4/26/10
>> Market
Update
INFO THAT HITS US WHERE WE LIVE The week
ended on the most dramatically impressive new home sales numbers in 47
years. March's 26.9% increase was the biggest monthly sales gain since 1963,
taking us to a 411,000 annual rate! Supply dropped to 6.7 months,
inventories fell to 228,000 and the median price went to $214,000, up 4.3%
versus last year. Some put the sales surge to the soon-to-expire tax
credit, but the facts remain that the economy IS recovering and homes ARE
substantially more affordable!
The day before, March existing home sales came in UP 6.8% at a 5.35
million annual rate, UP 16.1% from a year ago, with all regions showing gains!
The existing home median price went to $170,700, UP 0.4% from a year ago.
These good numbers reversed a three-month slide and sent the supply of
existing homes down to 8.0 months.
On April 22, the EPA's new lead paint renovation rules went into effect.
These require contractors who are disturbing lead-based paint in homes built
before 1978 to hire certified renovators working for a certified renovator firm
using lead-safe work practices. Realtors need to advise sellers to use
certified professionals to fix up a home and to make sure it's safe for buyers
to move into a home that's been renovated. The real estate disclosure must
include any tests for the presence of lead paint and any dust wipe testing done
after lead paint's been disturbed. Property managers with pre-1978 homes
must also hire certified renovators. Find more info at http://www.realtor.org/government_affairs/lead_paint_main.
Or visit the EPA at http://www.epa.gov/lead/pubs/renovation.htm.
2/22/10
INFO THAT HITS US WHERE WE LIVE Builders are
jumping on the recovery bandwagon, as January Housing Starts beat consensus
estimates, heading UP 2.8% to an annual rate of 591,000 units. Single-family
starts are now 35.6% up from their low a year ago. Total new building
permits dropped a tad in January, but single-family permits were up 0.4% for
the month and UP 48.2% from a year ago.
The trend indicates more improvement ahead. Permits for single-family
homes are 7.4% higher than starts in states requiring building permits,
well above the historical norm. Many observers feel home building is in the
early stages of a serious rebound. Supporting this, the National Association of
Home Builders reported builder confidence higher in February, going from 15 to
17 points, 8 points up from a year ago.
Although the Fed will stop buying Mortgage Backed Securities (MBS) at the end
of March, some analysts now feel this may not cause mortgage rates to rise
much, if at all. That's because Fannie Mae and Freddie Mac recently announced
their plan to buy up to $200 billion in delinquent loans from their own MBS and
pass-through pools. Friday the Mortgage Bankers Association reported the
percentage of delinquent home loans shrank in Q4. MBA chief economist Jay
Brinkmann feels that fewer new problem mortgages could be signaling the
"beginning of the end" of the foreclosure crisis. Let's hope
so.
2/15/10
INFO THAT HITS US WHERE WE LIVE The National
Association of Realtors last Thursday reported existing home sales UP 27.2%
for the last three months of 2009 versus a year earlier. This amounted to a
seasonally adjusted annual rate of 6 million homes. -- a 13.9% increase over
the third quarter's annual rate of 5.29 million homes. Clearly, buyers are
taking advantage of the low mortgage interest rates and the tax credit that was
extended and expanded by Congress.
The existing home sales increase from Q3 to Q4 occurred in 48 states and
D.C., with 32 of those states showing double-digit gains. Year-over-year, sales
were higher in 49 states and D.C., up by double digits in all but 3 states. And
distressed property made up just 32% of Q4 sales versus 37% of sales a year
ago. The national median price of an existing single-family home, at $172,900,
was down 4.1% year-over-year -- but that was the smallest price decline in
over two years. Even better, out of the 151 metropolitan statistical
areas studied, 67 of them showed a RISE in the median home price!
2/8/10
INFO THAT HITS US WHERE WE LIVE The Pending Home
Sales Index recovered from its November slump, increasing 1.0% in December,
putting it 10.9% over its level of a year ago. National Association of
Realtors chief economist Lawrence Yun sees "...a broad improvement over
year-ago levels. December activity was the fifth-highest monthly tally in two
years." The slump was attributed to the rush before November to grab
the tax credit set to expire at the end of that month.
We now know the tax credit was extended to buyers who can sign a contract by
April 30 and close on the home by June 30. It's also been expanded, adding a
$6500 credit for repeat buyers to the $8,000 credit for first timers. The NAR's
Yun estimates 2.4 million households should take advantage of the credit this
year.
The NAR also released their adjusted overall outlook for this year and
next. They estimate existing home sales will grow from 5.19 million in 2009
to 5.66 million in 2010 and 5.7 million in 2011. They see new home sales
growing from 375,000 in 2009 to 446,000 in 2010 and 637,000 in 2011. They
believe prices have bottomed, projecting a 3.4% hike in the median price for
existing homes to $179,800 this year and then a 4.3% rise to $187,500 in 2011.
New homes should go up 3.7% this year to a $221,300 median price and then 4.7%
in 2011 to $231,700.
2/1/10
INFO THAT HITS US WHERE WE LIVE The week began with December Existing Home Sales dropping 16.7%. Some observers felt this was the result of uncertainty over the homebuyer tax credit, scheduled to expire at the end of November. The tax credit was, as we now know, extended into this year, but it wasn't announced soon enough to help December sales. Nonetheless, Existing Home Sales are UP 15.0% over a year ago. And the median price of an existing home is now $178,300, UP 1.5% over a year ago and the best year-over-year comp since 2006. Finally, inventories are now down to 3.29 million, their lowest reading since March 2006.
Wednesday, New Home Sales were reported at a 342,000 annual rate, down 7.6% for December. But inventories are now at 231,000, 59.6% below their mid-2006 peak and at their lowest level since 1971, when the population was two thirds its size today. The Case-Shiller index of home prices in the 20 biggest markets went up a seasonally-adjusted 0.2% in November. This was the sixth month in a row the index gained and prices increased in 14 of the 20 markets. The FHFA price index for homes bought with conforming mortgages went up 0.7% in November, its fifth advance in the last seven readings.
According to Freddie Mac's weekly Primary Mortgage Market Survey, mortgage rates inched down for the fourth week in a row. But prospective homebuyers and owners looking to refinance should note that the Fed reiterated its intention to end mortgage bond purchases on March 31. Experts feel this will make rates head up a bit.
1/18/10
INFO THAT HITS US WHERE
WE LIVE Our hearts go out to the people of Haiti recovering from
the terrible tragedy of last Tuesday's earthquake. We know everyone's thoughts
are with the Haitians. It has been inspiring to see the American people support
the relief efforts in so many ways.
Last week, housing market news was thin on the ground. It was good to see that
fixed-rate mortgage rates dropped again, according to Freddie Mac's weekly
survey of conforming mortgages, which came out Thursday. The report was
accompanied by encouraging words from Freddie Mac's chief economist Frank
Nothaft, who said: "The Federal Reserve recently reported positive news
in both the housing market and the overall state of the economy in its
January 13 regional economic report....Economic activity improved in 10
of its 12 districts. Home sales...increased due in part to the home-buyer tax
credit and house prices appeared to have changed little since its last
report." The bottom in home pricing appears to have formed in many
areas of the country.
1/4/10 Happy New Year!
INFO THAT HITS US WHERE
WE LIVE Last Tuesday the Case-Shiller Home Price Index for 20
cities came in UP a seasonally adjusted 0.4% for October. This was the
fifth consecutive monthly increase for the index. Year-over-year, prices are
still down 7.3%, but that's a less steep rate of decline than we've been
seeing.
It looks like home prices could be stabilizing, though well below their
peaks in most markets. This price decline, plus the dramatic drop in mortgage
rates, have made homes more affordable than they've been in a long time. A
writer for the Wall Street Journal compared home price index values, mortgage
rates and average weekly earnings going back to 1987. The finding? On
average, housing is as affordable now as it was in the mid-1990's, when homes
were a real steal. Of course, this conclusion is based on average prices,
so affordability may be greater or less in individual markets.
Christmas Eve, the Treasury lifted the limit on the money it can put into
Fannie Mae and Freddie Mac to keep their net worth positive over the next
three years. Some economists point out that Fannie and Freddie could now
replace the Fed as a big buyer of mortgage-backed securities to help keep
mortgage rates down after March 31. That would be great, but
nothing is certain. Smart buyers are taking advantage of TODAY'S low
mortgage rates AND the expanded tax credit that requires a signed contract by
April 30 and a closing by June 30!
12/21/09
INFO THAT HITS US WHERE WE LIVE We saw strong evidence last
week that homebuilders are well on their way to recovery. Housing starts
for November were UP 8.9%, to an annual rate of 574,000 units.
Single-family starts were 35.0% higher than their January and February
lows. The very volatile multi-units starts were UP 67.3% from the previous
month's cyclical low. And get this -- starts were UP in every major region
across the country!
Building permits are the future of homebuilding and guess what. They
were UP 6.0% for November, to an annual rate of 584,000 units. This was
above expectations and the fastest rise in a year. Single-family permits
were UP 5.3%, registering their best pace since September 2008, when the economic mess began. Overall, homebuilding is UP in Q3 and many experts anticipate another gain in Q4 and even bigger increases in 2010-2011.
Mortgage rates continue at attractive levels, though they're creeping up.
Fannie Mae's survey for the week ending last Thursday showed 30-year
Fixed-rate mortgages averaging 4.94% with an average 0.7 point
(including the origination fee) for 80% loan-to-value (LTV) ratio loans.
Last week the Fed confirmed they would end their purchase program for
Mortgage Backed Securities on March 31, 2010. This is expected to
cause mortgage rates to keep inching up. One more reason for buyers
to act now!
12/12/09
How often has this happened to you?... After much market research, driving around and conversations with your agent (and often many others) you find the REO home you were looking for. Its only been on the market one day and you know its priced below the market and within your approved budget. Your agent calls the listing agent only to find out there is already one accepted full price offer and two more back up offers.
This has been my experience way to often in the last few months so I found a creative way to get my buyer's offers first in line. Its all about building relationships with the AZ REO listing agents. Just as they had to work to build relationships with the lenders and the asset management companies, Arizona REO buyers agents need to invest time and effort into relationships with the people who can help them.
I spend a lot of my time on the phone with Prescott AZ REO agents working to find out which prime properties are about to be listed and at what price. Often I can can even get my buyers into them several days before the listing. Last week I was able to successfully get an offer into the lender the day before the listing went active. By the time the listing went active the next day, I already had an accepted offer and the listing went pending immediately.
As Buyers agents in the foreclosure market, its important to be looking for new, more effective ways to represent our client's interests. Building good relationships with the agents who have what we need just makes good sense.
Dave Conners enjoys figuring out new ways to make his clients happy! He works with the Stephanie Woods Team in Prescott Valley AZ.
Thanksgiving is past, but I'm still grateful today. There are a hundred things (and people) I am grateful for, but I want to write about challenges of the Prescott AZ Foreclosure Market and the problems that go along with it. First I should back up and explain about problems and in particular "High Quality Problems". In real estate the worst problem to have is no clients. No clients equal no problems which of course is the worst one to have.
As I wrote a few days ago, the Prescott AZ REO market has shifted from moderate to red hot. Today's new bank owned listings often get multiple offers the first day on the market. That brings me to my first problem (that I am ever so grateful for). The time between a new listing going public and getting a good offer submitted is very short. So the key is either searching the listings several times each day and running off with my buyer's several times each week. Or... having information about listings that are not yet listed.
The process of listing a foreclosed property takes time. We average about 40 to 60 days between the initial assignment from the bank to the time the listing goes live. During this time which we call "pre-marketing" the property is cleaned and repaired if necessary. Several BPO's (broker price opinions) are ordered by the bank. Negotiations take place between the bank and the listing agent to arrive at an initial list price. Marketing is prepared.
Also during pre-marketing the some houses can be shown if the listing agent knows he has a buyer looking for that particular type of home and the buyer is already educated on the Prescott REO market and ready to roll. I mention the last part about buyer education because it would not be appropriate for somebody who is just starting the home shopping process to jump into a situation where timing is crucial. All the pieces need to be in place. Buyer needs to know the market, have a loan status report or proof of funds ready to go with the offer and be ready to write an offer.
So I am grateful that the current market conditions require me to move fast, know the REO market inside and out and have clients who appreciate the service I offer. Sometimes its hard. It can get crazy. It can be a problem, but its a High Quality problem.
Dave Conners is feeling a little crazy with Prescott Arizona's REO market. He is also very grateful for it:)
11/23/09
WASHINGTON - Home sales surged for the second month in a row in October, climbing to the highest level in 2 1/2 years as first-time buyers rushed to take advantage of an expiring tax credit.
Home sales nationwide are now up nearly 36 percent from their bottom in January, dataMonday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.
Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.
"It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."
The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.
Without adjusting for seasonal factors, sales were up 21 percent from a year earlier and were up in all four regions of the country. The gains were led a 26 percent increase in the Midwest. Sales were up 25 percent in the Northeast, 23 percent in the South and 10 percent in the West.
The housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.
The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.
The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended.
"The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"
Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.
The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.
But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand.
11/18/09
Prescott REO Homes and the New Tax Credit
Prescott Arizona REO properties are still a large part of the Prescott housing market currently accounting for about 35% of the sales with only 10% of the listings. Many bank owned properties come with perks such as home warranties or seller paid closing costs which make the deals even more attractive. On top of those, President Obama has signed a bill that extends the existing tax credit for first time homebuyers into the first half of 2010. The extension continues the existing tax credit for 10% of the purchase price up to a maximum of $8,000 for first time homebuyers (anyone who has not owned a home in the last three years).
In addition, the new bill also opens up opportunities for others who are not buying a home for the first time. For buyers who have owned a home for five of the last eight years and are purchasing a new primary residence they will receive a tax credit of 10% of the purchase price up to $6,500. They do not need to sell their existing residence to qualify, but they must move into the new home as a primary residence. This expansion of benefits to non-first time buyers is particularly helpful for a large segment of the Prescott area buyer's market. We all know what a great place Prescott is to live in and we are not alone. Most Prescott agents have an extensive list of prospective buyers who intend to move to Prescott in the future. This $6,500 incentive seems almost tailor made for this traditional Prescott buyer base.
In both cases, buyer income caps apply. There are other details of the bill that may impact individual situations. Ask me to recommend local mortgage brokers who will be happy to consult with the buyer's CPA to determine exactly what their credit is likely to be.
Both tax credits apply to purchases under contract by April 30th 2010 and they must close before June 30th 2010. This give Prescott REO buyers approximately five months to find a home and write a contract. Additionally, Federal Reserve bond purchase programs that have helped keep rates low over the last year are currently winding down. Many forecasts suggest rates in 2010 will average more than half a percentage point above current levels. Local appraisers are telling us values are stable in almost all of Yavapai County and do not show signs of continued decline. Combine the short window on the tax credit, the likely rise in rates and stabilization of prices and its hard to imagine a better opportunity for buyers than right now.
10/26/09
Earlier in the week, Housing Starts for September were UP 0.5% to an annual rate of 590,000 units. The consensus expected more, but the drag on the number all came from a drop in those volatile multi-unit starts. Single-family starts were up a strong 3.9%, their sixth gain in the last seven months and UP 40.3% since the January-February bottom. The rate of building is well below underlying demand, which some put at about 1.6 million units per year, based on population growth and the need for replacement because of fires, disasters and knock-downs.
The Mortgage Bankers Association reported that for 30-year fixed-rate mortgages, the average contract interest rate was 5.07% with 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. First time buyers have just five weeks to get in on these still great rates AND the $8,000 tax credit set to go away at the end of November.
10/23/09
WASHINGTON - Home resales rose in September to the highest level in more than two years, beating expectations, as buyers scrambled to complete their purchases before a tax credit for first-time owners expires.
The National Association of Realtors said Friday that sales rose 9.4 percent to a seasonally adjusted annual rate of 5.57 million in September, from a downwardly revised pace of 5.1 million in August. Sales had been expected to rise to an annual pace of 5.35 million, according to economists surveyed by Thomson Reuters.
The median sales price was $174,900, down 8.5 percent from a year earlier, and slightly lower than August's median of $177,300.
The inventory of unsold homes on the market fell about 7 percent to 3.63 million. That's a 7.8 month supply at the current sales pace, and the lowest level since March 2007. Nationwide sales are up nearly 24 percent from their bottom in January, but are still down 23 percent from four years ago.
Sales rose around the country, especially in the West, where they grew 13 percent from a month earlier. Foreclosure sales are booming in cities like Los Angeles, San Diego and Las Vegas.
First-time homebuyers and investors are snapping up those homes and taking advantage of low mortgage rates. These buyers can also take advantage of a tax credit of 10 percent of the sales price, up to $8,000, if the sale is completed by the end of November.
The tax credit is so important to some buyers that they are adding a clause to their contracts, allowing them to back out if the sale doesn't close by Nov. 30.
While home sales and housing construction have risen steadily after hitting bottom earlier this year, most economists believe that the worst isn't over for home values.
Prices could see a double dip because rising unemployment is causing more foreclosures. The jobless rate, currently at 9.8 percent is expected to rise as high as 10.5 percent next year, causing more people to be unable to afford their monthly mortgage payment.
With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.
Realtors and homebuilders are pressing lawmakers to do so, arguing that the tax credit is crucial to get the housing market back on its feet.
"We are not there in terms of removing the consumer fear factor," said Lawrence Yun, the Realtors' chief economist.
One potential roadblock, however, emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.
At a hearing on Thursday the Treasury Department's inspector general for taxes questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old.
10/19/09
