Gino Blefari


Gino Blefari
Senior Vice President of HSF Affiliates
HomeServices of America, Inc

The number of pending home sales was up substantially in May from April, but remained below average for the same month a year ago. What this means is the housing market is gaining steam as the year goes on, but we’re still in a slower market compared with last year.

The numbers came out in the National Association of Realtors’Pending Home Sales Index this week. The index, which tracks contract signings and provides a forecast of sales to come, increased 6.1% to 103.9 in May from 97.9 in April. It was 5.2% below May 2013.

Of note was that pending sales saw the largest monthly gain in May since April 2010.

More good news was that pending sales were not isolated in certain regions. The pending sales index in the Northeast climbed 8.8% to 86.3 in May, and increased 6.3% in the Midwest to 105.4. Meanwhile, the index was up 4.4% in the South to 117, and up 7.6% in the West to 95.4.

Where will this lead us at the end of the year and going into 2015?

NAR’s economist believes the market will continue to gain steam, though not enough to offset the sluggish beginning of the year. So while we may see a year with overall fewer home sales, we will see a market that’s likely gaining steam at a faster pace by early 2015.

We of course, also know that the most relevant market activity is the most local. This means that some of our local markets – like those in the San Francisco Bay Area and Silicon Valley – will likely end the year on some record highs. But at the same time, other local markets through the Midwest and South, will be in good shape but potentially below last year’s levels.

It’s all in where you sit.

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Gino Blefari
Senior Vice President of HSF Affiliates
HomeServices of America, Inc

A growing number of homeowners who are looking to move are choosing to hang onto their homes and rent them out instead. Call it the rise of the accidental landlords.

In many cases, they either purchased or refinanced in the last few years and snagged an incredibly low interest rate. Redfin reports that 19% of current homeowners either purchased or refinanced homes between 2011 and 2013, when rates were historically low around 3.4%

And when the going market rate for rent can cover your monthly mortgage and tax payments with profit to boot – well, what an amazing way to put extra money down to pay off your mortgage!

Or, as noted in this CNN Money story, some homeowners who are still underwater on their mortgages are finding that renting at least helps soften the financial blow while enabling them to move to a bigger house.

Being a landlord indeed seems like it’s working out for many homeowners.

There are considerations in being a landlord, though. Tenants can be demanding. You have to be comfortable shelling out money for regular maintenance and repairs. You’re on the hook, even when your property is vacant and not providing income.

Being a landlord also will impact your income taxes, which is why it’s a good idea to check in with an accountant or tax preparer before jumping in.

Another thing to think about: If you’re moving out of the area it can be a challenge to manage a second property, creating the need to hire someone to help.

It’s definitely not for everyone.

The Big Picture

With more owners deciding to hang onto their properties instead of selling, you have to wonder about the impact on the overall housing market.

For-sale inventory is affected for sure. For every owner who decides to become a landlord, there’s one less home on the market for eager buyers.

On the other hand, this is good for renters, who in some areas are a growing demographic.

We don’t anticipate huge changes in housing inventory due to the rising landlord trend. If anything, it’s a wonderful thing for those owners who can profit or help close their equity gap in the next couple of years.  And who knows – they’ll either love being landlords or they’ll be more than eager to sell after a couple years playing Mr. Furley.

Gino Blefari
Senior Vice President of HSF Affiliates
HomeServices of America, Inc

Boomerang buyers. It’s a nickname we’re seeing in the news lately that implies potentially good things for former homeowners and lenders alike.

A boomerang buyer is one who either went through foreclosure or a short sale during the housing downturn – and, thanks to a government program launched last year by the Federal Housing Administration, now may be able to buy a home again.

About 7.2 million homes have been lost to foreclosure since the downturn began about eight years ago. Many speculated that the dent in those homeowners’ credit and the sour taste of homeownership left in their mouths would leave them renting for decades.

But that seems to be changing already. And FHA’s Back to Work program is certainly a big help. The program enables former homeowners to qualify for low interest rates and a minimum of 3.5% down if they meet certain qualifications like proving their foreclosure or short sale was due to at least a 20% drop in income for a six-month period. They also need to show that they’ve taken steps to improve their credit histories in the last year.

While some may criticize the program and question why a lender would risk lending to a borrower with such a large stain on their mortgage history, others have said just the opposite. Many still believe that this pool of buyers who experienced a major housing setback actually includes some of the best candidates for homeownership. In many cases, they want to own a home again and are willing to do what it takes to get it.

Matt Weaver, a lender with PMAC Lending Services in Florida, told NBC News that about 20% of his current clientele either suffered a short sale or foreclosure in the past and are now looking to buy back into the market.

While the FHA program is helping to lift some of these buyers, it remains to be seen how much of a difference it will make in the overall demand for homes. But even if it’s not a significant overall boost, the good news is that foreclosure and short sale no longer mean the homeownership door is closed and locked forever for these buyers. And that’s worth noting. 

 

Gino Blefari
Senior Vice President of HSF Affiliates
HomeServices of America, Inc

“Upside down” homeowners – or those who owe more on their mortgage than their home is worth in current market conditions – was a largely followed housing segment during the downturn and recession. Many markets and individual owners are still feeling the effects.

How deep is the problem now? Are we near more complete relief that puts more balance back into the market?

Real estate data firm CoreLogic last week released a reportshowing that about 312,000 residential homes regained equity in the first quarter of 2014. This raises the total of residential properties with equity to more than 43 million.

That leaves about 6.3 million homes – or 12.7% – with negative equity (i.e., owing more on the mortgage than the home is worth), an improvement from 6.6 million, or 13.4% in the fourth quarter of 2013.

The report went on to show that of the 43 million homes with equity, about 10 million have less than 20% equity. This is considered a risky situation for homeowners should home prices drop.

What does this mean for the market overall?

The improvement is good news for sure. For the owners with negative equity, it essentially means they either cannot sell or would have to show a hardship for short sale or even foreclose. But it’s important to note that as long as a seller is not looking to move and can afford the mortgage, there’s really no issue.

The owners with negative or short equity who need to sell or want to sell in the coming year or two will need home prices to rise to cover the value of their existing mortgage. While that may seem feasible in some markets where prices are right back at pre-recession levels, it may not in those markets that are still sluggishly pulling out of the downturn.

States with the highest percentage of negative equity homes include: Nevada (29.4%), Florida (26.9%), Mississippi (20.1%), Arizona (20.1%), and Illinois (19.7%).

CoreLogic expects another 5% increase in home prices over the next year, which would lift another 1.2 million properties out of negative equity.

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

What’s the big picture in home sales so far this year? We are on a path of monthly incremental increases in sales, but overall are seeing a slower market than last year.

Some of the data underlying this statement was released this past week, showing pending home sales improved for the second straight month in April. Pending sales are key to watch because they track transactions under contract, which is a forward-looking indicator for sales volume the following month.

The National Association of Realtors’ Pending Home Sales Index increased 0.4% to 97.8 in April from 97.4 in March, but is 9.2% below the same month a year ago when it was 107.7.

What appears to be boosting monthly sales is more homes on the market and a slight decline in mortgage interest rates during the spring – both of which bode well for encouraging and enabling buyers to close deals.

Pending sales tracked in April were led by gains in the Midwest and Northeast, which offset declines in the West and South.

In the Northeast, the Pending Sale Index increased 0.6% to 79.3 in April, but was 12% below a year ago, NAR reported. Meanwhile, the index climbed 5% to 99.2 in the Midwest that same month, but stood at 6.9% below April 2013. Pending sales in the South declined 0.6% to an index of 111.9, and were 6.4% below a year ago. And the index in the West also declined 2.9% to 88.4, 15% below year-ago levels.

While certainly the monthly upward movement bodes well, annual existing home sales are anticipated to end the year slightly below the 5.1 million we saw at the end of 2013. NAR economists expect sales to return to 2013 levels in 2015. Meanwhile, home prices are expected to grow 5-6% this year and 4-5% in 2015.

Housing is healthy overall, with local markets looking starkly different in some cases. The goal for this year is to get more inventory on the market and keep affordability in check so we can continue to usher first-time buyers into homes.

Acquisition further expands HomeServices’ footprint in California residential real estate market

May 13, 2014 11:05 AM Eastern Daylight Time

MINNEAPOLIS–(BUSINESS WIRE)–HomeServices of America, Inc., a Berkshire Hathaway affiliate, today announced the acquisition of Intero Real Estate Services, one of Silicon Valley’s largest and fastest growing residential real estate brokerage firms, and Intero Franchise Services, its affiliated franchise network. Terms were not disclosed.

“By joining forces with HomeServices, we will be unmatched in our ability to serve the real estate needs of new and existing clients throughout the communities we serve.”

Headquartered in Cupertino, Intero serves Northern California in 13 offices throughout the San Mateo, Santa Clara and San Benito counties. Since 2007, Intero Real Estate Services has consistently ranked in the top 5 market share in Silicon Valley, based on volume and in 2013, closed nearly 7,300 units and $5.7 billion of volume. The Intero franchise network, which is comprised of nearly 50 affiliates located in Alabama, Arizona, California, Colorado, Nevada, Tennessee and Texas, generated more than $1.5 billion in sales volume in 2013. Intero Real Estate Services and the Intero franchise will each retain their name and existing branding without change or interruption.

Founded in 2002, Intero has experienced rapid year-over-year growth and is best known for its innovative approach through its technology platform and its unwavering commitment to providing their agents and clients with the highest level of customer service, expertise and resources. Gino Blefari, president and CEO, is among real estate’s most recognized and influential leaders, known for his industry expertise, vision and leadership. Blefari, together with the executive management team of Robert Moles, Tom Tognoli, and John Thompson will continue to lead Intero’s strategic planning and growth initiatives as well as manage the day-to-day operations along with their sales management teams.

HomeServices is the second-largest, full-service residential real estate brokerage firm and through its operating companies, is one of the largest brokerage-owned settlement services providers in the U.S. The acquisition represents HomeServices’ expansion of their presence in California which also includes southern California-based Berkshire Hathaway HomeServices California Properties and Fresno-based Guarantee Real Estate which HomeServices acquired in 2002 and 2012, respectively.

With this transaction, HomeServices has more than 23,000 real estate professionals operating in 25 states. In 2013, HomeServices’ associates closed nearly $56 billion in sales volume, over 184,000 real estate transactions and closed approximately $3.7 billion in home mortgages.

“Intero is a strong company with an excellent reputation in a growth market,” said Ron Peltier, chairman and CEO, HomeServices. “This transaction aligns with our vision of acquiring distinguished companies in leading markets that share our core values.”

“This transaction makes one of the premier firms in northern California an even stronger organization,” Blefari said. “By joining forces with HomeServices, we will be unmatched in our ability to serve the real estate needs of new and existing clients throughout the communities we serve.”

“We are proud to be part of HomeServices of America,” said Robert Moles, chairman of Intero Real Estate Services. “We are joining an organization known for its strength and stability; one that is consistent with our high standards of service, integrity and community involvement, making this a win/win for our customers and our brokers.”

“We are excited to be in Silicon Valley and are looking forward to having the Intero Real Estate team join the HomeServices family,” Peltier said.

About HomeServices of America

HomeServices of America, Inc. is the nation’s second-largest residential real estate brokerage company and, through its operating companies, is one of the largest providers of integrated real estate services. HomeServices of America is the majority owner of the Berkshire Hathaway HomeServices, Prudential Real Estate and Real Living Real Estate franchise networks. HomeServices is owned by Berkshire Hathaway Energy, a consolidated subsidiary of Berkshire Hathaway Inc. HomeServices’ operating companies offer integrated real estate services, including brokerage services, mortgage originations, title and closing services, property and casualty insurance, home warranties, and other homeownership services. HomeServices Relocation, LLC is the full-service relocation arm of HomeServices of America, which provides every aspect of domestic and international relocation to corporations around the world. HomeServices operates under the following residential real estate brands: Berkshire Hathaway HomeServices California Properties; Berkshire Hathaway HomeServices Carolinas Realty; Berkshire Hathaway HomeServices First Realty; Berkshire Hathaway HomeServices Fox & Roach, Realtors®; Berkshire Hathaway HomeServices Georgia Properties; Berkshire Hathaway HomeServices KC Realty; Berkshire Hathaway HomeServices New England Properties; Berkshire Hathaway HomeServices Northwest Real Estate (Portland); Berkshire Hathaway HomeServices Northwest Real Estate (Seattle); Berkshire Hathaway HomeServices KoenigRubloff Realty Group; Berkshire Hathaway HomeServices York Simpson Underwood Realty; Berkshire Hathaway HomeServices Yost & Little; Carol Jones Realtors®; CBSHOME Real Estate; Champion Realty Inc.; Edina Realty; EWM REALTORS®; Guarantee Real Estate; Harry Norman, Realtors®; HOME Real Estate; Huff Realty; Intero Real Estate; Iowa Realty; Long Companies; RealtySouth; Rector-Hayden Realtors®; Reece & Nichols; Roberts Brothers Inc.; Semonin Realtors®; and Woods Bros. Realty.

Information about HomeServices is available at www.homeservices.com.

About Intero Real Estate

Intero serves Northern California with 13 offices throughout the Greater Silicon Valley. The Intero franchise network is comprised of nearly 50 affiliates located in Alabama, Arizona, California, Colorado, Nevada, Tennessee and Texas.


By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.

 
One area of relief coming to home buyers across the country appears to be the lowering of credit standards necessary to get a home loan.
 
Wells Fargo, the largest mortgage lender in the U.S., a couple weeks ago cut its minimum credit score for borrowers of Fannie Mae- and Freddie Mac-backed loans to 620 from 660.
 
According to Bloomberg, Wells Fargo followed similar moves by smaller lenders, including the U.S. unit of Canadian Toronto-Dominion Bank, which lowered downpayments to 3% without requiring mortgage insurance for some loans.
 
The news is noteworthy because it opens up borrowing capacity for many who had been shut out in the years following the housing downturn. When the foreclosure wave started to hit, banks tightened up borrowing requirements to protect themselves from foreclosures and short sales, which for several years were eating up resources.
 
But now that the refinance boom has severely dried up, more lenders are looking to court purchase loans from home buyers.
 
Also contributing to this move is a recent drop in demand for mortgages, which we believe stems from a lack of homes for sale, increasing home values that are pricing out a lot of borrowers in markets throughout the country, and a larger presence of all-cash investors. In April, Mortgage Bankers Association Chief Economist Mike Fratantoni lowered his forecast for home purchase loans in 2014 to $626 billion from $652 billion last year.
 
What does this news mean for buyers and sellers?
 
On the one hand, it’s good to hear that more borrowing options will be open for home buyers this year. Lower credit scores don’t always equate to reckless borrowing. On the other hand, this is a clear sign that lenders are in need of more loan business. We may see more consolidation in that industry as a result.
 
Bloomberg reports that only 58% of independent mortgage banks and bank home-loan units were profitable in the last quarter of 2013. And JPMorgan Chase, the second largest mortgage lender in the U.S., said last month that its origination business lost money last quarter and would also lose money in the second quarter.
 
For the coming year, it looks like buyers will at least have an advantage when it comes to getting a loan. That doesn’t help the inventory shortage situation, but provides one small area of relief.
 

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