Posts Tagged ‘ home sales ’

New Home Sales Crater In January, Opening The Door For Deals With Builders

February 25, 2011
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New Home Sales (Jan 2010 - Jan 2011)

Not all housing reports are sunny, it seems.

In its monthly New Home Sales release, the U.S. Department of Commerce showed a 13 percent drop-off in annualized new construction sales between the months of December and January.

It’s the biggest one-month drop in New Home Sales since May 2010.

In addition, the supply of new homes for sale spiked higher to 7.9 months last month.  ”Home supply” is defined as the amount of time it would take to sell the complete “for sale” inventory at the current pace of sales.

In December, the supply measured just 7.0 months,

Don’t fret the news, however. For buyers of new construction in Tumwater , falling New Home Sales figures can be terrific. Weaker markets put pressure on the nation’s home builders to sell their respective homes more quickly. To reach that goal, builders often discount prices and/or offer free upgrades to buyers. 

Some of that action may already be in effect.

Despite falling volume, the New Home Sales report showed that new homes are selling faster than in recent months. The median time required to sell a newly-built home dropped to 7.8 months in January – a figure well below January 2010′s reading of 13.9 months.

It suggests that builders are getting better at locating buyers, and moving property.

Therefore, if you’re shopping for a new construction and see one worth buying, get to it. Not only will the home likely sell soon if it’s priced right, but an increase in mortgage rates will make the home more expensive to finance.

Every 0.250% increase to rates adds $15 monthly per $100,000 borrowed.

Home Supplies Plummet, Putting Pressure On Prices To Rise

January 21, 2011
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Existing Home Supply 2009-2010Existing Home Sales surged 12 percent last month, closing 2010′s housing market with strength. An “existing home” is a home that cannot be categorized as new construction; a resale.

According to the National Association of REALTORS®, seasonally-adjusted, annualized Existing Home Sales figures climbed by more than a half-million units in December as compared to November. It’s the 3rd straight month of home resale improvement nationwide.

Sales volume is now as high as it’s been since May 2010 — just after the federal home buyer tax credit’s expiration.

In addition, the number of months needed to sell the complete, current home inventory at the current pace of sales fell by 1.4 months, tying December for the biggest one-month home supply improvement in 2 years.

It’s yet another signal that the housing market is in recovery. Not that this data should surprise anyone. November’s Pending Home Sales report told us to expect it two weeks ago.

Broken down by buyer-type, home sales split as follows:

  • First-time home buyers : 33% of all sales
  • Repeat buyers : 47% of all sales
  • Real estate investors : 20% of all sales

Cash buyers represented 29 percent of all transaction, down 2 ticks from November. This may suggest that mortgage guidelines are loosening — another sign of economic improvement.

So, take note, Olympia home buyers. This spring, along with mortgage rates, home values should rise, too. Expect less “bang for your buck” as the housing recovery takes hold here in King County and across the nation.

The best deals of the year may be the ones made this month.

The Flawed Home Price Index Shows Home Values Up 0.8 Percent

July 9, 2010
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Monthly change in Home Price Index from April 2007 peak

Last week, the Case-Shiller Index reported home values up 0.8 percent across 20 tracked markets. The public-sector Federal Housing Finance Agency has reached a similar conclusion.

Reporting on a two-month lag, the government’s Home Price Index shows home values up 0.8 percent in April, buoyed by the expiring federal home buyer tax credit and low mortgage rates.  It’s a positive signal for a recovering housing market — in Olympia and everywhere else.

But just because the Home Price Index says home values are rising, that doesn’t mean they are. The Home Price Index methodology is flawed on multiple fronts.

First, the Home Price Index reports on a 60-day delay. This two-month lag turns the HPI a trailing indicator for the housing market instead of a forward-looking one. If you’re a home buyer looking for direction, HPI won’t give it to you — you’ll have to get that analysis from your real estate agent.

Second, HPI only accounts for home values in which the home’s attached mortgage is backed by Fannie Mae or Freddie Mac.  As the FHA market share grows, fewer homes get included in the HPI sample set, and HPI values may be skewed high or low.

And, third, HPI doesn’t account for new home sales — only repeat ones.  This, too, eliminates a major segment of the market.

All of that said, though, the Home Price Index remains important to housing.  It’s still the most comprehensive home valuation model in print and it’s been giving strong readings since the start of year.  You can’t ignore that on any level.

It’s July and you may have missed the “rock bottom” Thurston County home prices from earlier in the year, but homes are still relatively inexpensive. Couple that with all-time low mortgage rates and home affordability looks excellent. Consider making an offer while the terms are right.

The Headlines Were Overly Rosy On February’s Case-Shiller Index

April 30, 2010
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Case-Shiller Change In Home Values Jan-Feb 2010

Earlier this week, Standard & Poors released its February Case-Shiller Index, a home price tracker for select metropolitan areas. 

Overwhelmingly, home values fell in the 20 markets tracked by the Case-Shiller. Only San Diego showed a modest increase.  The other 19 markets averaged a 1.23 percent decline between January and February.

However, that’s not the story you read in the most papers. Instead, headlines read that home values were up in the United States, citing annualized data.

Unfortunately for active home buyers and sellers, year-over-year data isn’t all that helpful when making a real estate decisions. It’s the month-to-month data that matters. Month-to-month changes in home prices are what defines a housing market. Month-to-month is what sets the tone for contracts and negotiations on a purchase.

The rosier, annualized data published this past week just doesn’t capture the reality of what was the February 2010 market.  And even then, the data is somewhat useless because it’s from February and May will be upon us next week.

Case-Shiller is on a 2-month lag — hardly reflective of the “right now” of real estate in Tumwater.

When you’re looking for real estate data that actionable, consider using sources that are more “real-time”. A real estate agent may be the right place to start.  Because for all the data that Case-Shiller and the other housing indices collect, it can never be as relevant to your individual needs as a well-executed, timely market analysis.

Simple Real Estate Definitions : Short Sale

February 2, 2010
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Short Sale DefinitionA “Short Sale” is when a home seller sells his home for a lesser amount than what is owed on his mortgage, and the mortgage lender agrees to accept the lesser amount in lieu of a full payoff.

By way of example, a Short Sale may be appropriate for a Olympia home seller whose mortgage balance is $250,000 but whose home wouldn’t sell for more than $220,000.  Rather than pay the $30,000 difference to the lender at the time of sale, the seller enters into an agreement with the lender by which all sale proceeds are paid to the bank and the deficient balance is forgiven.

Short Sales are a preferable alternative to foreclosure but the process still harms both parties. For one, the seller is penalized with a derogatory tradeline on credit for not fulfilling a mortgage obligation. And, two, the lender is forced to take a loss on a mortgage loan.  Versus an executed foreclosure, however, Short Sale damages are relatively limited on both sides.

For this reason, Short Sales are sometimes considered “the economical alternative” to default.

The process of getting a Short Sale approved varies from lender-to-lender and can be time-intensive. Home sellers should not go at it alone — speaking with a real estate agent about the proper protocol is usually the best place to start.  And sellers should be aware of how a Short Sale on their credit can impact future borrowing.

Current Fannie Mae guidelines prevent short-selling homeowners from obtaining new mortgage financing for a period of 2 years.

Thousands of Good Reasons to Buy A Home, Right Now!

January 7, 2010
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While the nightly news and some newspapers continue to focus on the negative, now might be the best timing to buy a home that we have seen in many years. Don’t get caught saying I could of or should of, act now before it is too late or before the numerous incentives offered go away.

Median Home pricing in our area is nearing or has hit an all time low that we have not seen in many years. Affordable homes are selling and many buyers are taking advantage of the huge Tax Credits that are being offered through the end of April 2010. While previous Tax Credits were specifically for First Time Home Buyers there is now up to a $6500 Tax Credit for existing home owners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a new home to be their principal residence (“repeat buyer”). For details of the Tax Credits that are being offered visit our website at www.cumortgagedivision.com or www.federalhousingtaxcredit.com. For First Time Homebuyers who make a binding offer that is accepted on a new home before 04/30/2010 they can receive up to an $8000 Tax Credit. If you owe nothing on your income tax return or normally receive a refund you still get the tax credit. For example if you are expecting a $500 refund you would get an $8500 refund instead.

With median home pricing being at or near an all time low in our area you could save thousands on the purchase price of your home. You can get a lot more home for you money right now. Homes that are selling for $250,000 at this time are larger and offer more than what you could have purchased for thousands more, just a few short years ago. The market is recovering and we may not ever see home pricing as affordable as it is today.

Interest Rates on mortgage loans are favorable at this time and have been near all time lows several times in the last 12 months. Interest rates reward those with good credit as well as a stable employment history and your down payment may be lower too. If you can take advantage of the low rates offered today you could save thousands in interest over the life of your loan and hundreds on your monthly payment. As an example, the payment on a $250,000 mortgage at 5.00% is $238 a month cheaper than a 30 Year Fixed mortgage loan at 6.50%. And, if you were able to secure a 30 year fixed rate mortgage for $250,000 at 5.00% rather than 6.500% it would save you over $85,000 in interest over the life of your 30 year loan. Why not take advantage of today’s low interest rates and purchase the home of your dreams, your first home or downsize into a more comfortable easily maintainable home while the market is in your favor? Remember interest rates change daily and can go up at any time.

As a member of O Bee Credit Union you can participate in the Home Benefits Plus Program which is a Realtor Referral Service which utilizes local professionals and earns you a 25% rebate of their commission at closing or after. By utilizing one of the professional Realtors who participate in the Home Benefits Plus Program you could earn a sizeable rebate. For example, on a $250,000 home you could earn up to an $ 1875 rebate, at closing, for simply just participating in and using a Realtor from the Home Benefits Plus Program. For details visit www.obee.com or www.cumortgagedivision.com.

So as you can see right now is an opportunity to save thousands in interest on your new home loan, save thousands on the purchase price of your new home, earn up to a $8000 Tax Credit and earn a Rebate of Your Realtor’s commission at the closing of your new home. There really are “thousands of good reasons to buy a home, right now”.

Home Prices On The Rise, Says The October Home Price Index Report

December 30, 2009
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Home Price Index April 2007 to October 2009

More positive signals from housing — home values are still on the rise.

According to the Federal Housing Finance Agency, after posting its first quarterly increase since 2007 this past September, the Home Price Index rose by another 0.6 percent in October.

Prices are up in 4 of the last six months.

But before we take the stats to the proverbial bank, it’s important that we recognize the Home Price Index for its shortcomings.

  1. HPI only accounts for homes with mortgages backed by Fannie Mae or Freddie Mac
  2. HPI only accounts for re-sold homes — newly-built homes are excluded
  3. HPI aggregates national data whereas real estate markets are local phenomena

On a broad scale, the Home Price Index can be useful, but it doesn’t specifically apply to Olympia or any specific U.S. market.  For that, analysts tend to turn to the Case-Shiller Index, a privately-produced report that assesses home values in 20 cities nationwide.

The good news for home sellers in Thurston County is that Case-Shiller’s most recent report corroborates the government’s conclusion — home values are creeping back.

Home buyers should pay attention. When public and private sector data is in accord, markets tend to go along and, looking back, housing likely bottomed in February 2009.  Since then, home sales are up, home supplies are down, and values have increased in most U.S. markets.  Furthermore, so long as mortgage rates remain low and government stimulus is in place, the trend should continue through at least the first quarter of 2010.

If you’re on the fence about buying a home right now, or wondering about timing, consider your options vis-a-vis today’s market.  Into the new year, homes won’t likely be as cheap to buy, nor to finance.

New Home Supplies Plummet, Pressuring Home Prices Higher

December 1, 2009
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New Home Supply October 2009

The supply of newly-built homes fell to its lowest levels since 2006, offering additional proof of a housing market in recovery.

Home supply is defined as the amount of time it would take to sell the current inventory of homes at the current pace of sales.

In October, for the 8th consecutive month, home supplies fell. Since peaking in January 2009, it’s now down by almost half.

Lower supply leads to higher prices. This is Economics 101.

Furthermore, supply is expected fall into 2010. According to the government, builders are breaking ground on new homes at a declining pace, even as sales ramp up.

Builders are cheering the October New Home Sales report, but its the everyday sellers of “existing homes” that have real reason to celebrate.

See, as builders clear out their respective inventories and turn profitable, there’s less reason for them to offer the types of over-the-top purchase incentives that characterized the last 12 months of selling.

With fewer builder incentives, the playing field levels between large corporations and individual home sellers.

And while this is happening, buyers are eagerly taking advantage of low mortgage rates and federal tax credits for buying homes. It’s pressuring home prices higher overall.

Since January 2009, the average sale price of a newly-built home is up 6 percent.