For some time now, I have attempted to shed light on the fact that pricing in today’s real estate market will be determined by the concept of ‘supply and demand’. If supply continues to increase and demand softens (or even remains constant) prices will continue to fall. Even the National Association of Realtors (NAR) has acknowledged this to be true.
The supply of inventory in the real estate industry is defined by the current months’ supply of homes that is available for sale. There are no steadfast rules that will apply to every category of housing. However, here is a great guideline by which to go:
1-4 months’ supply creates a sellers’ market where there are not enough homes to satisfy buyer demand. Appreciation is guaranteed.
5-6 months’ supply creates a balanced market where historically home values appreciate at a rate a little greater than inflation.
7-8 months’ supply creates a buyers’ market where the number of homes for sale exceeds the demand. Depreciation follows.
Where do we stand today?
According to NAR’s most recent Existing Sales Report, there is currently a 10.5 months’ supply of homes for sale. We can see, based on the guideline above, we are in a buyers’ market and that prices will continue to soften. The other statistic we must watch is the number of months’ of shadow inventory which will be coming to market.
CoreLogic just released their November report (which covers August). They estimate shadow inventory:
… by calculating the number of properties that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders and that are not currently listed on multiple listing services (MLSs). Shadow inventory is typically not included in the official metrics of unsold inventory.
The report showed that shadow inventory jumped more than 10% in the last year, pushing total unsold inventory to 2.1 million houses.
That represents another 8 months of supply.
The Wall Street Journal reported that some analysts have said CoreLogic estimates look rather low.
Laurie Goodman, senior managing director at Amherst Securities Group, has warned that as many as seven million homes could end up in banks hands unless more aggressive modification regimes are put in place.
Barclays estimates that another 3.76 million homes are either in the foreclosure process or are at least 90 days delinquent but not yet in foreclosure.
Bottom Line
Most industry experts are projecting just that – an additional fall in prices of between 5-20%. Mark Fleming, chief economist for CoreLogic commented:
“The weak demand for housing is significantly increasing the risk of further price declines in the housing market. This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing.”
If you are thinking of selling, give me a call immediately. In most parts of the country, selling sooner may be better than later. I will be glad to give you the exact number of months of inventory for your market area and help you price your home to sell before the shadow inventory or foreclosures hit the market.
Reprinted from Keeping Current Matters Blogsite.
Monday, November 29, 2010
Friday, November 19, 2010
20,000 Homes Will Sell This Weekend!
There is no doubt that demand for housing has slowed. The National Association of Realtor’s 3rd Quarter Existing Homes Sales Report showed that sales were down in all fifty states and the District of Columbia (3rd quarter vs. the 2nd quarter). The decline was in double digits in all but two states (Nevada and California). Those are the facts.
But let us not allow the facts to get in the way of the truth. The truth is that over 4 million homes will have sold in this country by the end of the year.
That averages out to be over 10,000 houses a day! Every day – 365 days a year!
Houses are selling. The question is will your house be one of the 10,000 that sell today. That is entirely up to you. You and your family can move on with your plans and dreams immediately. You just have to be willing to price the house at what today’s purchaser is willing to pay. Will you be able to sell it for what it would have sold for in the past? Probably not. Will you be able to sell it for the price you had desired? Probably not.
You must weigh the cost of selling today (a reduced profit on your home) against the cost of not getting on with your life. There is no doubt that money is important to everyone, especially today. Being able to follow your plans and dreams is also important however. Don’t allow money to ultimately control that decision.
Decide what is best for you and your family – AND DO IT!!
Reprinted from Keeping Current Matters Blog.
But let us not allow the facts to get in the way of the truth. The truth is that over 4 million homes will have sold in this country by the end of the year.
That averages out to be over 10,000 houses a day! Every day – 365 days a year!
Houses are selling. The question is will your house be one of the 10,000 that sell today. That is entirely up to you. You and your family can move on with your plans and dreams immediately. You just have to be willing to price the house at what today’s purchaser is willing to pay. Will you be able to sell it for what it would have sold for in the past? Probably not. Will you be able to sell it for the price you had desired? Probably not.
You must weigh the cost of selling today (a reduced profit on your home) against the cost of not getting on with your life. There is no doubt that money is important to everyone, especially today. Being able to follow your plans and dreams is also important however. Don’t allow money to ultimately control that decision.
Decide what is best for you and your family – AND DO IT!!
Reprinted from Keeping Current Matters Blog.
Monday, November 15, 2010
October MLS Report
Every month, David Flory with Cunningham & Company Mortgage Bankers does an MLS report with sales and inventory levels for our MLS area as well as on our island. I find this to be a very informative report and thought you might find it interesting as well. He has several graphs each month, but I have not been able to copy them to my blog. If you have any questions or would like more information or the graphs, please do not hesitate to call me at 877 617-7654 or email me at joyce@intracoastalrealty.com.
David’s Comments –
“You’ve got to be very careful if you don’t know where you’re going, because you might not get there” Yogi Berra
So where are you going? Do you know how to get there? Where is our economy going? Does the Federal Reserve know how to get there? In the last week the Federal Reserve announced that it plans to purchase up to $600 billion in government securities. Treasury bond yields initially fell and then gradually rose again. This allowed mortgage rates to fall to record levels this past week (see comments on Mortgage rates further in report). Will this action succeed and improve our housing recovery. Our housing recovery is key to the current economic situation.
Octobers average sales price has managed to exceed last month as well as 2009 year end average sales price. While the numbers of sales were down from last month and as well as down from a year ago. Our average sales price is up 5.8% over last month and up 1.1% from Year End 2009. When we look at our year to date average sold price we are only down 2.1% from Year End 2009. Our median sold price is up from last month by 4.8% and down by 2.4% from last year this time. Our median sold price has rebounded and has risen and is only 1.2% behind 2009 year end median. In our rolling 12 months we are up 10.8% in sold units and our average sold price is only down by 3.7%. Sold units are only 85 units down from last month and down 153 from last October.
In the month of October we saw a decrease of 241 homes in our listing inventory, we have 5,150 homes on the market as of November 1st. This continues to put us in a strong buyer’s market with a listing inventory of over a 16.8 month supply. With the low sales in October this affects our month supply with a change of 2.6 months from last month. Our average list price has stayed below the $400,000 range for the last year; we are currently at $364,097. In October we saw an increase in our seller concessions, it is now 25.6%. Our average days on the market are 121. The list to sold ratio is 93.0% and there is no change from last month; this number needs to continue to get better. The number of homes that sold in 15 days or less continues to remain very low, 18.0% of October sold homes. The 30-year fixed-rate mortgage (FRM) averaged 4.17% with an average 0.8 points for the week ending November 11, 2010. We have hit historic lows in mortgage rates. Call me so I can show you or your clients how they can get the benefit of these rates. Have a great week and let me know what I can do to help you and your clients.
Despite all the media comments about our markets we are still lending money for residential mortgages. If a client has income and credit and some sort of down payment; they can get a mortgage. It goes to the basic three C’s – Capacity, Collateral and Character.
Listing Inventory
In October we saw a decrease in listing inventory of 241 units. We are about 146 units under November 1, 2009. We have 5,150 single family homes for sale in our MLS. The average list price of $364,097 is down by $801 from last month. The average list price has decreased by 4.8% from November 1, 2009.
Monthly Average Sold Price
Our monthly average sold price is up by 5.8% from last month and down .01% from October 2009. Our average sold price is up by $12,898.00 from last month. October average sold price ($236,985) shows an increase of 1.1% from year end 2009. Our average sold price is up by $321.00 from last October.
Monthly Sold Units
This month’s decline in the number of homes sold when compared to previous year is down 153 units. The number of sold homes is down 21.8% from last month and down 33.4% from October 2009. Last month we had 390 sold units and this month 305 sold units, last year in October we had 458 sold units.
Average Sold Price Year to Date
Year over year our year to date numbers have dipped a little.
2003 year end average sale price $ 186,137
2004 year end average sale price $ 210,048
2005 year end average sale price $ 254,080
2006 year end average sale price $ 264,498
2007 year end average sale price $ 273,408
2008 year end average sale price $256,498
2009 year end average sale price $234,379
2010 year to date average sale price $229,458
While our current year to date numbers are lower than Year End 2009 they do show promising signs that our sales are on the upswing. The first ten months of 2010 has a 211 sold unit gain over first ten months of 2009. The average sales price is down 2.9% for the first ten months of 2010 than the first ten months of 2009. Our median sales price is just 1.2% behind 2009.
Rolling 12 months
When we look at November 1st, 2009 to October 31st, 2010 we have 4,580 sold units and when we compare November 1st, 2008 to October 31st, 2009 we have a 448 unit gain (4,132 sold units). When we look at the same rolling 12 months for average sold price we see that we are only down by 3.7%. So the dates of 11/1/2009 to 10/31/2010 we have an average sold price of $228,669 while from 11/1/2008 to 10/31/2009 we had an average sold price $237,397.
Median Sold Price
Our Median sold price rebounded this month an increase of 4.8% from last month, up to $181,500. Our national numbers lag by one month. Our median sales price dip from last month matches up with the national median for September. I am hoping we can see the national median sales price reverse its downward trend.
Pending
Pending Sales – A sale is listed as pending when the contract has been signed but the transaction has not yet closed. Sales are typically finalized within one to two months from signing. I look at the total pending units on a regular basis and this is how they chart out. We saw our peak pending numbers about May 3rd. We are actually up 2.3% from last month and we are down just 16.9% from November 2, 2009. With the tax credit benefits expired it will be interesting to see if our sales can improve going into early fall.
Market Absorption rate – The number of homes sold in October, 305 divided by the current listing inventory, 5,150 gives us a 16.8 month supply of single family homes. This increased by 2.6 months from last month. We need to get this inventory back under 12 months. With a large inventory and the few sales in October this affects our market absorption. With rates where they are and plenty of inventory; we can get this number down.
List to Sold price ratio – the average list price of the sold properties is $254,799 and the average sold price is $236,984 for October which gives us a 93.0% list to sold price ratio – a zero change from last month. We have now managed to stay under 95% for over a year and several months.
Seller Concessions – We had 25.6% of sold properties report a sales concession for October, an increase of 2.1%. We want this number to go lower.
Days on Market – The average days on market for the sold properties is now at 121 for October. That is about 4 months to keep a property on the market. Only 18.0% of the properties were placed under contract in less than 15 days for the month of October.
Carolina & Kure Beach
There are currently 405 single family homes for sale and this represents a 40 unit decrease over October 1, 2010 and 7.9% of our total WRAR inventory. The average list price is $412,359 a decrease of about $3,484 from October. In October there were 28 homes sold, divide that by the homes available and you have a 14.4 monthly supply of homes in Carolina and Kure Beach. The average sold price for the month of October was $263,439 and is up $11,864 from last month. When we look at our rolling 12 months November 1, 2009 to October 31, 2010 we have 327 homes sold at an average price of $284,291. While November 1, 2008 to October 31, 2009 we had 266 homes sold at an average price of $301,186.
This data was pulled on November 13, 2010, based on information from the Wilmington Regional Association of REALTORS Incorporated, for the period Jan. 1, 2005 through October 31, 2010.
The Market
30 Year & 15 Year Fixed Rate Mortgages fall to new lows
-Year and 15-Year Fixed-Rate Mortgages Fall to New Lows
Freddie Mac released the results of its Primary Mortgage Market Survey® , which found that the 30-year fixed-rate mortgage (FRM) and the 15-year (FRM) set new records for all-time lows. The 5-year ARM also reached another new low in the survey while the 1-year ARM remained at its nadir.
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.17 percent with an average 0.8 point for the week ending November 11, 2010, down from last week when it averaged 4.24 percent. Last year at this time, the 30-year FRM averaged 4.91 percent.
15-year FRM this week averaged 3.57 percent with an average 0.8 point, down from last week when it averaged 3.63 percent. A year ago at this time, the 15-year FRM averaged 4.36 percent.
Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
"Following the Federal Reserve (Fed) November 3rd policy announcement that it plans to purchase up to $600 billion in government securities, Treasury bond yields initially fell and then gradually rose again. This allowed mortgage rates to fall to record levels this week.
"Despite historically low mortgage rates, however, the housing recovery continues to be slow owing in part to household job uncertainty and tight credit conditions. The unemployment rate has remained at 9.5 percent or higher for the past 15 months, while commercial banks tightened lending standards in 16 of the last 17 quarters, according to the Fed's Senior Loan Officer Opinion Survey."
Freddie Mac
30 Year Fixed Rates
FHA approved Condo’s
Are you aware that about 75% of the FHA approved Condo’s in our area have to be recertified by December 7th, 2010? In order for a Condo purchaser to get a FHA loan after December 7th the Condo project will have to complete their condo recertification. You can go the web site for HUD to get a list of approved condo’s for our area. Go to www.hud.gov and then go to Resources, in this select HUD approved Condominium projects, then select North Carolina and Wilmington. You can then see the different FHA approved Condo’s in this area – look at the far column and you will see the expiration date of Condo’s in our area. If I can help in any way let me know.
I offer these key statistics to keep you informed as to how our market is moving. With 20 years of real estate sales and management and finance in my background I am able to evaluate the current conditions and provide you with accurate data. With key information from your clients I can evaluate their needs and offer them the best plan for their current mortgage. Call me today for a quote.
Cunningham & Company is a full service Mortgage Banker - we handle everything in house. We do first time buyers, USDA, FHA and VA loans, Conventional and Jumbo Loans, 100% financing and we have a large selection of adjustable rate loans as well as several interest only programs. Call me today with my background in real estate and the resources of Cunningham & Company working together... you can't miss. A loan in the crowd.
David Flory NMLS #91592
Mortgage Consultant
Cunningham & Company Mortgage Bankers
910-352-8273 cell
910-313-0045 office
davidf@cunninghammortgage.com
www.cunninghammortgage.com
David’s Comments –
“You’ve got to be very careful if you don’t know where you’re going, because you might not get there” Yogi Berra
So where are you going? Do you know how to get there? Where is our economy going? Does the Federal Reserve know how to get there? In the last week the Federal Reserve announced that it plans to purchase up to $600 billion in government securities. Treasury bond yields initially fell and then gradually rose again. This allowed mortgage rates to fall to record levels this past week (see comments on Mortgage rates further in report). Will this action succeed and improve our housing recovery. Our housing recovery is key to the current economic situation.
Octobers average sales price has managed to exceed last month as well as 2009 year end average sales price. While the numbers of sales were down from last month and as well as down from a year ago. Our average sales price is up 5.8% over last month and up 1.1% from Year End 2009. When we look at our year to date average sold price we are only down 2.1% from Year End 2009. Our median sold price is up from last month by 4.8% and down by 2.4% from last year this time. Our median sold price has rebounded and has risen and is only 1.2% behind 2009 year end median. In our rolling 12 months we are up 10.8% in sold units and our average sold price is only down by 3.7%. Sold units are only 85 units down from last month and down 153 from last October.
In the month of October we saw a decrease of 241 homes in our listing inventory, we have 5,150 homes on the market as of November 1st. This continues to put us in a strong buyer’s market with a listing inventory of over a 16.8 month supply. With the low sales in October this affects our month supply with a change of 2.6 months from last month. Our average list price has stayed below the $400,000 range for the last year; we are currently at $364,097. In October we saw an increase in our seller concessions, it is now 25.6%. Our average days on the market are 121. The list to sold ratio is 93.0% and there is no change from last month; this number needs to continue to get better. The number of homes that sold in 15 days or less continues to remain very low, 18.0% of October sold homes. The 30-year fixed-rate mortgage (FRM) averaged 4.17% with an average 0.8 points for the week ending November 11, 2010. We have hit historic lows in mortgage rates. Call me so I can show you or your clients how they can get the benefit of these rates. Have a great week and let me know what I can do to help you and your clients.
Despite all the media comments about our markets we are still lending money for residential mortgages. If a client has income and credit and some sort of down payment; they can get a mortgage. It goes to the basic three C’s – Capacity, Collateral and Character.
Listing Inventory
In October we saw a decrease in listing inventory of 241 units. We are about 146 units under November 1, 2009. We have 5,150 single family homes for sale in our MLS. The average list price of $364,097 is down by $801 from last month. The average list price has decreased by 4.8% from November 1, 2009.
Monthly Average Sold Price
Our monthly average sold price is up by 5.8% from last month and down .01% from October 2009. Our average sold price is up by $12,898.00 from last month. October average sold price ($236,985) shows an increase of 1.1% from year end 2009. Our average sold price is up by $321.00 from last October.
Monthly Sold Units
This month’s decline in the number of homes sold when compared to previous year is down 153 units. The number of sold homes is down 21.8% from last month and down 33.4% from October 2009. Last month we had 390 sold units and this month 305 sold units, last year in October we had 458 sold units.
Average Sold Price Year to Date
Year over year our year to date numbers have dipped a little.
2003 year end average sale price $ 186,137
2004 year end average sale price $ 210,048
2005 year end average sale price $ 254,080
2006 year end average sale price $ 264,498
2007 year end average sale price $ 273,408
2008 year end average sale price $256,498
2009 year end average sale price $234,379
2010 year to date average sale price $229,458
While our current year to date numbers are lower than Year End 2009 they do show promising signs that our sales are on the upswing. The first ten months of 2010 has a 211 sold unit gain over first ten months of 2009. The average sales price is down 2.9% for the first ten months of 2010 than the first ten months of 2009. Our median sales price is just 1.2% behind 2009.
Rolling 12 months
When we look at November 1st, 2009 to October 31st, 2010 we have 4,580 sold units and when we compare November 1st, 2008 to October 31st, 2009 we have a 448 unit gain (4,132 sold units). When we look at the same rolling 12 months for average sold price we see that we are only down by 3.7%. So the dates of 11/1/2009 to 10/31/2010 we have an average sold price of $228,669 while from 11/1/2008 to 10/31/2009 we had an average sold price $237,397.
Median Sold Price
Our Median sold price rebounded this month an increase of 4.8% from last month, up to $181,500. Our national numbers lag by one month. Our median sales price dip from last month matches up with the national median for September. I am hoping we can see the national median sales price reverse its downward trend.
Pending
Pending Sales – A sale is listed as pending when the contract has been signed but the transaction has not yet closed. Sales are typically finalized within one to two months from signing. I look at the total pending units on a regular basis and this is how they chart out. We saw our peak pending numbers about May 3rd. We are actually up 2.3% from last month and we are down just 16.9% from November 2, 2009. With the tax credit benefits expired it will be interesting to see if our sales can improve going into early fall.
Market Absorption rate – The number of homes sold in October, 305 divided by the current listing inventory, 5,150 gives us a 16.8 month supply of single family homes. This increased by 2.6 months from last month. We need to get this inventory back under 12 months. With a large inventory and the few sales in October this affects our market absorption. With rates where they are and plenty of inventory; we can get this number down.
List to Sold price ratio – the average list price of the sold properties is $254,799 and the average sold price is $236,984 for October which gives us a 93.0% list to sold price ratio – a zero change from last month. We have now managed to stay under 95% for over a year and several months.
Seller Concessions – We had 25.6% of sold properties report a sales concession for October, an increase of 2.1%. We want this number to go lower.
Days on Market – The average days on market for the sold properties is now at 121 for October. That is about 4 months to keep a property on the market. Only 18.0% of the properties were placed under contract in less than 15 days for the month of October.
Carolina & Kure Beach
There are currently 405 single family homes for sale and this represents a 40 unit decrease over October 1, 2010 and 7.9% of our total WRAR inventory. The average list price is $412,359 a decrease of about $3,484 from October. In October there were 28 homes sold, divide that by the homes available and you have a 14.4 monthly supply of homes in Carolina and Kure Beach. The average sold price for the month of October was $263,439 and is up $11,864 from last month. When we look at our rolling 12 months November 1, 2009 to October 31, 2010 we have 327 homes sold at an average price of $284,291. While November 1, 2008 to October 31, 2009 we had 266 homes sold at an average price of $301,186.
This data was pulled on November 13, 2010, based on information from the Wilmington Regional Association of REALTORS Incorporated, for the period Jan. 1, 2005 through October 31, 2010.
The Market
30 Year & 15 Year Fixed Rate Mortgages fall to new lows
-Year and 15-Year Fixed-Rate Mortgages Fall to New Lows
Freddie Mac released the results of its Primary Mortgage Market Survey® , which found that the 30-year fixed-rate mortgage (FRM) and the 15-year (FRM) set new records for all-time lows. The 5-year ARM also reached another new low in the survey while the 1-year ARM remained at its nadir.
News Facts
30-year fixed-rate mortgage (FRM) averaged 4.17 percent with an average 0.8 point for the week ending November 11, 2010, down from last week when it averaged 4.24 percent. Last year at this time, the 30-year FRM averaged 4.91 percent.
15-year FRM this week averaged 3.57 percent with an average 0.8 point, down from last week when it averaged 3.63 percent. A year ago at this time, the 15-year FRM averaged 4.36 percent.
Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.
"Following the Federal Reserve (Fed) November 3rd policy announcement that it plans to purchase up to $600 billion in government securities, Treasury bond yields initially fell and then gradually rose again. This allowed mortgage rates to fall to record levels this week.
"Despite historically low mortgage rates, however, the housing recovery continues to be slow owing in part to household job uncertainty and tight credit conditions. The unemployment rate has remained at 9.5 percent or higher for the past 15 months, while commercial banks tightened lending standards in 16 of the last 17 quarters, according to the Fed's Senior Loan Officer Opinion Survey."
Freddie Mac
30 Year Fixed Rates
FHA approved Condo’s
Are you aware that about 75% of the FHA approved Condo’s in our area have to be recertified by December 7th, 2010? In order for a Condo purchaser to get a FHA loan after December 7th the Condo project will have to complete their condo recertification. You can go the web site for HUD to get a list of approved condo’s for our area. Go to www.hud.gov and then go to Resources, in this select HUD approved Condominium projects, then select North Carolina and Wilmington. You can then see the different FHA approved Condo’s in this area – look at the far column and you will see the expiration date of Condo’s in our area. If I can help in any way let me know.
I offer these key statistics to keep you informed as to how our market is moving. With 20 years of real estate sales and management and finance in my background I am able to evaluate the current conditions and provide you with accurate data. With key information from your clients I can evaluate their needs and offer them the best plan for their current mortgage. Call me today for a quote.
Cunningham & Company is a full service Mortgage Banker - we handle everything in house. We do first time buyers, USDA, FHA and VA loans, Conventional and Jumbo Loans, 100% financing and we have a large selection of adjustable rate loans as well as several interest only programs. Call me today with my background in real estate and the resources of Cunningham & Company working together... you can't miss. A loan in the crowd.
David Flory NMLS #91592
Mortgage Consultant
Cunningham & Company Mortgage Bankers
910-352-8273 cell
910-313-0045 office
davidf@cunninghammortgage.com
www.cunninghammortgage.com
Friday, November 12, 2010
Falling Prices
In the past few days, three separate pricing reports showed that national house prices have begun to soften. Altos Research shows that prices fell 3.1% over the last three months. Clear Capital’s Home Data Index Market Report shows that prices have fallen 5% in the last quarter. The Zillow Real Estate Market Report shows a 1.2% quarterly decline and a 4.3% yearly decline. Anyone selling a house should understand what is currently happening in the market and what impact certain factors will have on prices over the next six months. Let’s look at those factors.
The Expiration of the Homebuyers’ Tax Credit
The tax credit was introduced by the administration to stabilize house prices. The TARP Report spells this out quite clearly. The thinking was, if they rewarded purchasers to buy, they could lower the months’ supply of housing inventory. By increasing demand and decreasing supply, prices would level off. And they did originally.
However, when they extended and expanded the tax credit earlier this year, the opposite occurred. When buyers came out, more property owners (individual homeowners who had previously held off putting their home on the market and banks with an ever increasing supply of foreclosures) decided that was the time to put their houses up for sale. Instead of lowering supply, it actually increased the supply of homes on the market. Inventory rose and demand faded with the expiration of the tax credit. Larger supplies and less demand will cause prices to fall.
Distressed Properties
Foreclosures and short sales have dramatically affected prices in almost every section of the country. Zillow has reported that 20.1% of all homes sold in September were foreclosures and an additional 27.3% were short sales. A foreclosure, on average, sells for 65% of full value and short sales sell for 85% of full value. Obviously, as more distressed properties sell the more the average sales price falls.
Distressed properties also have a major impact on appraisals. Even if a non-distressed property sells, the appraiser may use distressed properties to determine value in that neighborhood. We can see that distressed properties therefore impact prices even on the non-distressed properties sold.
We will be dealing with this issue for some time while banks clear the inventory of foreclosures they currently own. It was just reported that there is over 40 months of supply we must work through. Increased supply causes prices to soften.
Lack of Consumer Confidence
Many economists believe that the housing recovery depends on resurgence in job growth. It will be difficult for the buying public to have the confidence to make big ticket purchasers (including housing) until they are confident that they can stay employed. Demand will continue to be weak until the economy recovers. Weak demand causes prices to fall.
Bottom Line
Pricing of any item is determined by the ratio of supply and demand. Demand for housing will remain soft until the economy recovers. The months’ supply of housing inventory continues to remain too high and is increasingly being made up of distressed properties which are sold at a discounted price. That means that nationally home prices will continue to fall.
Please give me a call to sit down and discuss how the above issues affect prices in our area. Only by knowing the truth can you pick the best option for you and your family.
The Expiration of the Homebuyers’ Tax Credit
The tax credit was introduced by the administration to stabilize house prices. The TARP Report spells this out quite clearly. The thinking was, if they rewarded purchasers to buy, they could lower the months’ supply of housing inventory. By increasing demand and decreasing supply, prices would level off. And they did originally.
However, when they extended and expanded the tax credit earlier this year, the opposite occurred. When buyers came out, more property owners (individual homeowners who had previously held off putting their home on the market and banks with an ever increasing supply of foreclosures) decided that was the time to put their houses up for sale. Instead of lowering supply, it actually increased the supply of homes on the market. Inventory rose and demand faded with the expiration of the tax credit. Larger supplies and less demand will cause prices to fall.
Distressed Properties
Foreclosures and short sales have dramatically affected prices in almost every section of the country. Zillow has reported that 20.1% of all homes sold in September were foreclosures and an additional 27.3% were short sales. A foreclosure, on average, sells for 65% of full value and short sales sell for 85% of full value. Obviously, as more distressed properties sell the more the average sales price falls.
Distressed properties also have a major impact on appraisals. Even if a non-distressed property sells, the appraiser may use distressed properties to determine value in that neighborhood. We can see that distressed properties therefore impact prices even on the non-distressed properties sold.
We will be dealing with this issue for some time while banks clear the inventory of foreclosures they currently own. It was just reported that there is over 40 months of supply we must work through. Increased supply causes prices to soften.
Lack of Consumer Confidence
Many economists believe that the housing recovery depends on resurgence in job growth. It will be difficult for the buying public to have the confidence to make big ticket purchasers (including housing) until they are confident that they can stay employed. Demand will continue to be weak until the economy recovers. Weak demand causes prices to fall.
Bottom Line
Pricing of any item is determined by the ratio of supply and demand. Demand for housing will remain soft until the economy recovers. The months’ supply of housing inventory continues to remain too high and is increasingly being made up of distressed properties which are sold at a discounted price. That means that nationally home prices will continue to fall.
Please give me a call to sit down and discuss how the above issues affect prices in our area. Only by knowing the truth can you pick the best option for you and your family.
More Falling Real Estate Prices
In the past few days, three separate pricing reports showed that national house prices have begun to soften. Altos Research shows that prices fell 3.1% over the last three months. Clear Capital’s Home Data Index Market Report shows that prices have fallen 5% in the last quarter. The Zillow Real Estate Market Report shows a 1.2% quarterly decline and a 4.3% yearly decline. Anyone selling a house should understand what is currently happening in the market and what impact certain factors will have on prices over the next six months. Let’s look at those factors.
The Expiration of the Homebuyers’ Tax Credit
The tax credit was introduced by the administration to stabilize house prices. The TARP Report spells this out quite clearly. The thinking was, if they rewarded purchasers to buy, they could lower the months’ supply of housing inventory. By increasing demand and decreasing supply, prices would level off. And they did originally.
However, when they extended and expanded the tax credit earlier this year, the opposite occurred. When buyers came out, more property owners (individual homeowners who had previously held off putting their home on the market and banks with an ever increasing supply of foreclosures) decided that was the time to put their houses up for sale. Instead of lowering supply, it actually increased the supply of homes on the market. Inventory rose and demand faded with the expiration of the tax credit. Larger supplies and less demand will cause prices to fall.
Distressed Properties
Foreclosures and short sales have dramatically affected prices in almost every section of the country. Zillow has reported that 20.1% of all homes sold in September were foreclosures and an additional 27.3% were short sales. A foreclosure, on average, sells for 65% of full value and short sales sell for 85% of full value. Obviously, as more distressed properties sell the more the average sales price falls.
Distressed properties also have a major impact on appraisals. Even if a non-distressed property sells, the appraiser may use distressed properties to determine value in that neighborhood. We can see that distressed properties therefore impact prices even on the non-distressed properties sold.
We will be dealing with this issue for some time while banks clear the inventory of foreclosures they currently own. It was just reported that there is over 40 months of supply we must work through. Increased supply causes prices to soften.
Lack of Consumer Confidence
Many economists believe that the housing recovery depends on resurgence in job growth. It will be difficult for the buying public to have the confidence to make big ticket purchasers (including housing) until they are confident that they can stay employed. Demand will continue to be weak until the economy recovers. Weak demand causes prices to fall.
Bottom Line
Pricing of any item is determined by the ratio of supply and demand. Demand for housing will remain soft until the economy recovers. The months’ supply of housing inventory continues to remain too high and is increasingly being made up of distressed properties which are sold at a discounted price. That means that nationally home prices will continue to fall.
Please give me a call to sit down and discuss how the above issues affect prices in our area. Only by knowing the truth can you pick the best option for you and your family.
The Expiration of the Homebuyers’ Tax Credit
The tax credit was introduced by the administration to stabilize house prices. The TARP Report spells this out quite clearly. The thinking was, if they rewarded purchasers to buy, they could lower the months’ supply of housing inventory. By increasing demand and decreasing supply, prices would level off. And they did originally.
However, when they extended and expanded the tax credit earlier this year, the opposite occurred. When buyers came out, more property owners (individual homeowners who had previously held off putting their home on the market and banks with an ever increasing supply of foreclosures) decided that was the time to put their houses up for sale. Instead of lowering supply, it actually increased the supply of homes on the market. Inventory rose and demand faded with the expiration of the tax credit. Larger supplies and less demand will cause prices to fall.
Distressed Properties
Foreclosures and short sales have dramatically affected prices in almost every section of the country. Zillow has reported that 20.1% of all homes sold in September were foreclosures and an additional 27.3% were short sales. A foreclosure, on average, sells for 65% of full value and short sales sell for 85% of full value. Obviously, as more distressed properties sell the more the average sales price falls.
Distressed properties also have a major impact on appraisals. Even if a non-distressed property sells, the appraiser may use distressed properties to determine value in that neighborhood. We can see that distressed properties therefore impact prices even on the non-distressed properties sold.
We will be dealing with this issue for some time while banks clear the inventory of foreclosures they currently own. It was just reported that there is over 40 months of supply we must work through. Increased supply causes prices to soften.
Lack of Consumer Confidence
Many economists believe that the housing recovery depends on resurgence in job growth. It will be difficult for the buying public to have the confidence to make big ticket purchasers (including housing) until they are confident that they can stay employed. Demand will continue to be weak until the economy recovers. Weak demand causes prices to fall.
Bottom Line
Pricing of any item is determined by the ratio of supply and demand. Demand for housing will remain soft until the economy recovers. The months’ supply of housing inventory continues to remain too high and is increasingly being made up of distressed properties which are sold at a discounted price. That means that nationally home prices will continue to fall.
Please give me a call to sit down and discuss how the above issues affect prices in our area. Only by knowing the truth can you pick the best option for you and your family.
Tuesday, November 9, 2010
5 Reasons To Hire A Real Estate Professional
Should you spend the money on a real estate commission or save that money by selling your home by yourself?
That is a question many home sellers ask themselves. Today, we want to discuss why it is crucial to have a true professional guiding you through the mine field of challenges that exist in the current real estate market.
The housing market today is more challenging than it has ever been and seems to be becoming more difficult each day. What impact will foreclosures have on prices? Which loan products that were available just last month are no longer available? How do you convince perspective purchasers to pull the trigger on an offer when everyone is telling them that they should see another 100 houses before they make a decision? These are tough questions for a trained, experienced professional. The lay person would find it almost impossible to keep abreast of this rapidly evolving industry.
Here are five important reasons to use a real estate professional:
1. Pricing Is Difficult
Just a few years ago, you didn’t have to worry about overpricing your home. If it was too high, all you needed to do was wait as historic appreciation was taking place. The situation is quite different today. With experts calling for another drop in home values, overpricing your property will cost you time. In this market, time costs you money. A professional real estate agent will discuss how increasing inventory could dramatically impact the value of your property in the months to come. They will help you set the right price in today’s market.
2. Negotiating Ability Is Crucial
Buyers today have an almost unlimited supply of homes from which to choose. They realize that puts them in a great negotiating position. Most buyers are now also being represented by an agent. Sellers need to also be represented by a professional expert trained to negotiate real estate contracts.
3. Mortgaging Is Key to the Deal
The biggest impact of the housing market collapse is that lending standards are much stricter today than they were a few short years ago. Rules are constantly changing. Even FHA has gone through a guidelines overhaul in the last several months. You need a real estate expert who has teamed up with a knowledgeable mortgage professional to make sure that the buyer in the deal is in fact capable of obtaining a mortgage. Losing time with an unqualified buyer costs you money in a market prices are falling.
4. Your Family’s Safety
I have always found it puzzling that the same person that will lock every door and window and set the alarm today will then allow total strangers into their house tomorrow. The real estate industry trains its practitioners to take steps to protect themselves and their clients. Take advantage of putting a person between you and the person calling on an ad or yard sign.
5. You Probably Have More Important Things to Do
Selling a home could turn into a full time job. Learning the necessary disclosures, coordinating the dates of your closings, dealing with a challenge regarding your appraisal and re-negotiating the offer after an engineer’s report are just a few of the concerns you may face. You would probably be better of spending that time with the items important to you and your family and leaving the challenges to your agent.
Bottom Line
To make sure the sale of your home is handled professionally – hire a trained professional. In the long run, you will wind-up with more money in your pocket and have less challenges with the move.
Copied From KMC Blog by Permission
That is a question many home sellers ask themselves. Today, we want to discuss why it is crucial to have a true professional guiding you through the mine field of challenges that exist in the current real estate market.
The housing market today is more challenging than it has ever been and seems to be becoming more difficult each day. What impact will foreclosures have on prices? Which loan products that were available just last month are no longer available? How do you convince perspective purchasers to pull the trigger on an offer when everyone is telling them that they should see another 100 houses before they make a decision? These are tough questions for a trained, experienced professional. The lay person would find it almost impossible to keep abreast of this rapidly evolving industry.
Here are five important reasons to use a real estate professional:
1. Pricing Is Difficult
Just a few years ago, you didn’t have to worry about overpricing your home. If it was too high, all you needed to do was wait as historic appreciation was taking place. The situation is quite different today. With experts calling for another drop in home values, overpricing your property will cost you time. In this market, time costs you money. A professional real estate agent will discuss how increasing inventory could dramatically impact the value of your property in the months to come. They will help you set the right price in today’s market.
2. Negotiating Ability Is Crucial
Buyers today have an almost unlimited supply of homes from which to choose. They realize that puts them in a great negotiating position. Most buyers are now also being represented by an agent. Sellers need to also be represented by a professional expert trained to negotiate real estate contracts.
3. Mortgaging Is Key to the Deal
The biggest impact of the housing market collapse is that lending standards are much stricter today than they were a few short years ago. Rules are constantly changing. Even FHA has gone through a guidelines overhaul in the last several months. You need a real estate expert who has teamed up with a knowledgeable mortgage professional to make sure that the buyer in the deal is in fact capable of obtaining a mortgage. Losing time with an unqualified buyer costs you money in a market prices are falling.
4. Your Family’s Safety
I have always found it puzzling that the same person that will lock every door and window and set the alarm today will then allow total strangers into their house tomorrow. The real estate industry trains its practitioners to take steps to protect themselves and their clients. Take advantage of putting a person between you and the person calling on an ad or yard sign.
5. You Probably Have More Important Things to Do
Selling a home could turn into a full time job. Learning the necessary disclosures, coordinating the dates of your closings, dealing with a challenge regarding your appraisal and re-negotiating the offer after an engineer’s report are just a few of the concerns you may face. You would probably be better of spending that time with the items important to you and your family and leaving the challenges to your agent.
Bottom Line
To make sure the sale of your home is handled professionally – hire a trained professional. In the long run, you will wind-up with more money in your pocket and have less challenges with the move.
Copied From KMC Blog by Permission
Monday, November 8, 2010
Quantitative Easing
The economy is still struggling. Employment numbers are not improving. The housing market is stagnant. The Federal Open Market Committee (FOMC) decided that a new form of stimulus was necessary to kick start the job market and the economy. They decided to ‘put more money’ into the market. The term for the new stimulus package is ‘quantitative easing’ (QE2).
We want to take a look at what happened, what it means to the economy and ultimately what impact it will have on the residential real estate market.
What Happened?
The Washington Post reported on the FOMC’s actions:
The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.
What Does This Mean for the Economy?
In the same article mentioned above, The Washington Post explained:
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
The Impact on Real Estate
Patrick F. Stone is president and CEO of Williston Financial Group, in an Inman News article, explained:
We have seen meaningful increases in commodity prices and stock prices in anticipation of QE2. With the implementation of QE2, and the hoped-for inflation, house prices will stabilize and — depending on the degree of impact and length of impact — housing inflation is a logical byproduct. Any meaningful housing appreciation will have a tremendously positive impact on the economy.
The U.S. News and World Report on their Money Blog addressed the issue of what opportunities now exist because of the FOMC action.
Interest rates have never been lower. It seems that just about every week mortgage rates set a new low. And this week the Fed is expected to undertake a second round of quantitative easing, QE2 for short, by buying up more government debt. As a result, incredibly low interest rates may go even lower.
But low rates don’t do us any good if we fail to take advantage of them.
The report went on to give the five ways one could take advantage of lower rates. Number one? Buy a home:
The combination of low rates and falling real estate prices make for a perfect time to buy a home. Particularly for first time buyers, there may never be a better time to take the plunge into homeownership than over the next year. Some say home values may still fall over the next year, so knowing exactly when to buy can be a bit of gamble. But locking in incredibly low rates on a 30-year mortgage is a great way to reap the benefits of the current interest rate environment.
Bottom Line
Interest rates will remain low and inflation will increase slowly if the Fed’s actions work as hoped. After that, home prices will appreciate and interest rates without government intervention will return to historic norms. If you are looking to purchase, now is the time. If you can wait 12-18 months to sell, perhaps it makes sense to wait.
If you are looking to sell in the next several months, we don’t believe the impact of the government actions will take place within that time frame. Call me to discuss your options.
We want to take a look at what happened, what it means to the economy and ultimately what impact it will have on the residential real estate market.
What Happened?
The Washington Post reported on the FOMC’s actions:
The FOMC decided this week that, with unemployment high and inflation very low, further support to the economy is needed. With short-term interest rates already about as low as they can go, the FOMC agreed to deliver that support by purchasing additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August.
What Does This Mean for the Economy?
In the same article mentioned above, The Washington Post explained:
This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.
The Impact on Real Estate
Patrick F. Stone is president and CEO of Williston Financial Group, in an Inman News article, explained:
We have seen meaningful increases in commodity prices and stock prices in anticipation of QE2. With the implementation of QE2, and the hoped-for inflation, house prices will stabilize and — depending on the degree of impact and length of impact — housing inflation is a logical byproduct. Any meaningful housing appreciation will have a tremendously positive impact on the economy.
The U.S. News and World Report on their Money Blog addressed the issue of what opportunities now exist because of the FOMC action.
Interest rates have never been lower. It seems that just about every week mortgage rates set a new low. And this week the Fed is expected to undertake a second round of quantitative easing, QE2 for short, by buying up more government debt. As a result, incredibly low interest rates may go even lower.
But low rates don’t do us any good if we fail to take advantage of them.
The report went on to give the five ways one could take advantage of lower rates. Number one? Buy a home:
The combination of low rates and falling real estate prices make for a perfect time to buy a home. Particularly for first time buyers, there may never be a better time to take the plunge into homeownership than over the next year. Some say home values may still fall over the next year, so knowing exactly when to buy can be a bit of gamble. But locking in incredibly low rates on a 30-year mortgage is a great way to reap the benefits of the current interest rate environment.
Bottom Line
Interest rates will remain low and inflation will increase slowly if the Fed’s actions work as hoped. After that, home prices will appreciate and interest rates without government intervention will return to historic norms. If you are looking to purchase, now is the time. If you can wait 12-18 months to sell, perhaps it makes sense to wait.
If you are looking to sell in the next several months, we don’t believe the impact of the government actions will take place within that time frame. Call me to discuss your options.
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