The real estate market has experienced difficulty over the last five years. From 2000-2006, house values climbed to unsustainable heights. Since then, we have seen much of this appreciation disappear. Now many look at the housing market as dead and lying in the ashes of its previous glory. However, there is growing evidence that, just like the Phoenix, there is a new market currently rising from those ashes.
Buyer activity is increasing
The first sign of an improving market is buyers again beginning to shop for a home for themselves and their family. That is taking place right now.
Pete Flint, CEO of Trulia said in a recent press release:
“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth… (We) are now experiencing 100,000 property views per minute.”
The latest Credit Suisse Monthly Survey of Real Estate Agents reports:
Our Monthly Survey of Real Estate Agents pointed to another month of improved traffic – the third straight month, and the highest level for our traffic index since April 2010, the last month of the homebuyer tax credit. The improved economy and stronger consumer confidence has translated into an increase in homebuyer traffic.
But have they actually started purchasing?
The best news is that buyers are not just looking. The latest National Association of Realtors’ (NAR) Pending Sales Report, which quantifies the number of homes going into contract, shows continued improvement:
Pending home sales improved further in December, marking the fifth gain in the past six months.
Bottom Line
Buyers are back out looking at homes and the number that are actually purchasing is steadily increasing. It appears the housing market is on the verge of a rebirth. The Phoenix is beginning to flap its wings.
Reprinted from KCM Blog
Monday, February 21, 2011
Monday, February 14, 2011
“Own Thy Own Home”
The title of this blog is the advice given in a book of financial wisdom, The Richest Man in Babylon, written by George S. Clason in 1930. The book has become a classic having sold over 2 million copies in 26 languages. The advice is just as important today as it was when written almost a century ago. And, it is comforting to know we still realize how important homeownership is.
Two different surveys released last week show that homeownership is still part of the American Dream.
Trulia’s American Dream Survey
The survey looked at how Americans feel about homeownership. They found:
70% of Americans still view homeownership as being part of their American Dream.
78% say their homes are the best investment they ever made.
88% of 18-34 year old renters aspire to be homeowners.
The report went on to say:
“Contrary to popular belief, the American Dream of homeownership has not turned into an American nightmare. In fact, we’re seeing a national resurgence of buyer and seller activity on Trulia.com,” said Pete Flint, CEO of Trulia.
“During the housing bubble, the American Dream of homeownership was beyond reach for many young adults. Stuck with student loans and entry-level jobs, many had resigned themselves to being lifelong renters. But the tide is changing – Millennials are now today’s most serious homebuyers,” says Tara-Nicholle Nelson, Consumer Educator for Trulia.
Coldwell Banker Real Estate First-Time Homebuyers Survey
This reported concentrated on what first home buyers experienced in the purchase process. It was somewhat surprising to find that:
67% said the market allowed them to buy a home sooner than expected
50% said they found a home in a more desirable neighborhood than expected
61% were able to get the home at a better price than expected
40% got more space than expected
43% locked in a lower interest rate than expected
It seems that the American public, even young adults still believe that owning your own home makes sense. And, it seems that those who have most recently purchased were pleasantly surprised with the results.
Bottom Line
It appears that the majority of the country thinks you would be doing the smart thing if you considered purchasing a home for you and your family. Give me a call today to discuss your real estate needs and wants.
Two different surveys released last week show that homeownership is still part of the American Dream.
Trulia’s American Dream Survey
The survey looked at how Americans feel about homeownership. They found:
70% of Americans still view homeownership as being part of their American Dream.
78% say their homes are the best investment they ever made.
88% of 18-34 year old renters aspire to be homeowners.
The report went on to say:
“Contrary to popular belief, the American Dream of homeownership has not turned into an American nightmare. In fact, we’re seeing a national resurgence of buyer and seller activity on Trulia.com,” said Pete Flint, CEO of Trulia.
“During the housing bubble, the American Dream of homeownership was beyond reach for many young adults. Stuck with student loans and entry-level jobs, many had resigned themselves to being lifelong renters. But the tide is changing – Millennials are now today’s most serious homebuyers,” says Tara-Nicholle Nelson, Consumer Educator for Trulia.
Coldwell Banker Real Estate First-Time Homebuyers Survey
This reported concentrated on what first home buyers experienced in the purchase process. It was somewhat surprising to find that:
67% said the market allowed them to buy a home sooner than expected
50% said they found a home in a more desirable neighborhood than expected
61% were able to get the home at a better price than expected
40% got more space than expected
43% locked in a lower interest rate than expected
It seems that the American public, even young adults still believe that owning your own home makes sense. And, it seems that those who have most recently purchased were pleasantly surprised with the results.
Bottom Line
It appears that the majority of the country thinks you would be doing the smart thing if you considered purchasing a home for you and your family. Give me a call today to discuss your real estate needs and wants.
Friday, February 11, 2011
The Cost of Waiting For Prices To Fall
Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.
The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.
PRICES
The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:
The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.
A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.
INTEREST RATES
The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:
“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”
So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?
The price is the same. It just costs more.
Let’s show you what the news means:
Date Loan Interest Monthly Payment
Amount Rate (P & I)
Today $170,000 5.05% $917.80
Nov. 2010 $170,000 4.17% $828.36
Difference in Mortgage payments $ 89.44
By sitting on the sidelines for the last 90 days a purchaser lost:
$89.44 a month
$1,073.28 a year
$32,198.40 over the thirty year life of the mortgage
If you buy a $340,000 home, double all these numbers.
Bottom Line
Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.
The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.
PRICES
The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:
The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.
A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.
INTEREST RATES
The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:
“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”
So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?
The price is the same. It just costs more.
Let’s show you what the news means:
Date Loan Interest Monthly Payment
Amount Rate (P & I)
Today $170,000 5.05% $917.80
Nov. 2010 $170,000 4.17% $828.36
Difference in Mortgage payments $ 89.44
By sitting on the sidelines for the last 90 days a purchaser lost:
$89.44 a month
$1,073.28 a year
$32,198.40 over the thirty year life of the mortgage
If you buy a $340,000 home, double all these numbers.
Bottom Line
Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.
Monday, February 7, 2011
As We Were Saying…
Several months ago, we explained that there would be an opportunity to sell your house at a higher price in the first quarter of this year than you could later in the year. Our believe was that the robo-signing mess would delay foreclosures coming to the market and that your home would sell at a higher price before these distressed properties became your competition (foreclosures sell at a 41% average discount). The numbers are now in and what we projected is in fact taking place.
Clear Capital released its monthly Home Data Index last week. In the report, they explained:
(Our) Home Data Index shows that U.S. home prices stopped declining in early January and have posted their first uptick since mid-August 2010.
“This recent national change in price direction is encouraging for the overall housing sector,” said Dr. Alex Villacorta, senior statistician at Clear Capital.
“This uptick is the first non-incentivized change in prices we’ve seen since the downturn began, and could provide great opportunity for buyers, sellers and investors alike. Although many markets still remain under significant downward pressure in light of increased distressed sale activities, it is clear that the severity of the downturns observed in October and November have subsided.”
It seems prices have stabilized and, in some markets, are perhaps even showing appreciation. However, before we get too excited let’s take a look at the reason this is taking place. According to Clear Capital:
…it is still too early to determine whether this current uptick in home prices is a temporary reprieve or the start of a sustained recovery…
Why? The number of distressed properties coming to market slowed dramatically in the last quarter of 2010.
…every spike in REO saturation (REO saturation calculates the percentage of real estate owned properties sold as compared to all properties sold in the last rolling quarter) has corresponded with a decline in home prices, and vice versa. The most recent rolling quarter for REO saturation has slowed considerably after gaining 3.2 percent during Q3 2010, with national REO rates only climbing 1.4 percent. A decrease in REO saturation indicates that an increasing proportion of fair market transactions are occurring, and as the level of distressed transactions decrease, prices tend to increase since the overall market value for an area is less affected by distressed comparable sales. If this observed negative correlation persists, a leveling off of the national REO saturation rate could indicate that home prices are poised for further gains well ahead of the seasonal spring lift.
As we explained months ago, there is a window of opportunity to sell before a large number of discounted properties go up for sale. This opportunity will last for the next 60-90 days. By then, banks will have fixed many of their paperwork challenges and again start releasing distressed properties to the market.
Bottom Line
If you wish to sell in the next twelve months, do it now. You will get a better price today than you will later in the year.
Reprinted from KCM Blog
Clear Capital released its monthly Home Data Index last week. In the report, they explained:
(Our) Home Data Index shows that U.S. home prices stopped declining in early January and have posted their first uptick since mid-August 2010.
“This recent national change in price direction is encouraging for the overall housing sector,” said Dr. Alex Villacorta, senior statistician at Clear Capital.
“This uptick is the first non-incentivized change in prices we’ve seen since the downturn began, and could provide great opportunity for buyers, sellers and investors alike. Although many markets still remain under significant downward pressure in light of increased distressed sale activities, it is clear that the severity of the downturns observed in October and November have subsided.”
It seems prices have stabilized and, in some markets, are perhaps even showing appreciation. However, before we get too excited let’s take a look at the reason this is taking place. According to Clear Capital:
…it is still too early to determine whether this current uptick in home prices is a temporary reprieve or the start of a sustained recovery…
Why? The number of distressed properties coming to market slowed dramatically in the last quarter of 2010.
…every spike in REO saturation (REO saturation calculates the percentage of real estate owned properties sold as compared to all properties sold in the last rolling quarter) has corresponded with a decline in home prices, and vice versa. The most recent rolling quarter for REO saturation has slowed considerably after gaining 3.2 percent during Q3 2010, with national REO rates only climbing 1.4 percent. A decrease in REO saturation indicates that an increasing proportion of fair market transactions are occurring, and as the level of distressed transactions decrease, prices tend to increase since the overall market value for an area is less affected by distressed comparable sales. If this observed negative correlation persists, a leveling off of the national REO saturation rate could indicate that home prices are poised for further gains well ahead of the seasonal spring lift.
As we explained months ago, there is a window of opportunity to sell before a large number of discounted properties go up for sale. This opportunity will last for the next 60-90 days. By then, banks will have fixed many of their paperwork challenges and again start releasing distressed properties to the market.
Bottom Line
If you wish to sell in the next twelve months, do it now. You will get a better price today than you will later in the year.
Reprinted from KCM Blog
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