A glimmer of light in the long housing tunnel

Although no one's claiming an end to the housing slump, it's hard not to consider the positives in June's housing statistics as signs of life beginning to emerge.

Some of the good news at both the local and national levels include:

• The inventory vs. sales rate in Cincinnati dropped to 7.2 months. This is the first time the monthly rate has been below the previous year since 2006. In fact, the rate was actually lower than the June 2007 rate.
  
• June 2009 sales volume was higher than June 2008 volume. The first year over year volume increase in 37 months.
  
• Nationally, median housing prices had their first month over month increase in over 3 years.
• New home construction had an 11% increase over the previous month.
  

While all of the above are positives, I have to do a reality check as there are still many headwinds buffeting the housing market before we are likely to see a sustained upturn. Some of these still include:

• Distressed property sales are still an outsized portion of the market and are likely to remain so for the foreseeable future.
  
• Average sales prices were still down year over year. 15% lower than this time last year (again, an attribute likely accountable to foreclosures and other distress sales). On a national level that figure was 17% lower, but also less of a decrease than seen in earlier months.
  
• There's some reasonable expectation the market will get temporary support through the end of the year by first-time buyers taking advantage of the tax credit along with efforts to keep mortgage rates very low. No one knows quite what to expect if and when those elements go away.
  

So, while the market appears to be reaching the stabilization point, there should be no illusions that home prices are going to bounce back up anytime soon. On the other hand, buyers should be aware that well priced homes are getting snatched up quickly - even getting multiple offers in a matter of days.

For charts of June's statistics, see the links below

• June sales vs. inventory (Cincinnati MLS)
  
• June sales rates (Cincinnati MLS)
  
• National existing home sales
  

Solar power options really do exist in Cincinnati

Cincinnati isn't necessarily known as a hotbed of activity for solar power products, but with available tax credits and other incentives, the available options are more attractive than one would think.

After speaking with a number of vendors in the area, I've identified several solar powered products than can be quite cost effective. The list below shows some of the options and incentives available along with some local vendors to contact for more information.

Solar lighting:

This is a "passive solar" option that acts similarly to a skylight, but is far more efficient in limiting the thermal impact on your home. The "light" can even be controlled and diffused where a skylight is more or less an overhead window. (See a Solatube example). When used in an existing home, they can qualify towards the $1500 tax credit for efficiency improvements.

Solar Attic Fans:

I've discussed these previously, but these fans help move air through your attic much in the same way as an electric fan and passive vents. They operate by using a small solar electric panel to power the fan as long as daylight is available and provide the advantage of free operation. While passive venting is also free, it usually doesn't provide enough air movement to keep the attic as cool as it should be.

Solar attic fans can qualify for a 30% renewable energy tax credit and are not subject to the $1500 limit.

Solar water heaters:

These systems can be a little pricey, generally in the $5000 and up range, but eliminate approximately 50% of water heating requirements from other sources according to Energy Star research. These usually have a gas or electric water heater as backup, but can also be coupled with a geothermal system to produce hot water with nearly no additional utility cost.

Along with the 30% renewable energy credit, some vendors have local incentives such a $30 per 1000 BTU rebate through Green Energy Ohio. Overall, the incentives can take almost half off the total system cost.

Solar electric panels:

Solar panels have been around for a long time, and yes, they are still rather cost prohibitive for the typical consumer. Nevertheless, current incentives and tax credits can make this a cost effective option for some homeowners.

A typical home installation in this area is likely to run $22,000 or more and might eliminate about a third to half of your electric bill assuming average use and ability to place panels in an optimal spot. That might not seem like much, but when you add the 30% renewable energy credit plus a local Ohio incentive of a $3 per watt rebate, then you are getting into the territory of the system paying for itself if built into a mortgage.

Some additional benefits with these installations is that you can arrange for a battery backup system that kicks in during an outage, or tying into existing utility and "selling" electricity that you aren't using during the day. Again - not necessarily an option for everyone, but could be worth a look if your home has good southern exposure.

For more information about products and installation, check the websites of these local vendors:

• First Day Natural Lighting
• Home Energy Checkup
• Blue Chip Solar & Wind
• Third Sun Solar & Wind
  

Appraisals the new hurdle in home sales

As if sellers weren't having a hard enough time in this market... over the past few months, more sales contracts are falling apart - and more are happening due to low appraisals.

In "normal" housing markets, it's less common that problems arise once a contract is signed, but here's a quick look at issues that are happening with some frequency now:

• Home Inspections - always good practice, but when the market was slanted towards sellers many buyers were waiving the inspection process. Now, buyers are often expecting the sellers to fix even minor issues or canceling a contract.
• Financing - as most everyone is aware, lenders are giving far more scrutiny to the buyer and financing can fall through even after someone has been pre-approved. Sometimes a new lender can be found, many times not.
  
• Appraisals - the concern is now that appraisers are being overly conservative in the valuation of a property. If the house does not appraise, then the buyer is faced with paying the difference, or the seller is asked to reduce the sales price (or somewhere in between). After sometimes difficult negotiations up to that point, you often have a situation where neither party feels they should budge.
  

A lot of press has been given to the recently implemented HVCC or Home Valuation Code of Conduct. The guidelines stem from an agreement between Fannie Mae, Freddie Mac, and New York's State Attorney General to eliminate conflicts of interest. Without going into a lot of detail, essentially it seeks to ensure the independence of home appraisers.

As things of this nature often do, a fair amount of confusion exists over what's OK and what's not. And as one would expect, the (over)reaction is to err on the side of caution. With a number of sales being canceled due to low valuations, many are pointing the finger at the use of inexperienced and out-of-area appraisers (i.e., they don't know the local market). While the intent of the HVCC may have been positive, the law of unintended consequences is having a significant impact.

The complexities and issues in today's housing market will take time to sort out and may require an abundance of calm and patience whether buying or selling, but it's still important to note that many home sales can and do get done without problems.