A note from Brendan Reilly
Greetings! My newsletter covers local and national real estate trends to keep you abreast of current conditions. If you or anyone you know is looking to buy or sell a property in Suburban Philadelphia, I would love to help!
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Sales of existing homes rise to fastest rate since October
Sales of existing homes topped at annual rate of 5 million in June, the first time that's happened since last October. Sales of existing homes rose 2.6 percent in June, topping an annual rate of 5 million for the first time since last October. Despite June’s gains, existing home sales are below where they were a year ago. But there are signs that sales should continue to increase in the coming months. But supply shortages in certain areas, particularly the West, means that construction of new homes needs to increase before housing makes a full recovery. Plus, while the economy is adding jobs at a healthy clip, wage growth is stagnant. The high cost of Federal Housing Administration mortgage insurance also are deterring potential home buyers who have good credit scores but not much money for down payments. The median price for an existing home in June was $223,300, up 4.3 percent from June 2013. Foreclosures and short sales accounted for 11 percent of existing-home sales in June, down from 15 percent a year earlier.
PA Supreme Court rules on disclosure of murder-suicide
On July 21, the Pennsylvania Supreme Court unanimously decided that a murder-suicide in a property is not a material defect that a seller has to disclose to a buyer. The Supreme Court’s ruling contained several important points. First, the Court commented that using a disclosure form that revealed more information about a property than the law required does not create additional mandatory disclosure requirements. Second, the Court stated that it was “not ready to accept that a psychological stigma constitutes a material defect.” The Court observed that requiring quantification of the psychological impact of various traumatizing events would be a “Sisyphean task.” Third, the Court recognized that psychologically traumatic events do not result in defects to the structure of the house; they do not affect the quality of the real estate. Fourth, the Court noted that it would be nearly impossible to assign a monetary value to psychological stigma. Lastly, and importantly for buyers’ agents, the murder-suicide was absolutely not a latent event. It was widely publicized in the local media and on the Internet; and was a well-known event within the neighborhood. The doctrine of caveat emptor still survives and places the responsibility on the buyers to ensure the property they are buying meets their needs.
Governor signs Mechanics’ Lien legislation
New state legislation will help prevent unfair Mechanics’ Liens from being filed against unsuspecting homeowners. Gov. Tom Corbett signed Act 117, previously Senate Bill 145 in Harrisburg on Wednesday. The legislation amended the Mechanics’ Lien law, prohibiting liens being placed on homes by subcontractors when the homeowners have paid in full for services and goods. As a result of damage incurred by a tornado that ravaged parts of Westmoreland County in 2011, some residents were adversely affected when contractors flooded the area to repair roofing damage and failed to pay their suppliers. In turn, the suppliers exercised their right to file mechanics’ liens against the property owners even though the property owners had already paid the contract price to the out-of-state company in full. The issue became frequent throughout Westmoreland County which prompted the introduction of this legislation. The Pennsylvania Association of Realtors® provided testimony on mechanics’ liens after having learned of many cases in the southeastern and central part of the state. Homeowners, who had paid in full for the construction of the property, had mechanics’ liens placed on their newly constructed homes by subcontractors who were not paid by the general contractor.
Citigroup to pay $7B penalty for misdeeds related to mortgage-backed securities
Citigroup has agreed to pay $7 billion as part of a settlement with the U.S. Department of Justice for misdeeds associated with the sale of mortgage-backed securities tied to the 2008 financial crisis. The deal resolves potential civil claims with the DOJ, FDIC and several state attorneys general relating to residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) issued, structured or underwritten by Citi between 2003 and 2008. The agreement includes a $4 billion penalty, described as the largest penalty of its kind and appropriate given the strength of the evidence of the wrongdoing committed by Citi. The New York-based mega bank will also pay $500 million to state attorneys general and the Federal Deposit Insurance Corp. The remaining $2.5 billion will go to help consumers struggling with mortgage-related issues and other relief programs. Citigroup said it has agreed to provide the consumer relief by the end of 2018. Citigroup was one of the region's 10 largest deposit takers but closed its Philadelphia retail bank branches late last year.
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