Monday, December 19, 2011

Phoenix Residential Market Report Summary ~ Time To Buy Is NOW!!

This data includes single family detached homes, patio homes, condos, and townhomes provided by the Arizona Multiple Listing Service. The monthly charts above are based on trailing twelve monthly averages from December 2010 to November 2011 which shows the total activity in the Phoenix Metropolitan real estate market over a twelve month period. The yearly charts above are based on a yearly average for 2005 to 2010 but a trailing twelve month average from December 2010 to November 2011 for the year 2011. Without the trailing twelve month average for the year 2011, the charts would be substantially skewed and would not portray an accurate view of the market on an annual basis.

As you can see from the first chart above, Cromford Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the real estate boom from 2004 to 2006. When the government withdrew the first time home buyer tax credit on April 30, 2010, the average sold price and number of transactions decreased and the average days on market increased. Currently, the residential real estate market is experiences another buying frenzy that is caused without government intervention or relaxed mortgage underwriting standards. Consumers are jumping into the real estate market because market statistics are indicating the market has hit bottom and investors can purchase homes at rock bottom prices where they can rent the homes out to receive a 10% to 15% or more return on investment. Due to the current oversupply of homes on the market, real estate prices have not increased significantly but as you can see from Chart #2 the shadow inventory everyone is afraid of is decreasing. Once the supply of homes is purchased real estate prices will start to increase at a faster pace and then it will be too late to buy. Since January 2011, the average sold price has increased approximately +1.8% (up from last month), the average days on market have decreased approximately -18.0% (down from last month) and the number of transaction has increased approximately +10.5% (down from last month). It should be noted that approximately +35% of all transaction are cash purchases either by investors or homeowners due to tighter lending requirements. The volume of REO purchases since January is down -26.1% and the volume of short sale is up +44.9%. The volume of REO purchases are shrinking due to the increased volume of trustee sales and existing supply of inventory is getting absorbed at a faster rate.        
The number of Notice of Trustee Sales is currently experiencing a decline due to the declining number of adjustable rate mortgages coming due and from more lending institutions working harder on helping people stay in their homes. The number of foreclosures “notices” entering the market is expected to continue its decline throughout 2012 due to the exhaustion of adjustable rate mortgages created between 2003 to 2007. The percentage of third party purchases (other than banks taking back as REO) has increased substantially since the beginning of 2011 where we are currently at 50% of all purchases are from third parties. The percentage might appear to be a low number but the last time we experienced this volume of purchase was back in August 2006. The real estate market has reached a level of equilibrium where demand is equal to supply and all buyers are rushing into the market to take advantage of low prices. Once the supply of residential homes is exhausted and demand continues to rise, real estate prices will begin to rise (depends on the sustained level of demand). Time to buy is NOW!! Give us a call to discuss your best competitive strategy, NOW!!

Wednesday, December 14, 2011

What will new homes look like in 2015?

Members of the National Association of Home Builders (NAHB) were asked earlier this year what they anticipate the new home size will be 2015. While the size of new American homes has been shrinking for years, the builders offered some insights into what home features will start to disappear and which will become more popular.

In terms of square footage, the anticipated drop isn’t drastic. Currently, single-family homes measure an average of 2,400 square feet, a slight decrease from an average of around 2,521 square feet five years ago. In 2015, industry professionals believe it will drop to around 2,150 square feet.

To make up for less square footage, many new homes won’t have living rooms. Of the builders surveyed, 52 percent believe traditional living rooms will be combined into other areas of the home, such as family rooms and kitchens, to form “great rooms.” About 30 percent of builders believe the living room will vanish entirely.

Also likely to become less in demand by 2015? Mudrooms, formal dining rooms, skylights, sunrooms, three-season porches, media rooms, butler ‘s pantries, and homes exceeding four bedrooms and three bathrooms.

However, surveyed builders expect to see more ceiling fans, larger laundry rooms, eat-in kitchens, first-floor master suites with walk-in closets, kitchens with double sinks and recessed lighting. And while two-car garages won’t go anywhere, demand will probably sink for three-car garages.

Sixty-eight percent of builders surveyed say that energy-saving technologies and features including low-E windows, energy-efficient appliances and LED lighting will be common, along with other green features, such as engineered wood products, dual-flush toilets and low-flow faucets. Whole-house Energy Star certification is likely to become the norm for new homes in 2015, but LEED certification will not. Green features considered “somewhat likely” to be in new homes include argon windows, tankless water heaters, above-code insulation, and solar photovoltaic and thermal systems.

Says Stephen Melman, director of Economic Services with the NAHB: “Although affordability is driving these decisions, smaller homes are a positive for builders. It allows for more creative design, more amenities, better flow. It’s an opportunity to deliver a better home.

20 Cities Added to Improving Housing Market List

More cities were added to this month’s Improving Markets Index, which was created earlier this year by the National Association of Home Builders and First American. The index identifies cities that are showing improvement in housing permits, employment, and home prices for at least six consecutive months.
The latest index results is “very much in keeping with the latest government housing data and our own builder surveys, which have shown modest signs of improvement in certain individual markets where employment is gaining and distressed properties are not as numerous," NAHB Chief Economist David Crowe said in a statement. "These gradual improvements are now becoming evident not just in small, energy-producing metros that have previously dominated the [index], but also in several larger markets and areas with more diverse economies."
The 20 new metro areas added to this month’s list are: 

  • Ann Arbor, Mich.
  • Athens, Ga.
  • Boulder, Col
  • Phoenix, AZ
  • Canton, Ohio
  • Charleston, W.V.
  • Danville, Va.
  • Fort Wayne, Ind.
  • Grand Forks, N.D.
  • Jackson, Miss.
  • Kingsport, Tenn.
  • Laredo, Texas
  • Lincoln, Neb.
  • Muncie, Ind.
  • Muskegon, Mich.
  • San Jose, Calif.
  • Scranton, Pa.
  • Toledo, Ohio
  • Washington, D.C.
  • Winchester, Va.

Meanwhile, nine markets were taken off the list in December -- mostly due to softening in housing prices. The nine markets removed from the list in December are: Alexandria, La.; Fairbanks, Alaska; Hinesville, Ga.; Houma, La.; Jonesboro, Ark.; Lima, Ohio; Pine Bluff, Ark.; Sumter, S.C.; and Waco, Texas. 
To see the complete list of all 41 metro areas on the improved housing market list, visit the National Association of Home Builders web site

2012 Mortgage Delinquencies seen Dropping Sharply

If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion.

Mortgage delinquency rates – the ratio of borrowers 60 or more days behind on their payments – will likely tick up to about 6 percent through the first three months of 2012, TransUnion said in its annual delinquency forecast issued Wednesday.

But by the end of next year, it could drop to 5 percent, TransUnion said. That’s well off the peak of 6.89 percent seen in the fourth quarter of 2009.

Chicago-based TransUnion’s forecast takes into consideration several factors, including expectations that consumer confidence and the economy will improve next year.

Also, banks are expected to get a good portion of pending foreclosures off their books next year, said Charlie Wise, TransUnion director of research and consulting.

Banks are still working through a backlog of foreclosures created by issues including the robo-signing scandal, in which bank officials signed mortgage documents without verifying the information they contained. The issue surfaced last year in areas with large numbers of foreclosures, and banks had to backtrack and review foreclosures across the country to make sure their paperwork was in order.

That slowed down the process, Wise said, and left mortgages listed as delinquent for longer than they otherwise might have been, temporarily boosting delinquency rates.

Economic uncertainty has also contributed. In the third quarter of 2011, mortgage delinquencies saw their first uptick in six quarters, largely fueled by concerns over the economy as lawmakers were debating the U.S. debt ceiling and Europe’s debt crisis was unfolding.

Helping to cut the mortgage delinquency rate are a slowly improving job market and a stabilizing housing market.

While the drop will be significant, the rate will remain well above the pre-recession average of 1.5 to 2 percent.

“We have a long way to go to get back,” said Steven Chaouki, a TransUnion vice president.

The situation with credit cards is much stronger. Card delinquencies – payments late by 90 days or more – dropped to their lowest levels in 17 years during the spring, then saw a slight increase in the third quarter, but still remained near historic lows.

TransUnion expects further edging up in the current quarter and the first three months of 2012, but then late payments on bank-issued cards should fall again.

One reason card delinquencies are expected to remain so low is that credit is much tighter than it was before the recession. TransUnion data showed that nearly a quarter million new card accounts were opened by people with less-than-stellar credit scores during the third quarter, which contributed to the slight increase in late payments during the summer months. But banks are mainly still going after consumers with top-tier credit histories.

“Lenders are willing to lend, but are still pursuing the best customers,” said Chaouki.

TransUnion predicts by the end of 2012, just 0.69 percent of cards will be considered delinquent, down from a predicted 0.74 percent in the current quarter. The rate has wobbled in the last few years, peaking at 1.36 percent in the fourth quarter of 2007, then dropping and bouncing back up to 1.32 percent in the first quarter of 2009.

The figures reflect a shift in which debt payments consumers consider most important, largely because home prices fell so far.

Chaouki said the conventional wisdom before the Great Recession was that homeowners would put their mortgages first because of concern about their reputation and the emotional attachment involved in owning a home. But what has become clear as housing prices have continued to fall, he said, is that bill payment is far more practical.

“People were protecting their home equity,” he said. Credit cards were relatively easy to come by in years past, he said, so when money got tight, it was an easy decision to default on cards and maintain house payments. Now it’s common to owe more on a mortgage than a house is actually worth, but credit cards are harder to get. So consumers are being practical and protecting what is more valuable to them.

He said he expects the equation will shift again if housing prices rebound and people go back to building home equity.

Tuesday, December 6, 2011

6 Top Job States to find Jobs

One factor reportedly holding many Americans back from purchasing a home is job stability. But several states’ future looks bright when it comes to adding jobs. 
Texas is expected to add the most jobs over the next five years on a percentage basis, according to Forbes (it edges out Nevada if you do not round up the growth rate). Employment in Texas is expected to increase by 2.9 percent annually through 20150— or add 1.6 million new net jobs in that period, according to research from Moody’s Analytics. 
Here are the states expected to grow the most with jobs in the next five years, according to Forbes:

1. Texas
Projected 5-year annual job growth: 2.9%

2. Nevada
Projected 5-year annual job growth: 2.9%

3. Arizona
Projected 5-year annual job growth: 2.8%

4. New Mexico
Projected 5-year annual job growth: 2.6%

5. North Dakota
Projected 5-year annual job growth: 2.6%

6. Utah
Projected 5-year annual job growth: 2.4%

Senior-Housing Market Gone Gangbusters

Though the overall housing market has not escaped the doldrums, the senior housing sector, driven by investment companies, has gone gangbusters since 2010.

In the third quarter of 2011 alone, 39 senior housing deals worth $5.5 billion were completed, primarily by real estate investment trusts that specialize in housing for the elderly. That figure includes independent-living and assisted-living communities, but not nursing homes.

The total value of senior housing deals in the quarter ended Sept. 30 was greater than the combined total in the previous two full years, according to the National Investment Center for the Seniors Housing & Care Industry in Annapolis, Md.

Brandywine Senior Living in Mount Laurel, N.J., has participated in the consolidation frenzy. Brandywine, which had been owned by New York private equity firm Warburg Pincus LLC since 2006, sold its 19 assisted-living facilities in five states in December to Health Care REIT of Toledo, Ohio, in a deal valued at $600 million.

Brandywine Senior Living, now primarily a management company owned by Chief Executive Brenda G. Bacon and other executives, leased the facilities back and continues to operate them.

Brandywine, with 2,000 employees, is not standing still.

This fall, Brandywine, in partnership with Health Care REIT, bought five more assisted-living facilities in New Jersey for an undisclosed price and indicated that it would add more New Jersey locations soon.

Driving the consolidation in senior housing is the ability of real estate investment trusts to borrow cheaply in conjunction with the resilience of senior housing during the recession, giving investors confidence that strong returns will continue.

“The senior-living industry survived the pressure on real estate after Lehman Bros. collapsed,” said Bacon, 61, who co-founded Brandywine in 1996 with two nursing homes that she owned and $65 million in private equity.

Steve Monroe, editor of the trade newsletters SeniorCare Investor and Senior Care Acquisition Report in Norwalk, Conn., cited the relatively small drop in the senior housing occupancy rate during the real estate collapse of recent years as reason for its attractiveness to investors.

“It dropped from 91 percent to 87 percent,” Monroe said. “If you only dropped that much in the worst we can throw at you in 70 years, that’s pretty damn good.”

Senior housing includes independent living and Brandywine’s specialty, assisted living, which is for the elderly who can no longer live safely on their own but who do not need the more intense level of care provided in nursing homes.

For investors and operators, assisted living has an advantage over nursing homes in that it is not very dependent on government funding.

Nursing homes run the risk that the federal government could radically reduce Medicare reimbursement rates, as happened in the 1990s. The 11 percent cut that started Oct. 1 is hurting, but not destroying, nursing homes’ bottom lines.

Assisted-living residents, by contrast, typically use private resources to pay rent.

Assisted living also has a business advantage over continuing-care retirement communities, where seniors have the assurance that they will not have to move again, Bacon said.

Seniors who move to continuing-care retirement communities live first in the independent-living section. They have to be able to get by on their own, which means they could just as well remain in their houses. Because many seniors are reluctant to sell their houses in a weak market, some continuing-care retirement communities are dealing with significant drops in occupancy rates.

Moving to assisted living is usually not a choice, Bacon said, speaking in the voice of a senior: “I’m going to move into assisted living because I need to. I have some needs that need to be met and can’t be met at home.”

That can overcome reluctance to sell a house for less than expected or the desire to remain at home.

That was the case for Marie Ruggeri, 89, who moved to Brandywine’s Moorestown Estates about 18 months ago – and who still misses her house. “I loved my house. I had a lot of parties,” she said while chatting one afternoon this month with Cecilia Sacca, 93.

Public records show Ruggeri sold her one-story house with a patio in back in April for $176,000.

For most seniors, the cost of assisted living ranges from $3,000 to $10,000 a month, depending on the accommodations and the level of care, said Bacon, who started her career as a social worker before earning an MBA at the Wharton School of the University of Pennsylvania in 1980.

Bacon said assisted-living residents, most of whom move in at about 85, typically pay their rent with the money they get from selling their houses, with help from Social Security and, for some, a pension. Medicare does not pay for assisted living. Medicaid can contribute in some states, including New Jersey.

Brandywine has wings at five of its communities that charge more than $10,000 per month. Bacon called it “Ritz-Carlton” living, with the services of a butler, a daily happy hour from 3 to 4 p.m., and the choice of room service for meals among the perks.

The Serenade wings at two Brandywine communities opened in 2008, as the economy was tanking, and “filled up immediately,” Bacon said.

Mary Stiles, 97, who moved into the Serenade wing in Moorestown about a year and a half ago, enjoyed the attention of butler Lisa Laphan one afternoon this month.

“Lisa will do anything I ask her,” Stiles said. “She’s so good.”

Monday, November 21, 2011


It was a good week for the U.S. economy, despite what was going on in Europe . The Conference Board Index of Leading Indicators was up to 117.4 from 116.3 last month (September) and 110.1 from October, 2010.  The indices for both coincident and lagging indicators were also up from prior month and year levels.

Industrial production grew again.  It expanded 0.7% in October after only declining 0.1% in September.  Previously, industrial production was reported to have gained 0.2% in September.  At 94.7% of its 2007 average, total industrial production for October was 3.5% above its year-earlier level.  Capacity utilization for total industry stepped up to 77.8%, a rate 2.3 percentage points above its level from a year earlier but still 2.6 percentage points below its long run (1972-2010) average.  This is a key to the recovery because major increases in business spending for new plant is not likely to occur until capacity utilization reaches 80% or more.

The Consumer Price Index for All Urban Consumers (CPI-U) declined by 0.1% in October on a seasonally adjusted basis.  The index now stands 3.5% over year earlier levels.  Core CPI (CPI-U less food and energy) was up 0.1%.

National retail sales, according to advanced estimates, increased 0.5% from September, 2011and 7.2% from October, 2010.  Retail sales excluding autos grew by 0.6% over last month.

Housing had a "better than expected" month but the expectations were low.  Privately-owned housing starts in October were at a seasonally adjusted annual rate of 628,000.  While this is below the September level of 630,000 units, it is well above year earlier levels of 539,000 and expectations of about 600,000 units.  Housing permits were also higher than prior month and year levels.

Locally, employment gains continued.  Total nonfarm jobs were up 44,700 over year earlier levels to 2,433,500 in the state.  That is a gain of 1.9% over October, 2010 and a 0.8% gain over the first 10 months of 2010.  For Greater Phoenix, job gains were 43,200.  That equates to gains of 1.8% for October, 2011 vs. October, 2010, and a gain of 1.1% for the first 10 months of 2011 compared to the first 10 months of 2010.  While these gains are modest and weak when compared to the extent of the decline since 2007, at least employment is growing.

In housing news, R. L. Brown reports that 543 permits were recorded in October compared to 485 in October, 2010.  Year to date, there have been 5,817 permits for 2011 compared to 6,119 permits for the same period in 2010.  Median new home prices were $218,504 in October while median resale prices were $110,000.  According to the Cromford Report, the average number of listings on MLS is 27,354 homes so far in November compared to 45,836 listings in November, 2010.  Days on market were down to 93 in October of this year compared to 104 in October of last year.

Overall, slow growth seems to be the order of the day.  That is likely to remain for quite some time.  At least it is improvement.


This week, the federal government released more details about its revamped Home Affordable Refinance Program, which sets out to allow more home owners to refinance their mortgage and take advantage of ultra-low rates. The program is geared to those who are current on their mortgage but may be underwater, owing more on their homes than they are currently worth. 
Here are some more details about the changes coming to HARP: 

Q: Who may be eligible?
A: The program is only eligible to borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who have 20 percent or less equity in their homes. To check if either Fannie or Freddie backs a mortgage, go to http:/// http://w The only loans eligible are those that were backed by Fannie Mae and Freddie Mac before May 31, 2009.

Q: When can applications be submitted, and when does the program end?
A: The program begins Dec. 1 but some participating lenders may not be ready to take applications that soon. The program ends Dec. 31, 2013.

Q: Can borrowers apply at any lender?
A: Yes. Participation is voluntary for lenders, but one key component of the reworked program is designed to make lenders more comfortable with writing a new loan on an underwater property. Going forward, a HARP lender is not considered responsible if a loan it refinances goes bad because of mistakes in the original purchase loan. The change was considered critical to attracting lenders to the program and fostering competition among lenders for business. However, lenders still have underwriting guidelines to follow.

Q: What if I missed one mortgage payment?
A: The agencies don’t want to see any delinquencies in the most recent six months, but a borrower can be 30 days late on one payment in months seven to 12 of the past year.

Q: What kind of extra fees are tacked onto the loans?
A: For loans that amortize in 20 years or less, all fees related to the riskiness of the loan have been eliminated. For loans that amortize in more than 20 years, fees are capped at 0.75 percent of the loan amount.

Q: What are the maximum loan-to-value ratios?
A: For 30-year, fixed-rate loans, there is no maximum LTV ratio. For fixed-rate loans of more than 30 years and less than 40 years, the maximum LTV is 105 percent.
The maximum also is 105 percent for adjustable-rate loans with an initial fixed period of 5 years or more and terms up to 40 years.

Q: Can a borrower refinance from a 30-year to a shorter-term loan, even if it means increasing the monthly payments?
A: Yes. In fact, the government is encouraging that because interest rates are usually lower on shorter-term loans and it allows the borrower to increase equity in their homes at a faster rate.
But to qualify for a shorter-term loan under the program, the borrower has to meet additional criteria, like having a credit score of at least 620 and must have a debt-to-income ratio of no more than 45 percent.

Q: Can lenders solicit my business?
A: Yes. If lenders advertise the program to potentially eligible borrowers with loan-to-value ratios of 80 percent or more, they have to advertise it for both Fannie and Freddie-backed loans.

Wednesday, November 16, 2011

82% of Refinancing Homeowners in U.S. Maintain or Reduce Mortgage Debt in 3Q

Based on Freddie Mac's third quarter refinance analysis, homeowners who refinance continue to strengthen their fiscal house by maintaining or reducing their mortgage debt.

In the third quarter of 2011, 82 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table. Of these borrowers, 44 percent maintained about the same loan amount, and 37 percent of refinancing homeowners reduced their principal balance.

"Cash-out" borrowers, those that increased their loan balance by at least five percent, represented 18 percent of all refinance loans; the average cash-out share during the 1985 to 2010 period was 46 percent.

The median interest rate reduction for a 30-year fixed-rate mortgage was about 1.2 percentage points, or a decline of about 22 percent in interest rate. Over the first year of the refinance loan life, these borrowers will save about $2,500 in interest payments on a $200,000 loan.

The net dollars of home equity converted to cash as part of a refinance, adjusted for inflation, was at the lowest level in 16 years (third quarter of 1995). In the third quarter, an estimated $5.3 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages, down from $6.3 billion in the second quarter and substantially less than during the peak cash-out refinance volume of $83.7 billion during the second quarter of 2006.

Among the refinanced loans in Freddie Mac's analysis, the median value change of the collateral property was a negative 7 percent over the median prior loan life of almost five years. In comparison, the Freddie Mac House Price Index shows about a 25 percent decline in its U.S. series between September 2006 and September 2011. Thus, borrowers who refinanced in the third quarter owned homes that had held their value better than the average home, or may reflect value-enhancing improvements that owners had made to their homes during the intervening years.

Frank Nothaft, Freddie Mac vice president and chief economist tells the World Property Channel, "The typical borrower who refinanced reduced their interest rate by about 1.2 percentage points. On a $200,000 loan, that translates into saving $2,500 in interest during the next 12 months."

Nothaft further comments, "Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 60 years to lock in interest savings. Fixed-rate mortgage rates hit new lows during September, with 30-year product averaging 4.11 percent and 15-year averaging 3.32 percent that month, according to our Primary Mortgage Market Survey."

How Appraisals Are Derailing Home Sales

Three months ago, real estate agent Gary Rogers says he was conducting a fairly routine home sale. Then he received the home appraisal's report, which valued the three-bedroom colonial in Waltham, Mass., at $430,000, rather than the $448,000 selling price the buyer and seller had agreed to. Unless the buyer agreed to put up more money, or the seller to lower the price, the deal was off. Fortunately, after nearly two weeks, Rogers says the two sides agreed to meet in the middle.

In the past, appraisals rarely disrupted a home sale. But realtors and housing experts say new requirements and a difficult housing market are doing just that. Year-to-date through September, one third of realtors have said appraisals resulted in buyers and sellers delaying or canceling contracts or renegotiating to a lower sales price, according to the National Association of Realtors. That's up from 29% in all of 2010 and up from less than 10% prior to 2009.

Indeed, lenders say they're requiring more thorough home appraisals. Appraisers determine the value of a home largely by reviewing the prices at which similar homes nearby sold for in recent months. During the housing boom, appraisers could cite as few as three recently sold homes; today, lenders are often requiring two to three times that, says David Stevens, president and CEO of the Mortgage Bankers Association. To meet that quota, appraisers say they sometimes have to use homes that aren't similar and may be foreclosures or short sales, though they are taking into account what this property would have sold for if it wasn't a distressed sale, says a spokesman for the Appraisal Institute, an association of real estate appraisers. "Appraisers have become much more cautious," says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

To be sure, a more thorough appraisal process does have its benefits. It lets a buyer know whether they're offering too much to buy a particular home. "For buyers, the appraisal is a check and balance -- it's there to ensure the buyer isn't overpaying and the lender isn't over-lending," says McCabe.

It may also make houses cheaper for buyers -- though not without more hassle. If the appraisal value comes in below the agreed buying price, the lender will typically offer a smaller mortgage. For example, on the house that Rogers sold, the buyer would have gotten a mortgage for $358,400, or 80% of $448,000. But when the appraisal value came in at $430,000, the lender adjusted the mortgage amount to 80% of the appraisal figure, or $344,000. The contract the buyer and the seller had signed, however, stated the higher buying price of $448,000, and the buyer (and potentially the seller) had the option to decide if they wanted to make up the $18,000 difference.

Typical solutions include having the buyer paying that difference out of pocket or the seller lowering his price -- or both. And sellers often do lower their prices: For example, during the three months ending September, 13% of realtors reported contracts were renegotiated to a lower sales price, compared to 10% who said contracts were canceled and the 8% who said contracts were delayed, according to the NAR.

Here are ways to make the process easier, say experts, and how to deal with complications.

How sellers can prepare:
Before putting their home on the market, sellers should research what similar homes near them are selling for by looking at online listings, visiting open houses and speaking with realtors, says Rogers. "It's always good to get more than one opinion," he says. They can also ask for their own home appraisal, which could give them a sense of how close (or far off) the figures are. The cost of an appraisal varies but typically ranges from $250 to $600.

How buyers can protect themselves:
When buyers make an offer, they should include statements in the contract guaranteeing they'll receive their initial down payment (typically 3% to 5% of the agreed buying price of the home) back if full mortgage financing doesn't come through for the agreed price or the appraisal value is below the offer that's in the contract, says McCabe. Separately, the buyer (who's required to pay for the home appraisal) should ask for the appraisal report and look at what properties the appraiser used as comparisons, says Rogers. It should, he says, include homes that are in the same neighborhood and the same style. In other words, a colonial home shouldn't be compared to a ranch.

What to do if appraisal value comes in below the purchase price:
In this situation, experts say buyers have several options. If they're no longer interested in the home, they can walk away. (However, without a contingency clause -- see previous section -- they risk losing their initial down payment.) But if they still intend to buy the house and they can prove the report excluded similar, nearby properties or had some other issue, they can appeal or ask their lender for a second appraisal.

If those strategies don't work, the buyer and the seller can consider working out an agreement on their own. Lastly, to report a problem with an appraiser, consumers can contact their state's appraisal board.

Top 10 Emptiest US Cities

It’s no secret that the U.S. housing market has seen better days. From falling home values and impaired labor mobility, to backed-up inventories and a flood of foreclosures, there are countless ways that real estate affects the economy at large.

One of the unfortunate results of a bad housing market is an increase in vacant homes, which has grown by 43.8 percent since 2000, according to the U.S. Census Bureau. Homes can be vacant for a number of reasons, but are defined as both rental inventory that are unoccupied and “for rent,” as well as homes that are unoccupied and up for sale. As of the 2010 Census, there were approximately 15 million vacant housing units in the country, with an 11.4 percent gross vacancy rate nationwide.

Much like the range of diversity in home values from city to city, homeowner and rental vacancy rates vary dramatically depending on where you live. Every quarter, the Census publishes data on homeowner and rental vacancies in the 75 largest U.S. cities that reveal which metro areas have the highest number of empty homes. The cities listed here are ranked by according to equal-weighted rankings in both rental and homeowner vacancies, which reveal the most significant outliers in both categories relative to other major U.S. cities.

So, what are the emptiest major U.S. cities?

10. Kansas City, Missouri
Rental vacancy rate: 11%
Homeowner vacancy rate: 3.7%
Although the Kansas City, Mo., metropolitan area has seen rental vacancy rates drop significantly — from 17.2 percent in the second quarter of 2010 — homeowner vacancies have gone up by nearly 30 percent over the same time. Interestingly, homeowner vacancies were higher in Kansas City prior to the housing crisis, hitting 4.5 percent in the second quarter of 2007.

9. Houston, Texas
Rental vacancy rate: 17.4%
Homeowner vacancy rate: 2.3%
Houston is home to the country’s second-highest rate of rental vacancies at a staggering 17.4 percent. The rate has been relatively high in the past three years, however, and has fluctuated between 18.6 percent and 13.1 percent over that time. Homeowner vacancies in the city have fared much better, currently below 2010 levels and down from the first quarter of 2011.

8. Detroit, Michigan
Rental vacancy rate: 17.2%
Homeowner vacancy rate: 2.4%
Detroit has been one of the hardest-hit cities of the recession, and remains in a poor position, with an unemployment rate at 12.9 percent. Detroit also has a 17.2 percent rental vacancy rate, the third highest in the country, but the homeowner vacancy rate is down by nearly half from 2008.

7. Dayton, Ohio
Rental vacancy rate: 10.7%
Homeowner vacancy rate: 4.7%
The homeowner vacancy rate in Dayton, Ohio, is the highest it’s been since the first quarter of 2009, when it stood at 5.6 percent. Although homeowner vacancies are at a high, rental vacancies have been down dramatically, falling from an all-time high of 26.4 percent in the fourth quarter of 2010, according to the Census Bureau.

6. Baton Rouge, Louisiana
Rental vacancy rate: 13%
Homeowner vacancy rate: 3.9%
Although Baton Rouge, La., doesn’t have some of the most extreme vacancy rates in the country, the proportion of the city’s empty homes are relatively high for both rentals and owned homes. With rental vacancies at 13 percent, Baton Rouge is the 12th emptiest city in that category, while its 3.9 percent homeowner vacancy rate ranks it 11th among major cities.

5. Atlanta, Georgia
Rental vacancy rate: 11.8%
Homeowner vacancy rate: 5.4%
Atlanta’s homeowner vacancy rate is the fourth highest among other major U.S. cities, standing at 5.4 percent. The rate has been rising since early 2010, when it stood at just 2 percent. Rental vacancies have been much worse for Atlanta — in 2010, the rental vacancy rate never dipped below 13 percent and was as high as 14.9 percent at the beginning of the year.

4. Memphis, Tennessee
Rental vacancy rate: 13.5%
Homeowner vacancy rate: 4.0%
For both rentals and owned homes in Memphis, the proportion of vacant homes is high compared to most other major U.S. cities. With a rental vacancy rate of 13.5 percent, the city is the 11th highest in the nation, while the 4 percent homeowner vacancy rate ranks the city ninth.

3. Toledo, Ohio
Rental vacancy rate: 19.3%
Homeowner vacancy rate: 3.6%
Of the 75 largest cities in the U.S., Toledo, Ohio, has the highest rate for rental vacancies at 19.3 percent, although in the third quarter of 2010 the rate was much higher, at 24.1 percent. Toledo also has a high proportion of empty homes, at 3.6 percent, which ranks it 17th among major U.S. cities.

2. Indianapolis, Indiana
Rental vacancy rate: 13.5%
Homeowner vacancy rate: 5.2%
The capital of Indiana is also one of the emptiest major cities in the country, according to data from the Census Bureau. The 5.2 percent home vacancy rate in Indianapolis ranks it fifth in the country, while the 13.5 percent rental vacancy rate places it 10th. With these levels, the city is more vacant than nearly every other major U.S. metro area.

1. Tucson, Arizona
Rental vacancy rate: 15.9%
Homeowner vacancy rate: 6.8%
The emptiest city in the U.S. is the second largest city in Arizona: Tucson. With rental vacancies at 15.9 percent, the city is seventh most vacant among major cities, while the 6.8 percent homeowner vacancy rate is the highest in the country as of the second quarter of 2011.