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FIVE STAR PANEL DEBATES HOME REHAB OPTIONS NAR FINDS MEDIAN DAYS LISTED SHORTENS AS INVENTORY TIGHTENS as supply conditions tighten, according to a report from the National Association of Realtors (NAR) released last month. The median time homes were listed for sale Homes are spending less time on the market was 69 days in July, down 29.6 percent from 98 days in July 2011. While the overall median is down, NAR's report noted that the median reflects a wide spectrum; one-third of homes purchased in July were on the market for less than a month, while one in five stayed on the market for at least six months. At the July sales pace, it would take 6.4 months to clear the supply of homes available for sale at the end of the month, according to the trade group. That represents a 31.2 percent decrease from a year earlier when the for-sale supply was 9.3 months. "As inventory has tightened, homes have question posed to panelists at the Five Star Conference and Expo last month during one of the event's new debate-style academic sessions. The panel featured a discussion between "To repair, or not to repair?" That was the Brett Ory, president of Cyprexx Services; Jason Chapman, director of field services, repairs, and field QC at Fannie Mae; Rhonda Montgomery, a regional manager for Freddie Mac's HomeSteps REO disposition unit; Dale McPherson, presi- dent and CEO of Field Asset Services; and mod- erator Lisa Shepherd VP, of REO at JPMorgan Chase. The speakers helped brokers and servicers tackle a common issue: Is it worth the investment to repair a home not in showcase condition? For Freddie Mac, repairing is usually the best choice. "Repair is number one on the list if at all possible," Montgomery said. She ex- plained that while many investors may be will- ing to take a home as-is if the price is right, the GSE's main focus is split between maximizing value and getting owners into homes. While Fannie Mae erred on the same side, price and non-repaired home price] is $20,000, and the repair costs $10,000, that's an obvious choice," Chapman said. Moving away from the topic of structural and safety repairs, the panel also discussed the advantages of cosmetic renovations— those that are intended to showcase a home's beauty. Montgomery said she believes no matter "If the difference [between a repaired home been selling more quickly," said Lawrence Yun, NAR's chief economist. Yun says the trend began this spring. "This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren't often languish on the market," he added. The report also pointed out a relationship what state the housing market is in, buyers will always gravitate toward homes that are pleasing to the eye. "I don't think the impact [of curb appeal] has changed," she said. "Wanting your house to look like other houses in the neighbor- hood—that has changed." All the panelists agreed on the impor- Chapman recommended a more studious ap- proach, encouraging servicers and agents to do their due diligence before deciding on a repair. There are a number of factors that should influ- ence the decision, he said, including the type of neighborhood, the type of buyer, the chances of vandalism, and the spread of value between an as-is home and a rehabbed home. 42 tance of maintaining the home's exterior and emphasized the importance of making a good "walk-up impression." They also offered advice on smaller details that may be overlooked when rehabbing a home, for example, replacing used appliances instead of simply cleaning up the old, hard-used ones. More than anything, all panelists agreed that rehab goes beyond a few fresh coats of paint. "Don't go in and recommend just carpet and paint. You're really not getting anywhere with a partial repair like that," Montgomery said. "You're making decisions that impact the neighbors in these communities." between research in NAR's Profile of Home Buyers and Sellers and sets of data in the existing-home sales series. When the existing- home supply hovered around six months, which is considered to be the norm, the median selling time was slightly above six weeks in the homebuyer and seller series. In balanced market conditions, NAR says it's typical to see prices rise by 1 to 2 percentage points above the rate of inflation as measured by the Consumer Price Index. Looking ahead, Yun said, "Our current forecast is for the median existing home price to rise 4.5 to 5 percent this year and about 5 percent in 2013, which is somewhat stronger than historic norms because of the inventory shortfall that is most pronounced in the low price ranges." STAT INSIGHT Short sales completed during the month of June. Source: CoreLogic 38,000

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