Submitting Creative Bids During the Spring Market Frenzy

It's that time of year again. The spring market is in full swing and crowds of buyers are fighting over their dream house—or at least the closest thing to it, considering this year's nationwide inventory shortage isn't leaving many options. So, what does that mean? For the most part, higher prices, more competition and a whole lot of bids. 

Listings in good condition tend to get multiple offers this time of year, and buyers are putting forth their strongest submissions—cash offers, over-asking, fast closings, no contingencies, etc. But creativity is the name of the game in this year's competitive market. Buyers are inspired to win over the seller's emotional side. Here are the latest home-buying trends for beating out the competition in a swarming spring market:

Love Letters
While they've been around for a while, they're getting a lot more popular, being used by buyers as a last-ditch effort to win via the seller's emotional attachment to the home. Most letters talk about favorite design choices the seller incorporated, plans to raise the family and proclamations that the home is "the one" after a long and tough home search.

Letters usually tell the seller that the buyer is serious and willing to take care of the home. But some sellers may only focus on the numbers and terms. It's a toss-up, but it doesn't hurt to try. 

Buyer-Crafted Videos
These are a little newer, emerging after YouTube's digital push into vlogging, or video blogging. While they can come off as cheesy, they are a little more personal than handwritten letters, because sellers will feel like the potential buyer is talking directly to them.

According to REALTOR® Magazine, a couple recently won a bid on their dream home by making a music video to "Our House," which just so happened to be the song the sellers sang to each other when they first lit the fireplace in their home. The connection instantly won the sellers over, beating out another offer that was $20,000 over the buyers' submission. 

Fresh Home Upgrades for Spring

After a long winter cooped up indoors, spring is the perfect time to start re-imagining your home and making upgrades that create a fresh, welcoming vibe. These project ideas—some big, some small—can help breathe new life into your home so that you're ready to enjoy your favorite rooms to the fullest. 

Air it out. Months of closed windows and doors can make any room feel dusty and stale. As soon as temperatures allow, throw open the windows and skylights to let the fresh air chase away the remnants of winter. It's also the perfect time to launder window treatments and clean area rugs. If you're considering an update to the overall décor, changing out these textiles is an easy and affordable way to create a new look.

Paint to perfection. Over time, once cheerful walls can grow dull. Create a livelier ambiance with a fresh coat of paint, either in the same shade or something completely new. If you're not sure exactly where to start, tackle the project room by room. To choose the right hue, select a favorite item in the room, such as an heirloom throw blanket or a piece of wall art, and consider color shades that complement the item.

Make what's old new again. Sometimes a fresh perspective is as simple as rearranging a room to better fit your needs. Over time, furnishings can become almost an afterthought because they've been in place so long. Try moving things around to create new conversation groupings or to highlight a piece that has been tucked away in the shadows.

Get earth smart. With all of the new growth and hues of green that abound during spring, it's natural to be more mindful of the environment. Earth-friendly upgrades like switching out inefficient lighting or installing low-flow toilets and shower heads can make a sizable difference.

Fannie Mae’s Economic & Strategic Research Group Forecasts Conservative Growth in Housing for 2017

Despite a strong year-end performance by the stock market and a post-election jump in confidence among consumers and businesses, limited information on the new Administration's potential economic policies led to a conservative 2017 growth projection of 2.0 percent, according to the Fannie Mae Economic & Strategic Research (ESR) Group's January 2017 Economic and Housing Outlook.

Improved consumer spending in the third quarter drove a slight upward revision from the prior forecast; moreover, a friendly labor market and rising household wealth should continue to support consumers. Business fixed investment is expected to pick up - particularly in the equipment space - as the drag from declining oil prices faded and should add to 2017 growth. Additionally, government spending and inventory investment are expected to add to growth this year, while the dollar should continue to weigh heavily on net exports. Mortgage rates are predicted to rise gradually in the coming year, ultimately reaching a fourth quarter average of 4.3 percent. There is risk that rates could rise faster and higher than foretasted, but the impact on housing could be offset by strengthened income growth.

"Policy changes under the new Administration - in its nature, sequencing, and magnitude - will determine the direction of economic growth in 2017," says Fannie Mae Chief Economist Doug Duncan. "Incoming data suggest improving consumer spending, diminished labor market slack, and advancements in wages, but until we can more clearly read the political tea leaves, it's difficult to say whether this late-cycle expansion will continue into its eighth year.” 

Spring-Cleaning Time! 6 Things You Never Clean but Really Should.

It’s spring—that time of year when a young man’s fancy turns to thoughts of love, pollen takes over the Earth, and winter coats get mothballed for another year. It’s time to live again! But it’s also supposed to be the time you pull on the rubber gloves and get to scrubbing, dusting, washing, and polishing so your home looks sparkling clean for the upcoming warmer months.

And yet there are some particularly grimy areas even the most diligent among us tend to avoid. But should we?

“When we do get around to spring-cleaning, chances are the first places we tackle are those that we—or our guests—will see,” says Cheryl Reed from Angie’s List. “But if it’s up high, down low, or behind something, it may never see your scrub brush.”

That’s all the more reason to tackle these oft-ignored areas today! Here are the six most neglected items for spring-cleaning.

1. Refrigerator coils

Did you even know your fridge has coils you’ve gotta clean? Well, it does. When dust and dirt cover said coils, your fridge has to work harder to cool food—and that can shorten this appliance’s life span.

You can find your refrigerator coils either at the bottom or behind the machine. Vacuum them with a crevice or upholstery tool. Then push a duster or refrigerator coil brush (about $5)  between the coils to grab the rest of the pet hair and dust that stubbornly cling to the coils; position your vacuum under the brush to catch falling debris. Here’s more on how to clean refrigerator coils.

2. Ceiling fans

Ceiling fan blades are landing strips for dust and allergens, which the fan spreads throughout the room.

To grab the dust, climb a ladder and wipe the blades with a microfiber cloth. Or, slip an old pillowcase over the blades and grab the gunk as you pull it off. Shake the case outside so dust doesn’t fly all over, or throw the case in the laundry. You can also buy curved duster attachments made especially for ceiling fans for about $10.

While you’re on the ladder, reverse the blade direction so they’ll move clockwise and push air straight down, creating a cooling breeze and relief from warm weather.

3. Baseboards

OK, it’s not the sexiest home cleaning task (not quite up there with refrigerator coils, for example), but cleaning scuffed and dusty baseboards goes a long way toward freshening up your home. You can get rid of scuff marks by wiping them with a Mr. Clean Magic Eraser or cleaning wipes. Vacuum with an upholstery attachment to get rid of dust. For a really deep clean, run a Q-tip over baseboard tops and ridges to remove dust collecting there.

4. Pillows

Sure, you clean pillowcases every week when you strip the bed. But once or twice a year, you should also wash the pillows, which absorb your sweat, dead skin cells, and dust mites. Gross, right?

Check and follow care labels for your particular pillow. You can wash most synthetic pillows in your machine on a short, gentle, lukewarm cycle. For down- or feather-filled pillows, wash in a basin with a little detergent. Knead the pillow, drain the basin, then wrap the pillow in a towel.

To remove the rest of the water, place pillows in the washer on the spin cycle. Then pop into your dryer on moderate heat for about an hour. Add a couple of tennis balls to fluff up the pillows during drying.

5. Shower heads

Need to remove mineral buildup from stainless-steel shower heads? Turn to white vinegar, says Glenn Gallas, vice president of operations for Mr. Rooter Plumbing based in Waco, TX.

Fill a small plastic bag with distilled white vinegar, and attach it with a rubber band over the shower head. Let the vinegar work its magic for an hour or two until the scale dissolves; then scrub the residue away with a toothbrush.

If you have a brass or bronze shower head, which are more delicate, rub away scale with a soft cloth and warm water.

Clean a shower head with white vinegar in a plastic bag.

6. The insides of your appliances

The appliances that clean your dishes and clothes can get quite gunky over time. You most likely are painfully aware of this. Food and soap scum build up along the bottom and sides of your dishwasher, and dirt and detergent collect in the drum and along the top of your clothes washer. Here’s how to get them clean.

• Dishwasher: Place distilled white vinegar in a shallow bowl on the top rack of your empty dishwasher, and run a hot water cycle. If the machine still smells funky, sprinkle baking soda on the bottom and run the machine through a short, hot cycle.
  
• Washer: To kill any mold in your washer, add a cup of bleach to the bleach dispenser and run the empty machine through the longest, hottest cycle available. Scrub any removable parts, and use a toothbrush to clean the gunk out of nooks and crannies. Open the lid, and let air dry.
• Dryer: Vacuum the drum and lint screen. If you use dryer sheets, soak and scrub the screen to remove residue. Unplug the machine, remove the exhaust hose, and pull out lint you can reach with your finger, vacuum hose, or flexible dryer brush. Or you can blow out debris with a leaf blower.

Lisa Kaplan Gordon is an award-winning freelancer who's written about real estate and home improvement for realtor.com, Yahoo, AOL

The Home Office Is Disappearing—What's Taking Its Place?

I work from home. Not a coffee shop, not a co-working space with free microbrew. I work in a dedicated, IRS-approved workspace with the requisite Ikea desk and drawer of supplies I never use (I mean, who staples anymore?).

And yet, on the days when my husband telecommutes, he sprawls out on the living room couch, laptop perched on his stomach. And an informal poll of others who work from home shows they do so in all sorts of unconventional places, from kitchen tables to beds and any other nook or cranny so long as it’s not an actual office.

How technology killed the home office

Recent figures from the Bureau of Labor Statistics show that 24% of employed people did some or all of their work at home.

“But even with the move to more work-from-home situations, few people seek a traditional study,” says Glenn S. Phillips of Lake Homes Realty.

Chalk this up to shrinking square footage (U.S. Census data show the median square footage of a single-family home fell 73 square feet this year) and the rise of open floor plans which blur defined spaces. Phillips also notes that in days of yore, people needed a whole lot of stuff to work: not only staplers, but also physical reference material, files, landline phones, and desktop computers hooked to modems to access the internet. Remember those days?

Now, all you need to work is a laptop and Wi-Fi, which can exist pretty much anywhere. So, it’s no wonder today’s WFH folks roam.

Another reason workers shun formal offices? Doors. People I interviewed described feeling “trapped,” “tucked away,” and “stuck” when in a home office.

Sarah Tippett, editor of Homeschool Base, says of her old dedicated home office, “I never wanted to go in there!” The Asheville, NC, resident adds, “I really think my creativity gates open up when I’m not caged in.”

So where do people work, then? The options are endless, from easy chairs to dining tables and beyond. It all depends on your home’s layout and where opportunities lie.

When Marcia Noyes, director of health care technology company Communication for Catalyze, bought a new cottage in New Braunfels, TX, the small third bedroom was already an office. But she found herself drawn to work on her porches instead, explaining, “I love going outside and feeling like I’m part of the rest of the world.”

Meanwhile, Jessi Carr, managing editor of the website 365 Business Tips in San Diego, also has a designated home office, but her go-to work spot is the kitchen island.

“Not only is it the perfect height to be a substitute standing desk, there’s also enough counter space for any extra papers,” she says. “The change in location helps break me out of any problems that I may have run into.”

Challenges of the roving worker

But let’s face it, typing on a laptop on your couch all day can be just as uncomfortable as sitting at a desk—and it could wreak havoc on your back. Working in bed? Even worse.

Given the ergonomic perils of working from home, people who do so should be particularly aware of any aches and pains that can develop. If you’re working in an armchair, use a footstool to elevate your legs and ease pressure in your lower back. And in bed, use a TV tray to support your laptop, like Jessalyn Duncan, vice president of Benediction Web Consulting in Houston. A keyboard that’s too high can put stress on your wrists; use the tray to keep your laptop on the same level as your forearms.

Storage is another challenge. So what should you do with any of those papers that haven’t quite become digital?

Jamie Novak, expert organizer and author of “Keep This Toss That,” suggests using an ottoman for storage: “The person can sit in a comfy spot and have everything they need right there.”

Finally, there’s the question of concentration. Being where the action is frees the trapped worker. But a central location—with amped-up noise and activity—can also present challenges for even the most agile multitasker. For this reason, while Duncan has a favorite comfy chair in the media room where she can power through the bulk of her work with the TV on, she heads to the TV-free living room when it’s crunch time.

What about the home office tax write-off?

People who work from home may also be tempted to take their home office tax deduction. The good news is, the IRS does not require a home office to be its own room; it can just be a corner you’ve carved out of a bigger space.

But here’s the bad news: Your “office” does need to be used exclusively for business. So, your kitchen table where you eat, the bed where you sleep, or living room couch where you watch TV won’t count. But hey, if that’s where you work best, then it will obviously pay off in the long run!

Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in The New York Times Magazine, Vanity Fair, and Boston Magazine.

7 Important Things Home Sellers Often Forget to Do

When you’re selling your home there’s so much to do: find a Realtor®, do touch-ups, get that balky air conditioner fixed, look into staging… It’s no wonder that sometimes things fall between the cracks. Big things. (We’re not pointing fingers, promise!) Our arsenal of experts—aka real estate agents who have worked with many home sellers—identify the to-do’s that sellers typically overlook. We promise you, these tasks are well worth the time it will take to complete them (which isn’t very long at all).

Heed this sound advice, and there’s a good chance selling your house won’t be nearly as stressful as everyone tells you it is.

To-do No. 1: Google your address

Not all sellers scour the Internet to find out what’s being said about their property, but they should. Nearly all buyers—90%—search online during their hunt for a home, according to the National Association of Realtors. You should be aware of what your online listing looks like, since it will influence the kinds of concerns buyers will have, says Avery Boyce, a Realtor with Compass Real Estate in Washington, D.C.

“Is the site’s estimated value very different from your asking price? It might be because tax records have the wrong information about the number of bedrooms or bathrooms your house has, and this is easily fixed,” Boyce says. Consider this too: Google Maps’ street view of your property may not show improvements that you’ve made, so you’ll want to be sure to include those updates in your listing.

To-do No. 2: Account for improvements and issues

“If you’ve owned your home for a while, make a list of all the problems you’ve solved while you’ve lived there,” says Boyce. This could include chimney fires, water damage, or a flood in the basement. Whether you solved the problem or not, you should disclose this information to the buyer so you don’t wind up in a lawsuit after the sale. Disclosing “invisible improvements” that you’ve made, like re-grading or adding a French drain system, can also be a great source of comfort for buyers, adds Boyce.

“The same goes for sewer lines or tanks, radon remediation, or leaky skylights.”

To-do No. 3: Check your real estate agent’s references

An agent’s bad behavior or incompetence could cost you time, money, and peace of mind, so it’s well worth taking extra steps to find the best real estate agent for you. Ask friends for recommendations.

Check that the people you’re considering have a current real estate license—with no complaints filed against them. Meet with the agent and reach out to a few of their references directly.

“Real estate agents should be happy to provide a number of references for a new client to call,” says Marianne Leonard Cashman a Realtor with William Raveis Real Estate in Andover, MA. As far as talking to your friends about a real estate agent recommendation, here are some questions Cashman suggests asking:

• Did you have confidence in your real estate agent?
• Do you think he/she had good knowledge of the local market?
• Did your agent communicate well and keep you informed during the entire transaction?
• Do you think that he/she negotiated well on your behalf?
• Did your agent have good vendors who could assist you?
• Did your agent returned calls/emails in a timely fashion?
• Would you recommend this person? Why? (Or why not?)

To-do No. 4: Insist on social media marketing

You staged your home beautifully, picked a competitive price, and listed the property, but there’s something else you’ll need to prepare before you’re fully ready to sell—a social media marketing plan. Video tours, floor plans, and photo galleries promoted on Facebook, Twitter, and Instagram are must-dos, advises Cashman.

“You want to make sure that your agent is using all avenues to attract the right buyer for your home,” she explains. “Make sure your home has a presence on your agent’s website, their agency’s website, and is promoted on various sites that will market the home and give information about open houses.”

To-do No. 5: Make sure the doorbell rings

Ah, attention to detail. It’s those little cosmetic repairs that could cost you your home sale. If buyers see that you can’t even be bothered to repair a busted doorbell, they’re automatically going to think about what else may need fixing and view the home negatively.

“First impressions make all the difference,” says Cashman. “A well-kept home, starting with the view from the curb, gives the perception that the seller has great pride in the home and has taken good care of it—which translates into less energy and costs for the buyer as they prepare to move in.”

To-do No. 6: Clean inside everything

Storage is a huge selling point for homes. So be warned: Buyers are going to poke around inside closets, drawers, cabinets, ovens, refrigerators, and even the dishwasher, whether they’re cleaned or not—so you’d better make sure they are clean.

“Spending the money on a service to deep-clean your home will come back to you at least 10 times in your sales price,” says Boyce. Even if you’ve swept up and scrubbed all surfaces to a shine, you’re not done until dust, crumbs, and creepy crawlies are cleaned out from within the small spaces too.

To-do No. 7: Clarify which items are not included

You don’t want a buyer to fall in love with your house because of the custom window treatments and then rescind their offer when they find out the curtains aren’t for sale.

“The law says that anything bolted to the wall or ceiling goes to the buyer unless specifically excluded in the contract,” says Boyce. “If you want to take your flat-screen TV, chandelier, or custom pot rack, be sure to label it as soon as the house goes on the market, so that buyers don’t bank on owning that item and wind up disappointed.”

Jennifer O’Neill is a Boston-area writer and former staffer at Allure, SELF, Us Weekly, and Yahoo Parenting.

Forget the Snow: Spring Has Sprung in the Nation's Housing Markets:

Much of the country is looking at one more very big bite of winter before spring officially begins, but for the residential real estate market, spring is already underway—and new home buyers are sprouting everywhere.

Job creation so far this year is 30% stronger than in the same period last year. Unemployment is close to a low of more than nine years. Wages and income are also starting to pick up to growth levels we haven’t seen since 2009.

And with more money in their bank accounts, consumers are feeling a boost in confidence that leads to big purchases … like homes! This year’s economic growth gives them another reason to buy sooner rather than later, because stronger economic growth also means higher interest rates.

January and February saw rates in line with what we saw at the end of 2016. But in the last two weeks, we’ve seen the average rate for a 30-year conforming mortgage increase by almost a quarter of a point. That’s because the market is expecting the Federal Reserve to raise short-term rates when the board of governors meets this week.

Mortgage rates will likely stay close to this level until we hear more about additional rate increases later this year. The expectation is for three increases this year. If economic data continue to show growth in inflation and wages, those three increases could actually become four.

This means that rates will continue to rise—we’re more likely to see movement of 10-25 basis points in one- to two-week spurts, as new data and new comments from the Fed indicate rate policy changes are imminent.  Those spurts will likely be followed by weeks with little change in rates.

The upside of higher rates is that it is getting easier to get a mortgage. The most widely followed measure of mortgage credit access from the Mortgage Bankers Association indicates that access has expanded 6.5% since September.

Arguably the biggest challenge to buyers this spring will be simply finding a home to buy and getting it successfully under contract. That’s because the supply of homes for sale is at an all-time low, and yet demand is strong and getting stronger.

We started the year with the lowest inventory of homes available for sale that we’ve ever seen on realtor.com. While we did see inventory grow 2% in February, total inventory was down 11% over last year.

Low inventory and strong supply is leading to inventory moving faster and faster as measured by median days on market. The median number of days on market in February was 90 days, six days less than last year. We also saw 27% of all listings selling in less than 30 days. Last year, we saw that happen in mid- to late March, so this year’s timetable is about three weeks ahead.

The early birds who decided to buy in the winter faced less competition and enjoyed lower rates than we are seeing now. It gets more expensive and more competitive going forward, but the early(ish) buyer, at this point, is still likely to come out on top, when you consider that prices and rates are likely to be much higher later in the year.

Jonathan Smoke is the chief economist of realtor.com, where he analyzes real estate data and trends to develop market insights for the consumer.

Shhh! 5 Real Estate Tax Secrets the Rich Don't Want You to Know

Do you ever feel like the rich just keep getting richer? Well, allow us to let you in on a little secret: Part of the reason they keep on raking in dough is that they take advantage of real estate tax strategies that many ordinary homeowners have no clue even exist. So what are they, exactly—and can we ordinary mortals take advantage of them, too?

For starters, most of these strategies involve investment properties—in other words, not your primary residence. So if you have a cabin in the woods or a beach house that sits empty most of the year, you might be in luck. Read on to follow in the well-heeled footsteps of the wealthy and maximize your tax savings this year.

Strategy No. 1: Take advantage of ‘safe harbors’

Smart investors don’t let second homes lie vacant, but rent them out, says Crystal Stranger, president of 1st Tax and author of “The Small Business Tax Guide.”

Not only will you make extra cash, you can deduct expenses such as repairs, insurance, real estate taxes and mortgage interest, says broker and attorney Bruce Ailion of RE/MAX Town and Country Commercial in Atlanta, GA.

Even better, the IRS has what’s known as a “safe harbor” rule for rental property expenses that, after Jan. 1, 2016, was expanded from $500 to $2,500. Here’s what that means for you: Let’s say the cost to replace the roof on a rental property is $4,500. Ordinarily, this would be a capital expense you’d have to deduct over the life of the roof (so, $180 per year for 25 years). But if you break the cost of the roof into two smaller bills (let’s just say $2,400 for materials and $2,100 in labor), since they’re both under $2,500, the IRS allows you to deduct these expenses all in their first year, in their entirety—and added together! So that ends up being a massive first-year deduction of $4,500.

One red flag: If you personally use the property for more than 14 days during the year, your tax implications can change, so check with your accountant to make sure you’re in the clear.

Strategy No. 2: Depreciate your rental property

The IRS views a rental property as a business expense and expects it to depreciate over time. Ka-ching! You can deduct a portion of the cost of the home—what are called deprecation losses—for upward of 27.5 years (the amount of time the IRS thinks is the deductible life of a single-family home).

Tom Wheelwright, CPA and author of “Tax-Free Wealth,” gives this example of how depreciation works: Suppose you buy a duplex for $400,000 this year with 20% down ($80,000) and a $320,000 bank loan. Let’s say the duplex produces an annual cash flow—after expenses and mortgage payment—of $24,000. According to the IRS, the depreciation deduction for this property should be about $32,000 for the first five or six years. Since that depreciation ($32,000) amounts to more than your cash flow ($24,000), this actually produces a tax loss of $8,000 a year ($32,000 to $24,000). With proper planning, that tax loss can offset your other income, saving you a bundle.

Strategy No. 3: Depreciation is actually a ‘phantom deduction’

The rich know that these depreciation losses for rental properties—defined by the IRS as an allowance given to property owners for the “exhaustion, wear and tear (including obsolescence) of property”—is, in fact, a “phantom deduction.” Phantom because, as Than Merrill, CEO and founder of FortuneBuilders.com, points out, while the IRS compensates landlords for the depreciation of their assets, homes tend to do the opposite and appreciate in value. And therein lies the true value of depreciation losses: If the value of your property rises, the loss the IRS allows never actually takes place. So you save money on taxes and make a profit at the same time.

Strategy No. 4: The 1031 exchange

When it comes time to sell an investment property, wealthy folks never worry about paying taxes on their profits. Why? Because they take advantage of what’s known as the 1031 exchange. This tax rule allows people to sell an investment property for a profit and move the proceeds directly into another investment property while deferring the tax liability. If done right, you can ratchet up the value of your holdings in real estate without eroding your capital by paying capital gains tax, says Ailion.

Let’s break down how it works: If you sell a property for $500,000, you then have 90 days to find a replacement property of equal or greater value (while a qualified intermediary holds the proceeds) and then 180 days to close on that property. As long as you don’t touch the money in holding before closing, no tax will be due on the original sale.

Strategy No. 5: Leave more money to your heirs

If you use the 1031, your heirs will be left with real estate that has a much lower tax basis than its actual value when you die. This is because the tax law specifies that when someone passes away, the gain inherent in their investments disappears, says Wheelwright.

For example, that property you bought under the 1031 exchange for $500,000 might be worth $1,000,000 when you meet your maker. Your heirs can immediately sell without paying a cent of capital gains tax. While they may pay estate or inheritance taxes, the overall tax savings are massive.

Want to take some cash out of the property while you’re alive and kicking? Simply refinance the property and take out a home equity line of credit (HELOC). The rich also know there is no tax on debt, so a HELOC is an easy way to get cash flowing without having to pay up (at least to Uncle Sam).

Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in The New York Times Magazine, Vanity Fair, and Boston Magazine.

New Home Sales Beat Forecasts, Up 20%:

The Commerce Department said today that new home sales for August came in at a seasonally adjusted annual rate of 609,000 units last month. Sales were up 20.6 percent from a year ago.

Economists had forecast single-family home sales, which account for roughly 10 percent of all home sales, falling to a rate of 600,000 units last month.

July's sales pace was revised up 5,000 units to 659,000 units. That level of annualized sales is the highest since October 2007.

New home sales have also benefited from a dearth of previously owned houses available for sale.

Last month, the inventory of new homes on the market rose 1.7 percent to 235,000 units.

At August's sales pace it would take only 4.6 months to clear the supply of houses on the market, up from 4.2 months in July.

The median price for a new home is now at $284,000

Distressed Sales Drop to Lowest Level Since 2007:

In yet another sign of strength in our housing market, sales of distressed homes (REO real estate owned by banks) has dropped to their lowest level since April 2007.

The most recent readings from CoreLogic show that distressed home sales made up just 11.1% of total home sales in April, down 3 percentage points from April 2014 and down 1.5 percentage points from March.

Broken up, REO sales accounted for 7.4% and short sales made up 3.7% of total home sales in April. Additionally, the short sales percentage fell below 4% in mid-2014 and has remained stable since then.

At its peak in January 2009, distressed sales totaled 32.4% of all sales, with REO sales representing 27.9% of that share.

“The ongoing shift away from REO sales is a driver of improving home prices since bank-owned properties typically sell at a larger discount than short sales. There will always be some level of distress in the housing market, and by comparison, the pre-crisis share of distressed sales was traditionally about 2%,” the CoreLogic report said.

“If the current year-over-year decrease in distressed sales share continues, the distressed sales share would reach that ‘normal’ 2-percent mark in mid-2017,” it continued. 

Economic Momentum is Strengthening Home Buyer Demand:

The housing market has been steadily growing and now has the potential to grow even more as mortgage rates remain low and have just ticked upward off of their one-year lows and credit is starting to loosen.

But what is ultimately driving demand is the strength in the labor market and related improvements in consumer attitudes.

Jobless claims in October remained beneath 300,000: The last month that averaged under 300,000 weekly claims was June 2000 (almost a 40 year low). Continuing claims were last this low at the height of the housing boom.

Consumer confidence and consumer sentiment are both now at seven-year highs.

The first estimate of the third quarter GDP indicated the economy expanded 3.5% as all sectors including government spending contributed to growth. The condition of the U.S. economy is clearly improving.

In every year of this recovery we’ve seen growth fade as we reached the fourth quarter.  But this time it may be different as almost all the fundamentals are much healthier. Jonathan Smoke, Realtor. com's chief economist, expects to see solid employment numbers for October this week and more positive momentum to carry the housing market through the winter.

Is Your Home Ready to Keep you Warm?

The crisp snap of autumn weather is a reminder that even colder days lie ahead. Get ready for them by performing a few simple chores now that will keep you toasty all winter long.

Install weatherstripping
Weatherstripping can save you up to 20 percent on heating bills — especially if you have drafty windows or doors. Plus, it’s quick and easy, and doesn’t cost a lot of money. Place weatherstripping along doorjambs and in the gaps between windows and sashes to keep chilly breezes out and heat in.

Fix drafty doors
If your doors need extra draft protection, add a door sweep along the bottom. These flexible rubber strips seal the gap at the bottom of the door to keep howling winds at bay. If cold air is still getting in, buy or DIY a door snake — a tube of fabric filled with sand, rice, or other material — to lay on the floor and plug the gap.

Add insulation
The attic and basement are two spots where you can lose a lot of heat. By insulating your basement ceiling and attic floor, you can prevent warm air from escaping the house. Also check around the exterior of your house for cracked foundation, gaps or cable holes, and seal them or fill them with spray foam insulation.

Check your furnace
Like any piece of machinery, your furnace works better if it’s properly maintained. Some utility companies offer a free annual checkup for your furnace, but if yours doesn’t, it may be worth paying a technician to ensure that your furnace is in top condition. But you can also improve your furnace’s performance with simple maintenance that you can do yourself, like replacing filters and cleaning registers.

Swap your thermostat
Standard thermostats can lead to wasted energy. If you opt for a smart thermostat like the Nest, you could cut down on your energy use — and your utility bills. Among other features, these smart thermostats can sense when you’re away and automatically adjust the temperature to save you money.

Seal ducts
If you have forced-air heat, leaks in your ducts could be costing you hundreds of dollars. Seal them with specially designed metal tape and keep your ducts — and your wallet — more secure.

Embrace fabrics
While a cool tile floor might feel nice underfoot in summer, it’s not so appealing when it’s sub-zero outside Cover your floors in throw rugs and runners for the winter months. You can also hang heavy insulating drapes in front of your windows to keep warm air in and the cold out where it belongs.

A New Group of First Time Homebuyers is on the Horizon:

The American dream is still alive as Teens overwhelmingly think that they will own their home.

A new survey found that American teens overwhelmingly think that they will be home owners—a far cry from millennials who were much less sanguine about their fortunes in an earlier study.

The study, conducted for real estate service Better Homes and Gardens Real Estate, found that 97 percent of those ages 13-17 believe they will own a home in the future. Compared with the 40 percent of millennials who said in an earlier Better Homes study that they expected to buy a home in the near term, these new figures prove that the younger generation may be more attached to the notion of home ownership.

This means that the next generation to reach adulthood will bring about 21 million hopeful home buyers to the market. For reference, just over 5 million existing homes were sold in 2013, according to the National Association of Realtors.

Lest anyone suggest that the survey's respondents are unaware of what it takes to be a homeowner, the study also found that the average teen has an impressively accurate understanding of the price of a home: Of the 97 percent who said they would own a home, they estimate paying on average $274,323 for their first one. The median cost of a new home in June was $273,500, according to the U.S. Census Bureau.

Not only are teens significantly optimistic about their home buying, but 82 percent also said home ownership is the most important part of the American Dream, according to the survey. Way to go teens!

Housing Could Rise Even Further This Fall:

Autumn is historically the start of the slow season for home sales, but after a good spring and summer, wrought with still-tight supply and higher costs, the stage may be set for another small pick up in U.S. housing this fall, at least according to a new report.

More sellers are lowering their price expectations, because the number of homes that sold above list price in July was down nearly 26 percent from a year ago, noted in the report. That is the biggest drop of the year. Lower prices, still-low mortgage rates and increasing supply could push sales higher.

Twenty-seven percent of homes sold above their list price a year ago, compared with 20 percent this July. Home prices rose 7.4 percent nationally in July from a year ago, according to CoreLogic, but the gains have been shrinking steadily. That includes sales of distressed homes, which are slowly becoming a smaller share of the market. It is the 29th straight year-over-year gain in prices. 

With Consumer Confidence increasing, interest rates very low and more supply of homes entering the market at more realistic prices - the stage is set for more units across the U.S. to move.

Underwater Homeowners Actually Helping Home Values:

One of the biggest barriers to an even more robust recovery in the housing market is a lack of supply. There are simply not enough homes listed for sale to meet the demand—and part of that is because a growing number of home buyers are not selling their previous homes.  Lack of inventory and steady demand have kept home prices moving upward.

"As people are starting to move, they're also turning into landlords by choice. And that is definitely having a dent in the inventory numbers," said Nela Richardson, chief economist at Redfin, a real estate brokerage. "Our agents are seeing people come through their door with the cash in hand to buy that next place. A lot of them obviously don't need that equity in their former home, or they're able to tap some of it out and then use it to buy the next place."

It's a strange new irony in housing. Lack of supply is driving prices higher, which is pricing some demand out and driving up rental demand.

For others, however, the rise in home prices is providing useful equity to buy another home while still holding on to their old home, which is then providing lucrative rental income.

There are no hard numbers as to how many buyers are holding on to their previous properties, but there is plenty of anecdotal evidence, especially as rental demand and rent rates continue to surge.

So, instead of underwater homes hurting the housing market they are driving up rental rates and home prices.

Un-advertised Listings Distort Housing Inventory:

The number of homes listed for sale nationally is finally beginning to rise, but ask anyone looking to buy a home and the majority will complain there is nothing out there. Neighborhood to neighborhood, market to market, supply still seems tight, despite a 6.5 percent increase in listings from a year ago, according to the National Association of Realtors. 

"Statistically it appears that we are getting back to very balanced market conditions," said Lawrence Yun, chief economist for the Realtors. "However, the sentiment out there is that we still have a shortage of inventory, and I think that is due to the prevalence of pocket listings in some markets."

A so-called pocket listing is when the real estate agent signs a listing agreement with a seller but does not advertise it widely or put it in a multiple listing service, where other agents and buyers can see it. Instead, they circulate the listing only among their own buyer clients or within their own brokerage. That way they can potentially get commissions on both buyer and seller sides, and would not have to split commissions with other selling agents.

No hard numbers exist on pocket listings so their rise and fall comes anecdotally from Realtors. Pocket listings are not illegal.

The incentive for a seller to do a pocket listing could be that they need to sell the home quickly and don't want to go through a wide marketing plan with multiple showings and open houses. The agent is promising the seller that they know of enough potential buyers personally that they can get a deal done fast. This usually happens when the market is very tight, and buyers are willing to make larger offers up front to negate the risk of a bidding war. 

Millennials Key To Next Wave of Purchases:

Just 36% of Americans under the age of 35 own a home, according to the Census Bureau. That's down from 42% in 2007 and the lowest level since 1982, when the agency began tracking homeownership by age.

It's not all their fault. Millennials want to buy homes -- 90% prefer owning over renting, according to a recent survey from Fannie Mae.

But student loan debt, tight lending standards and stiff competition have made it next to impossible for many of these younger Americans to make the leap.

"When we surveyed Millennials they cited several barriers to homeownership, especially access to financing," said Steve Deggendorf, a senior director for Fannie Mae. Many Millennials simply can't come up with the hefty 20% down payments. Others don't have good enough credit to qualify for loans.

There is a ray of hope for young wanna be homeowners, said Fannie Mae's Deggendorf. "Mortgage lending is getting a little less tight, with lenders approving buyers with a little lower credit score and who have less of a downpayment," he said. 

Home Prices Continue to Rise:

We have yet another positive housing report that shows continued growth in home prices.  Data provider CoreLogic says home prices increased 8.8% in May compared to a year earlier.  So, that means that the average homeowner enjoyed an 8.8% appreciation rate over the past 12 months.

On a month-to-month basis, prices rose 1.2 percent from April to May. But CoreLogic's monthly figures aren't adjusted for seasonal patterns, such as warmer weather, which can affect sales.

Prices increased the most in Western states, including Hawaii, California and Nevada.

Last week, we reported that Pending Home Sales shot up 6.1% and the continued gains in housing are helping more and more homeowners climb back into positive equity territory.  This new release supports pricing gains from other reports such as the Case-Shiller Home Price Index (+10.8% on a yearly basis) and the FHFA Home Price Index which showed a yearly gain of +6.6%.  Regardless of which reading is the most accurate, consumers are now starting to understand that the likelihood that they will loose money after purchasing their next home has diminished greatly.

Existing Home Sales and Prices Jump:

The National Association of Realtors reported today that May sales of homes that have been previously occupied (the largest segment of homes) jumped 4.9% from April.  Existing Home Sales came in at an annualized rate of 4.89 million units which handily beat the market expectations of 4.73 million units.

The median price rose to  $213,400 which is a 5.1% increase over the past year (May 2013 to May 2014).

The reason for the spike in sales?  Is it interest rates?  Nope, its inventory. Home Sales had been suppressed even while fixed mortgage rates hit their lowest levels for 2014 due to a very tight supply of homes available for sale.  Since home prices have been increasing at a moderate pace, many homes that were "under water" are now back into positive equity and these homeowners are now finally able to put their homes on the market.

Household Net Worth Creeps to Record High:

U.S. household net worth nudged up 2 percent to a record high $81.8 trillion in the first quarter as the stock market continued its upward climb and property values rose, data from the Federal Reserve.

The S&P 500 rose 1.4 percent in the first quarter as the Fed continued with a highly accommodative monetary policy for a recovering U.S. economy. For the year to date, the S&P is up 5 percent, and hit a new intraday record high on last week.

How consumers feel about their financial net worth has a direct impact on consumer spending and demand for homeownership, so this is more good news for the housing market.