnel brought in a pickup truck full of bottled water and were handing it out to the crowd.

A sign on the door of the office explained that only applications were being handed out.

“The housing authority will be issuing applications Wednesday, August 11, starting at 9 a.m. Everyone in line by 1 p.m. on the 11th will receive an application. … No Section 8 vouchers are available at this time. There are no public housing units available at this time. You’re applying for the waiting list only.”

The Housing Choice Voucher Program, called Section 8, subsidized the rents of low-income families living in apartments and houses that are privately owned. The federal program makes up the difference in rent that the poor can afford and the fair market value for each area.

The federal government has specific standards for its subsidized properties but at the same time landlords are assured an income.

Only families with incomes no more than half the median income for the area qualify. The median income for the East Point area is less than $32,000, according to Census data. It is up to the renter to find a place that meets HUD standards, which includes being 90 percent to 110 percent of the “local fair market rent.”

– Reporters Mike Morris and Rhonda Cook contributed to this story.

The article by Reuters reports on the National Association of Realtors Survey. The South is the only region where pending sales are up. I am doing my part to help.  We  sold 4 homes in June to help the cause.

Pending Home Sales Sink 2.6 Percent in June
Published: Tuesday, 3 Aug 2010 | 11:05 AM ET

By: Reuters
Contracts for pending sales of previously owned U.S. homes fell to a record low in June as buyers sat on the sidelines, a survey from the National Association of Realtors showed on Tuesday.

The Realtors said its Pending Home Sales Index, based on contracts signed in June, fell to a record low 75.7 from a revised 77.7 in May. Economists polled by Reuters had expected a rise of 0.6 percent.
“We really need to see stronger job creation to have a meaningful recovery in the housing markets,” said NAR chief economist Lawrence Yun, adding “there could be a couple of additional months of slow home-sales activity before picking up later in the year” if the job market improves.
The June decline followed a 30 percent drop in May after a popular tax credit expired at the end of April.
The index was 18.6 percent lower than in June 2009 and fell in three of four regions compared to the prior month.
Contracts rose 3.7 percent in the South, the country’s largest region, but dropped by 0.2 percent in the West, by 12.2 percent in the Northeast and by 9.5 percent in the Midwest.
Copyright 2010 Reuters.