Don't let the idea of seasonality in the market hold you back.
Now is a GREAT time to sell!
In Chicago's Gold Coast the fourth quarter boasts the highest median price, the 2nd highest number of units sold, and the 2nd highest price per square foot.
*Average over past 3 years
Showing posts with label real estate market forecast. Show all posts
Showing posts with label real estate market forecast. Show all posts
Wednesday, November 10, 2010
Friday, November 5, 2010
Home Prices Stabilizing in Key Markets
Chicago's Loop is #3 Nationally!! Two of the top three are Chicago!
ZipRealty says in its third quarter report that homes in key markets all over the country are selling above the asking price.
The report shows that the spread between the sales-to-list price ratio lessened significantly in most markets, but high-end housing markets in many areas continued to offer great bargains for buyers.
The 10 hottest ZIP codes in the ZipRealty markets where the selling prices was greater than the asking price were:
1. Greater Grand Crossing – Chicago, Ill. (60619)
2. Oakland, Calif. (94603)
3. The Loop – Chicago, Ill. (60603)
ZipRealty says in its third quarter report that homes in key markets all over the country are selling above the asking price.
The report shows that the spread between the sales-to-list price ratio lessened significantly in most markets, but high-end housing markets in many areas continued to offer great bargains for buyers.
The 10 hottest ZIP codes in the ZipRealty markets where the selling prices was greater than the asking price were:
1. Greater Grand Crossing – Chicago, Ill. (60619)
2. Oakland, Calif. (94603)
3. The Loop – Chicago, Ill. (60603)
Thursday, November 4, 2010
Real Estate Revisited, Part 4
WHAT PLANNERS SEE
Regardless of whether home prices will stabilize or whether they'll fall further, many financial planners will be discussing expectations about home purchases and sales at client meetings. "The demand for housing has not gone away," says Jane King, president of Fairfield Financial Advisors in Wellesley, Mass. "People still want to own their own home or have a second home."
She adds that when a client wants to buy a home, her firm will model the purchase. "We'll show clients how buying the place will affect liquidity and the income they can expect in retirement."
The housing slump of the past few years has had a visible impact, though. "There's not as much euphoria among buyers as there was a few years ago," King explains. "They're more likely to offer a certain amount-what they think is a fair price-and then back off if the seller doesn't accept."
King recounts the story of a client negotiating to buy a second home now, from an estate. He offered $650,000; the seller wants $800,000. If the seller won't come down, she says her client will walk away from the deal. He doesn't think that there is a line of buyers who will be bidding against him, so the seller might reduce the asking price.
According to King, her clients who are looking to buy a home are not so worried about whether we've finally reached the absolute bottom in the housing market. "Buyers aren't concerned about prices going down more in the next year or two," she says. "They're in it for the long term, not to flip houses."
SELLER'S REMORSE
However, many home buyers are sellers too; they're moving up or down in the housing market. And not every would-be buyer is an eager seller.
Marc Freedman, who heads a financial planning firm in Peabody, Mass., says some of his clients are thinking about selling their house and downsizing. They might want to move into a retirement community, where they won't have to do as much home maintenance. However, a lot of them are reluctant to sell now because they don't think they'll get the price they want-they have a certain number in their heads as to what their houses are worth.
That number, unfortunately, might be based on what similar homes sold for in 2005 or 2006. Few sellers will get such a price now, so they're holding on to their present house. "Often, they don't realize how much it's costing them to stay there," Freedman says.
Those costs are not just the obvious ones, such as property tax and homeowner's insurance, according to Freedman. Clients also have maintenance costs, including landscaping and plowing. They may be paying a great deal for heating and electricity, especially if they're still living in the big house where they raised their kids. Freedman adds that some of his clients pay a great deal for expenses related to their home swimming pool, even though they might use it no more than three or four times a year."
Clients who are unwilling to sell might be greedy. In addition, they might be looking for an excuse not to pack up a house, Freedman says. "If clients are downsizing, they might be worried about fitting everything into a smaller home."
As Paul Gydosh Jr., managing director of Kensington Wealth Partners in Columbus, Ohio, points out, "Clients who want to sell one home and buy another have several options. They might wait to sell at a higher price, carry the costs of two homes (if they can afford it), rent their former home or sell it to their kids. The most common solution is to reduce their asking price, sell the old home and buy a new one."
Gydosh explores all the options with clients, helping them come to a conclusion. "We've seen instances where a home seller was frozen over a small gap between his asking price and the bid, and we pointed out how little a difference that would make in his net worth," he says.
In some Midwestern cities like Columbus, neither the housing boom nor the bust was as extreme as it was in other areas of the U. S. "Sellers here might not be so anchored to the price they believe their home is worth," Gydosh says. Therefore, they might not be as reluctant to lower their price to close a sale.
Even though sellers will likely have to accept a lower selling price, they could get a good price on the place they buy in today's market. Gydosh tells of a homeowner who sold his place for 10%-15% below the peak price and bought a house down the street for a 30% discount from the peak. "The new home has more square footage, and is also better suited for the wife's elderly mother to live with them."
Even outside the Midwest, there are areas where housing prices have held up relatively well. "Around here, home prices are down 5% to 15% from the peak," says Eleanore Szymanski, principal at EKS Associates, a financial planning firm in Princeton, N.J. "At today's levels, some clients are willing to sell-and they're able to. One $700,000 home sold in three weeks; the sale fell through because of mortgage problems. When the house went back on the market it sold again, in another three weeks."
As Szymanski's anecdote indicates, lenders' extreme caution may be jeopardizing home sales now. "They're putting loan applicants through the ringer," she says. "Clients who are thinking about selling their home expect prices to move up, probably within the next three to five years, which could happen once the banks loosen up a bit." A return to the days of mortgages-for-anyone may not be desirable, but the residential housing market might look a lot healthier if lenders were as reasonable about the loans they make as they seem to be about the properties they have to sell.
By Donald Jay Korn
Read Part 1 Part 2 Part 3
Regardless of whether home prices will stabilize or whether they'll fall further, many financial planners will be discussing expectations about home purchases and sales at client meetings. "The demand for housing has not gone away," says Jane King, president of Fairfield Financial Advisors in Wellesley, Mass. "People still want to own their own home or have a second home."
She adds that when a client wants to buy a home, her firm will model the purchase. "We'll show clients how buying the place will affect liquidity and the income they can expect in retirement."
The housing slump of the past few years has had a visible impact, though. "There's not as much euphoria among buyers as there was a few years ago," King explains. "They're more likely to offer a certain amount-what they think is a fair price-and then back off if the seller doesn't accept."
King recounts the story of a client negotiating to buy a second home now, from an estate. He offered $650,000; the seller wants $800,000. If the seller won't come down, she says her client will walk away from the deal. He doesn't think that there is a line of buyers who will be bidding against him, so the seller might reduce the asking price.
According to King, her clients who are looking to buy a home are not so worried about whether we've finally reached the absolute bottom in the housing market. "Buyers aren't concerned about prices going down more in the next year or two," she says. "They're in it for the long term, not to flip houses."
SELLER'S REMORSE
However, many home buyers are sellers too; they're moving up or down in the housing market. And not every would-be buyer is an eager seller.
Marc Freedman, who heads a financial planning firm in Peabody, Mass., says some of his clients are thinking about selling their house and downsizing. They might want to move into a retirement community, where they won't have to do as much home maintenance. However, a lot of them are reluctant to sell now because they don't think they'll get the price they want-they have a certain number in their heads as to what their houses are worth.
That number, unfortunately, might be based on what similar homes sold for in 2005 or 2006. Few sellers will get such a price now, so they're holding on to their present house. "Often, they don't realize how much it's costing them to stay there," Freedman says.
Those costs are not just the obvious ones, such as property tax and homeowner's insurance, according to Freedman. Clients also have maintenance costs, including landscaping and plowing. They may be paying a great deal for heating and electricity, especially if they're still living in the big house where they raised their kids. Freedman adds that some of his clients pay a great deal for expenses related to their home swimming pool, even though they might use it no more than three or four times a year."
Clients who are unwilling to sell might be greedy. In addition, they might be looking for an excuse not to pack up a house, Freedman says. "If clients are downsizing, they might be worried about fitting everything into a smaller home."
As Paul Gydosh Jr., managing director of Kensington Wealth Partners in Columbus, Ohio, points out, "Clients who want to sell one home and buy another have several options. They might wait to sell at a higher price, carry the costs of two homes (if they can afford it), rent their former home or sell it to their kids. The most common solution is to reduce their asking price, sell the old home and buy a new one."
Gydosh explores all the options with clients, helping them come to a conclusion. "We've seen instances where a home seller was frozen over a small gap between his asking price and the bid, and we pointed out how little a difference that would make in his net worth," he says.
In some Midwestern cities like Columbus, neither the housing boom nor the bust was as extreme as it was in other areas of the U. S. "Sellers here might not be so anchored to the price they believe their home is worth," Gydosh says. Therefore, they might not be as reluctant to lower their price to close a sale.
Even though sellers will likely have to accept a lower selling price, they could get a good price on the place they buy in today's market. Gydosh tells of a homeowner who sold his place for 10%-15% below the peak price and bought a house down the street for a 30% discount from the peak. "The new home has more square footage, and is also better suited for the wife's elderly mother to live with them."
Even outside the Midwest, there are areas where housing prices have held up relatively well. "Around here, home prices are down 5% to 15% from the peak," says Eleanore Szymanski, principal at EKS Associates, a financial planning firm in Princeton, N.J. "At today's levels, some clients are willing to sell-and they're able to. One $700,000 home sold in three weeks; the sale fell through because of mortgage problems. When the house went back on the market it sold again, in another three weeks."
As Szymanski's anecdote indicates, lenders' extreme caution may be jeopardizing home sales now. "They're putting loan applicants through the ringer," she says. "Clients who are thinking about selling their home expect prices to move up, probably within the next three to five years, which could happen once the banks loosen up a bit." A return to the days of mortgages-for-anyone may not be desirable, but the residential housing market might look a lot healthier if lenders were as reasonable about the loans they make as they seem to be about the properties they have to sell.
By Donald Jay Korn
Read Part 1 Part 2 Part 3
Wednesday, November 3, 2010
Real Estate Revisited, Part 3
LOCATION, LOCATION
Molony's comments bring up a crucial point about housing prices. National data may be interesting, but it's not very helpful for planners advising clients who want to buy or sell a house on a specific lot. Lately housing price movements have varied enormously from place to place. The chart, "Regional Differences," on page 76, shows NAR's regional data on median sales prices of existing single-family homes.
As these numbers show, price declines in the western states over the last two years have been far steeper than in other regions of the United States, reflecting the huge boom in certain markets in previous years. Prices in the West plummeted 37% from 2007 through 2009. In many areas of the South and Midwest, however, prices did not go through a boom and bust in the early years of this century, so they may already be at or near the bottom of this cycle. Prices in the South fell 13.3% over the last two years, while prices in the Midwest were only down 11.5%
The shadow inventory threat will be most ominous in the areas with the greatest portion of distressed homeowners. RealtyTrac reports that California and Florida alone accounted for about 37% of all national foreclosure filings in August 2010. In areas with less speculative building and fewer distressed homeowners, the shadow cast by future housing supply might not be as long.
BALANCING ACT
The question is whether today's buyers should wait, for fear that shadow inventory will drag down prices even further in the next few years. Yun points to a hopeful indicator on the supply side.
"One aspect of the shadow inventory that people aren't talking about is the lack of inventory of newly constructed homes," he says. In a normal year, Yun explains, there is always a flow of new homes hitting the market that needs to be absorbed. But in today's market, the low level of housing starts has cut off the normal flow of new home inventory. "So the low number of new homes will help offset shadow inventory, providing some help in the overall inventory picture."
Luschini concurs that weak housing starts are good news for home prices. "We don't need more inventory now."
What's more, it may be unrealistic to expect millions of homes will be dumped on the market in the next few years, driving down prices. Lenders who find themselves overstocked with real estate-owned (REO) property are being cautious. "On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate," Saccacio says. "On the back-end, the dammed-up inventory of properties already in foreclosure is moving to REO in a steady stream rather than a flood-presumably to prevent further erosion of home prices."
Luschini also sees evidence of efforts to keep housing supply and demand on an even keel. "Many homes are owned by banks, ready to come back on the market," he says. "Banks don't want to be in the business of owning homes. At the same time, they are reluctant to bring too many homes to the market, for fear of exacerbating weakness in home prices."
Thus lenders may be both reluctant home owners and reluctant home sellers. "We see a tug-of-war," Luschini explains. "As the economic recovery continues, more homes will come to market from banks and other owners. This increased supply will keep prices down." On the other end of the rope, when excess supply threatens to pull prices down, banks may rein in the supply of foreclosed properties so that prices can firm up. Arnott agrees that such activity is "clearly going on" and will put a damper on housing prices.
Luschini concludes that home prices are likely to stay "flattish" for several years. The inventory will find its way onto the market, and there will be some continued softness. "Home prices might drop 5% or so, nationwide, but the price drops won't be anything like we've seen in the past few years," he predicts, adding that because the housing market is highly regionalized, some areas of the country may see higher prices while others suffer steeper drops.
What might put housing prices on solid footing? "The answer to price stability is more jobs," Luschini says "When more people are working, more people will be able to commit to service the debt that comes with home ownership." With unemployment still well over 9%, it may be awhile before housing prices can resume an upward surge. In the meantime, the national housing price indexes mighty not stray far from current levels as lenders expand and contract the supply of REO properties coming onto the market.
How might a foreclosure moratorium affect housing prices? In the short term, it could stem further housing price declines because it would preclude new inventory from hitting the market, according to Luschini.
In the longer term, supply will surge once the moratorium is lifted, and prices will fall, says Feifei Li, director of research at Research Affiliates. "The moratorium won't make troubled homes disappear. They will hit the market eventually and cause a big spike in supply, driving prices down further."
By Donald Jay Korn
Catch the conclusion in Part 4 tomorrow!
Miss Part 1 or Part 2? Read them now!
Molony's comments bring up a crucial point about housing prices. National data may be interesting, but it's not very helpful for planners advising clients who want to buy or sell a house on a specific lot. Lately housing price movements have varied enormously from place to place. The chart, "Regional Differences," on page 76, shows NAR's regional data on median sales prices of existing single-family homes.
As these numbers show, price declines in the western states over the last two years have been far steeper than in other regions of the United States, reflecting the huge boom in certain markets in previous years. Prices in the West plummeted 37% from 2007 through 2009. In many areas of the South and Midwest, however, prices did not go through a boom and bust in the early years of this century, so they may already be at or near the bottom of this cycle. Prices in the South fell 13.3% over the last two years, while prices in the Midwest were only down 11.5%
The shadow inventory threat will be most ominous in the areas with the greatest portion of distressed homeowners. RealtyTrac reports that California and Florida alone accounted for about 37% of all national foreclosure filings in August 2010. In areas with less speculative building and fewer distressed homeowners, the shadow cast by future housing supply might not be as long.
BALANCING ACT
The question is whether today's buyers should wait, for fear that shadow inventory will drag down prices even further in the next few years. Yun points to a hopeful indicator on the supply side.
"One aspect of the shadow inventory that people aren't talking about is the lack of inventory of newly constructed homes," he says. In a normal year, Yun explains, there is always a flow of new homes hitting the market that needs to be absorbed. But in today's market, the low level of housing starts has cut off the normal flow of new home inventory. "So the low number of new homes will help offset shadow inventory, providing some help in the overall inventory picture."
Luschini concurs that weak housing starts are good news for home prices. "We don't need more inventory now."
What's more, it may be unrealistic to expect millions of homes will be dumped on the market in the next few years, driving down prices. Lenders who find themselves overstocked with real estate-owned (REO) property are being cautious. "On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate," Saccacio says. "On the back-end, the dammed-up inventory of properties already in foreclosure is moving to REO in a steady stream rather than a flood-presumably to prevent further erosion of home prices."
Luschini also sees evidence of efforts to keep housing supply and demand on an even keel. "Many homes are owned by banks, ready to come back on the market," he says. "Banks don't want to be in the business of owning homes. At the same time, they are reluctant to bring too many homes to the market, for fear of exacerbating weakness in home prices."
Thus lenders may be both reluctant home owners and reluctant home sellers. "We see a tug-of-war," Luschini explains. "As the economic recovery continues, more homes will come to market from banks and other owners. This increased supply will keep prices down." On the other end of the rope, when excess supply threatens to pull prices down, banks may rein in the supply of foreclosed properties so that prices can firm up. Arnott agrees that such activity is "clearly going on" and will put a damper on housing prices.
Luschini concludes that home prices are likely to stay "flattish" for several years. The inventory will find its way onto the market, and there will be some continued softness. "Home prices might drop 5% or so, nationwide, but the price drops won't be anything like we've seen in the past few years," he predicts, adding that because the housing market is highly regionalized, some areas of the country may see higher prices while others suffer steeper drops.
What might put housing prices on solid footing? "The answer to price stability is more jobs," Luschini says "When more people are working, more people will be able to commit to service the debt that comes with home ownership." With unemployment still well over 9%, it may be awhile before housing prices can resume an upward surge. In the meantime, the national housing price indexes mighty not stray far from current levels as lenders expand and contract the supply of REO properties coming onto the market.
How might a foreclosure moratorium affect housing prices? In the short term, it could stem further housing price declines because it would preclude new inventory from hitting the market, according to Luschini.
In the longer term, supply will surge once the moratorium is lifted, and prices will fall, says Feifei Li, director of research at Research Affiliates. "The moratorium won't make troubled homes disappear. They will hit the market eventually and cause a big spike in supply, driving prices down further."
By Donald Jay Korn
Catch the conclusion in Part 4 tomorrow!
Miss Part 1 or Part 2? Read them now!
Monday, November 1, 2010
Real Estate Revisited
Real Estate Revisited
By Donald Jay Korn
Have real estate prices finally hit bottom? As far as home prices go, the data says they have. Prices are up across the board in 2010 compared to 2009. Many observers are doubtful, however, predicting further slippage. The pessimists point to the possibility of a double-dip recession, the expiration of housing tax credits and an increase in shadow inventory, as more troubled properties flood the market.
In fact, that inventory may be coming out of the shadows. There were more foreclosures this summer than in any three-month period since the housing bust began in 2006, according to RealtyTrac, a foreclosure listing service. Banks seized 288,345 properties in July through September, and are on pace to foreclose on 1.2 million homes by the end of 2010.
But the pipeline may slow due to a coordinated probe by the top prosecutors in all 50 states into improper foreclosures by the nation's largest loan servicers. The investigation comes after lawyers accused mortgage lenders of "robo-signing," or signing off on foreclosure documents without reviewing them as required by law.
Although the prosecutors have not called for mortgage lenders to freeze all foreclosures, mortgage lenders are taking various measures to ensure that their foreclosures are legal. As we went to press, Bank of America had halted foreclosure sales in all 50 states for a few weeks in October, and GMAC Mortgage and JPMorgan Chase stopped them in the 23 states that require court approval to complete foreclosures.
While the implications of these developments play out in the short term, it is becoming clear that lenders who have become major property owners, by default, may be manipulating the current housing cycle. "There are clear indications that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers," says James Saccacio, CEO of RealtyTrac in Irvine, Calif. In the longer term, such management might promote price stability (or stagnation, depending on one's point of view), both short- and long-term.
THE GOOD NEWS
According to the National Association of Realtors (NAR), the median sales price of existing family homes peaked in 2006 at $221,900. In 2009, that median price was $172,100-a drop of more than 22%. In the first seven months of 2010, the monthly medians ranged from $163,800 to $183,500, with the latest month (July) at $183,400. From July 2009 to July 2010, the median price was up 0.9%. Home prices in two out of four regions were up less than 5%, year over year, while the other two were down no more than 3%. Anyone looking for a statistical example of stability has found it.
Further evidence that housing prices have found a bottom comes from the Case Shiller 20-City Home Price Index. In the latest month to report-July 2010-prices were up 3.2% from a year earlier. "Ten of the 20 cities saw year-over-year gains and only one (Las Vegas) made a new bottom," says David Blitzer, chairman of the index committee at Standard & Poor's. "Judging from the recent behavior of the housing market, stable prices seem more likely" than a return to the lofty levels of 2005-2006.
Some industry observers are encouraged by these statistics. "Home values have shown stabilizing trends over the past year," says Lawrence Yun, the chief economist at NAR. He credits home-buyer tax credits for stimulating sales and bolstering prices.
Yun adds that houses have become more affordable in today's market. According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, 72.3% of the homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. That's just a shade below the historic peak of 72.5%, in the first quarter of 2009, and far above the level of three years ago, when less than half of the families earning the median income could afford the median-priced home.
"Residential housing may be quite inexpensive now, with prices down and the low cost of servicing debt," says Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. "The huge number of homes for sale just adds to the appeal of a buyer's market," he says.
Besides lower home prices, record low interest rates are helping to make housing more affordable. In mid-October, rates on 30-year fixed mortgages remained below 5%, the lowest level since May of 2009, when 30-year rates settled at 4.81%.
By Donald Jay Korn
Have real estate prices finally hit bottom? As far as home prices go, the data says they have. Prices are up across the board in 2010 compared to 2009. Many observers are doubtful, however, predicting further slippage. The pessimists point to the possibility of a double-dip recession, the expiration of housing tax credits and an increase in shadow inventory, as more troubled properties flood the market.
In fact, that inventory may be coming out of the shadows. There were more foreclosures this summer than in any three-month period since the housing bust began in 2006, according to RealtyTrac, a foreclosure listing service. Banks seized 288,345 properties in July through September, and are on pace to foreclose on 1.2 million homes by the end of 2010.
But the pipeline may slow due to a coordinated probe by the top prosecutors in all 50 states into improper foreclosures by the nation's largest loan servicers. The investigation comes after lawyers accused mortgage lenders of "robo-signing," or signing off on foreclosure documents without reviewing them as required by law.
Although the prosecutors have not called for mortgage lenders to freeze all foreclosures, mortgage lenders are taking various measures to ensure that their foreclosures are legal. As we went to press, Bank of America had halted foreclosure sales in all 50 states for a few weeks in October, and GMAC Mortgage and JPMorgan Chase stopped them in the 23 states that require court approval to complete foreclosures.
While the implications of these developments play out in the short term, it is becoming clear that lenders who have become major property owners, by default, may be manipulating the current housing cycle. "There are clear indications that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers," says James Saccacio, CEO of RealtyTrac in Irvine, Calif. In the longer term, such management might promote price stability (or stagnation, depending on one's point of view), both short- and long-term.
THE GOOD NEWS
According to the National Association of Realtors (NAR), the median sales price of existing family homes peaked in 2006 at $221,900. In 2009, that median price was $172,100-a drop of more than 22%. In the first seven months of 2010, the monthly medians ranged from $163,800 to $183,500, with the latest month (July) at $183,400. From July 2009 to July 2010, the median price was up 0.9%. Home prices in two out of four regions were up less than 5%, year over year, while the other two were down no more than 3%. Anyone looking for a statistical example of stability has found it.
Further evidence that housing prices have found a bottom comes from the Case Shiller 20-City Home Price Index. In the latest month to report-July 2010-prices were up 3.2% from a year earlier. "Ten of the 20 cities saw year-over-year gains and only one (Las Vegas) made a new bottom," says David Blitzer, chairman of the index committee at Standard & Poor's. "Judging from the recent behavior of the housing market, stable prices seem more likely" than a return to the lofty levels of 2005-2006.
Some industry observers are encouraged by these statistics. "Home values have shown stabilizing trends over the past year," says Lawrence Yun, the chief economist at NAR. He credits home-buyer tax credits for stimulating sales and bolstering prices.
Yun adds that houses have become more affordable in today's market. According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, 72.3% of the homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. That's just a shade below the historic peak of 72.5%, in the first quarter of 2009, and far above the level of three years ago, when less than half of the families earning the median income could afford the median-priced home.
"Residential housing may be quite inexpensive now, with prices down and the low cost of servicing debt," says Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. "The huge number of homes for sale just adds to the appeal of a buyer's market," he says.
Besides lower home prices, record low interest rates are helping to make housing more affordable. In mid-October, rates on 30-year fixed mortgages remained below 5%, the lowest level since May of 2009, when 30-year rates settled at 4.81%.
Wednesday, June 30, 2010
Chicago Home Sales
Crain's reported today..
The Chicago-area index seemed to hit bottom in April 2009, after a 27.4% drop from its September 2006 peak. The index rose steadily through last September but then started falling again. It now stands 28.6% below its peak and roughly where it was in May 2002.
S&P also reported that an index of Chicago-area condominium prices rose 5.2% from March to April. The local condo index fell 6.7% on a year-over-year basis and was down 22.5% from its peak in September 2007.
The Chicago-area index seemed to hit bottom in April 2009, after a 27.4% drop from its September 2006 peak. The index rose steadily through last September but then started falling again. It now stands 28.6% below its peak and roughly where it was in May 2002.
S&P also reported that an index of Chicago-area condominium prices rose 5.2% from March to April. The local condo index fell 6.7% on a year-over-year basis and was down 22.5% from its peak in September 2007.
Wednesday, September 2, 2009
Pending Home Sales on a Roll, Up for Sixth Straight Month
Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index since it began in 2001, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2% to 97.6 from a reading of 94.6 in June, and is 12.0% higher than July 2008 when it was 87.1.The index is at the highest level since June 2007 when it was 100.7.
Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said. “Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25% of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.
NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30, 2009 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible- it is taking approximately two months to complete home sales in the current market.
The Pending Home Sales Index in the Northeast declined 3.0% to 78.8 in July but is 4.7% higher than July 2008. In the Midwest the index slipped 2.0% to 88.1 but is 8.1% above a year ago. In the South, pending home sales activity rose 3.1% to an index of 103.8 in July and is 12.0% above July 2008. In the West the index jumped 12.1% to 112.5 and is 20.0% above a year ago.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he said. “To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy,” McMillan said.
NAR’s Housing Affordability Index (HAI) stood at 158.5 in July, below the peak set in April but is still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”
September 2, 2009, RISMEDIA
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2% to 97.6 from a reading of 94.6 in June, and is 12.0% higher than July 2008 when it was 87.1.The index is at the highest level since June 2007 when it was 100.7.
Lawrence Yun, NAR chief economist, said the housing market momentum has clearly turned for the better. “The recovery is broad-based across many parts of the country. Housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit,” he said. “Other buyers are taking advantage of low home values before prices turn higher. Nationally, the typical mortgage payment now takes less than 25% of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable,” Yun said.
NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit. Buyers have little time to act because they must complete the transaction by November 30, 2009 to qualify for the credit. Unless extended, contracts signed but not completed by that date will not be eligible- it is taking approximately two months to complete home sales in the current market.
The Pending Home Sales Index in the Northeast declined 3.0% to 78.8 in July but is 4.7% higher than July 2008. In the Midwest the index slipped 2.0% to 88.1 but is 8.1% above a year ago. In the South, pending home sales activity rose 3.1% to an index of 103.8 in July and is 12.0% above July 2008. In the West the index jumped 12.1% to 112.5 and is 20.0% above a year ago.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said Congress needs to keep the momentum going. “Even with a good recovery taking place, the market is not yet back to normal. With a gradual absorption of inventory, we are on the cusp of a general stabilization in home prices,” he said. “To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we’re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences. The faster we stabilize home prices, the fewer families will face foreclosure and the quicker credit can be extended to other sectors of the economy,” McMillan said.
NAR’s Housing Affordability Index (HAI) stood at 158.5 in July, below the peak set in April but is still 36.0 percentage points higher than a year ago. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
Yun expects existing-home sales to rise through the fourth quarter. “Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,” he said. “However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010. The buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I don’t want to miss out on a recovery.’”
September 2, 2009, RISMEDIA
Monday, August 31, 2009
Tuesday, August 25, 2009
Existing Homes Selling Fast - Record Fast
The volume of home re-sales has been on the upswing for four consecutive months.
NEW YORK (CNNMoney.com) -- Sales of existing homes rose in July for the fourth consecutive month, lending support to economists who argue a recovery is near.
Sales of previously owned single-family homes were up 7.2% compared with June and 5% from July 2008, The National Association of Realtors (NAR) reported Friday. The monthly gain was the largest on record for existing-home sales, which NAR has tracked since 1999.
"The housing market has decisively turned for the better," said Lawrence Yun, NAR's chief economist. "A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales."
July home sales hit an annualized rate of 5.24 million proprieties, marking the first breach of the 5 million annualized rate mark since last September, when they hit 5.1 million. Since then, they have stayed in a very narrow range, bouncing between between January's low of 4.49 million and October's high of 4.94 million.
The July performance far exceeded expectations: A consensus of real estate experts had forecast sales of 5 million.
Low prices
Of course, homes should be selling. Prices have fallen more than 32% from their peaks, set in the summer of 2006. Plus, mortgage rates near historic lows makes the cost of purchasing a home lower than they've been in nearly 20 years.
0:00 /3:11Home Depot sees housing recovery
"In some recovering markets like San Diego, Las Vegas, Phoenix and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint," Yun said.
Overall though, the national inventory rose by more than 7% to 4.09 million units. That will continue to keep prices low, according to Mike Larson, a housing analyst with Weiss Research.
"There's a bifurcation of the market," he said. "There's excess supply putting downward pressure on prices and people respond to the lower prices by buying homes."
Housing is its most affordable in many years, he pointed out. "Falling prices is not part of the problem, they're part of the solution," he said.
Hurting home sales have been stubborn increases in job losses. More than 6.7 million jobs have been lost since the beginning of 2008.
That's one reason why Robert Dye, a senior economist for PNC Financial Services (PNC, Fortune 500), is keeping his optimism in check.
"I wouldn't go overboard on this number," he said. "The economy is still healing and will continue to run into some bumps. But it does bode very well for the future and shows buyer confidence is increasing."
There is one potential bump, however: The looming end of the first-time homebuyers credit. The credit gave first-time homebuyers an up to $8,000 refund on their taxes if they close on a deal before Dec. 1. That credit has been motivating buyers, and when it expires, demand could dry up.
"Just like with the cash-for-clunkers program, we run the risk of a letdown as the program runs its course," Dye said.
Where homes are selling
Regionally, the strongest market was the Northeast, where sales soared by 13.4% to an annualized rate of 930,000. That was 3.3% higher than last July. The median price of homes sold during the month was $236,700, off 15% from last year.
Midwest sales rose 10.9% to a 1.22 million rate, 8% higher year-over-year. Prices there have sunk 5.9% over the past 12 months to a median of $157,200.
In the South, sales were up 7.1% from June and 5.4% from last July to a rate of 1.95 million. Price have dropped 7.1% to $164,500 over the past 12 months.
The only region reporting a slip in sales was the West, where they fell 1.7% to a rate of 1.13 million. That was ahead of last July, however, by 1.8%. The median price there was $202,300, a whopping 28% below what is was a year ago.
First Published: August 21, 2009: 10:19 AM ET
Money.cnn.com
NEW YORK (CNNMoney.com) -- Sales of existing homes rose in July for the fourth consecutive month, lending support to economists who argue a recovery is near.
Sales of previously owned single-family homes were up 7.2% compared with June and 5% from July 2008, The National Association of Realtors (NAR) reported Friday. The monthly gain was the largest on record for existing-home sales, which NAR has tracked since 1999.
"The housing market has decisively turned for the better," said Lawrence Yun, NAR's chief economist. "A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales."
July home sales hit an annualized rate of 5.24 million proprieties, marking the first breach of the 5 million annualized rate mark since last September, when they hit 5.1 million. Since then, they have stayed in a very narrow range, bouncing between between January's low of 4.49 million and October's high of 4.94 million.
The July performance far exceeded expectations: A consensus of real estate experts had forecast sales of 5 million.
Low prices
Of course, homes should be selling. Prices have fallen more than 32% from their peaks, set in the summer of 2006. Plus, mortgage rates near historic lows makes the cost of purchasing a home lower than they've been in nearly 20 years.
0:00 /3:11Home Depot sees housing recovery
"In some recovering markets like San Diego, Las Vegas, Phoenix and Orlando, the demand for foreclosed and lower priced homes has spiked, and a lack of inventory is becoming a common complaint," Yun said.
Overall though, the national inventory rose by more than 7% to 4.09 million units. That will continue to keep prices low, according to Mike Larson, a housing analyst with Weiss Research.
"There's a bifurcation of the market," he said. "There's excess supply putting downward pressure on prices and people respond to the lower prices by buying homes."
Housing is its most affordable in many years, he pointed out. "Falling prices is not part of the problem, they're part of the solution," he said.
Hurting home sales have been stubborn increases in job losses. More than 6.7 million jobs have been lost since the beginning of 2008.
That's one reason why Robert Dye, a senior economist for PNC Financial Services (PNC, Fortune 500), is keeping his optimism in check.
"I wouldn't go overboard on this number," he said. "The economy is still healing and will continue to run into some bumps. But it does bode very well for the future and shows buyer confidence is increasing."
There is one potential bump, however: The looming end of the first-time homebuyers credit. The credit gave first-time homebuyers an up to $8,000 refund on their taxes if they close on a deal before Dec. 1. That credit has been motivating buyers, and when it expires, demand could dry up.
"Just like with the cash-for-clunkers program, we run the risk of a letdown as the program runs its course," Dye said.
Where homes are selling
Regionally, the strongest market was the Northeast, where sales soared by 13.4% to an annualized rate of 930,000. That was 3.3% higher than last July. The median price of homes sold during the month was $236,700, off 15% from last year.
Midwest sales rose 10.9% to a 1.22 million rate, 8% higher year-over-year. Prices there have sunk 5.9% over the past 12 months to a median of $157,200.
In the South, sales were up 7.1% from June and 5.4% from last July to a rate of 1.95 million. Price have dropped 7.1% to $164,500 over the past 12 months.
The only region reporting a slip in sales was the West, where they fell 1.7% to a rate of 1.13 million. That was ahead of last July, however, by 1.8%. The median price there was $202,300, a whopping 28% below what is was a year ago.
First Published: August 21, 2009: 10:19 AM ET
Money.cnn.com
Friday, February 27, 2009
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