December 2011 Market Update

 

December 2011A� Market Update

One of the key drivers of homes sales, the employment rate, is beginning to show promising signs of a turnaround. The four-week average for jobless claims, as of November 19, was 394,250, a drop of 3,250 from the previous four weeks, and at the lowest levels since April. Consumer confidence also rose 15 points in the last month, and is now at its highest point since July of this year. Eric Green, Chief Market Economist at TD Securities Inc. said, a�?The trend remains very constructive. Jobless claims are back below 400,000, which seems to be the pivot point in terms of a strengthening labor market as opposed to a weakening one.a�?

In addition to improving employment conditions, home affordability also improved as interest rates fell further, opening the door for more first-time home buyers who accounted for 34% of the sales in October, an increase from 32% last month and last year. The western United States saw the greatest increase in home sales, which were up 4.4% month to month and up over 15% from last year.

A strengthening job market, along with encouraging signs from the housing sector, including a 10% jump in pending sales for October, are strong economic forces. While mortgage lending still remains a challenge, these forces may send a signal to banks to relax lending regulations and allow for a more rapid recovery.

Home Sales

in millions

 

Existing homes sales improved 1.4% in October, or to an annual pace of 4.97 million, a 13.5% increase from October of last year. Even more dramatic, was the jump in pending home sales, which surged in October by 10.4% from September, and were up 9.2% from October 2010. This jump in pending sales could lead to a strong fourth quarter as signs continue to point to a pent-up demand brought on by current lending conditions of
mortgage providers.

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Home Price

in thousands

The national median home price in the U.S. saw a small decline in October to $162,500, from $165,800 in September. This number can be affected by the sale of distressed properties, which typically sell at discounted prices. Distressed properties accounted for 28% of homes sales in October. Yet despite a drop in the median price from last September, the Federal Housing Finance Authority reported that seasonally adjusted prices rose 0.2% in the third quarter from the second quarter in 2011, which could be an early sign of appreciating home prices.

 

Inventory- Month’s Supply

in months

 

By the end of October, the total number of homes on the market had fallen 2.2% to 3.33 million homes, which represents 8 months of inventory at the current sales pace. Since a record high of 4.58 million homes in July 2008, the inventory of homes for sale has been steadily declining. When homes sell faster than they come on the market, the market comes from its current favor toward buyers into balance or in favor of sellers. This can trigger an appreciation in home prices and lead the way to a stronger recovery.

 

Source: National Association of Realtors

Interest Rates

Mortgage rates continue to push lower, dropping to 3.98% from 4.23% in October of 2010, offering historic affordability to todaya��s home buyers. While mortgage lending conditions continue to be a challenge, more and more people are seeing the advantage of buying a home sooner rather than later. Lawrence Yun, NAR chief economist, said, a�?Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years. We hope this indicates more buyers are taking advantage of the excellent affordability conditions.a�?


Topics For Home Owners, Buyers & Sellers

When first-time home buyers decide they are ready to buy, it is important for them to begin the process by carefully assessing their values, wants, and needsa��both for the short and long term. This is a critical step since consultation sessions normally start with the buyersa�� values. Afterward, buyers can explore their wants and needs and, once defined, determine actual criteria.

A recent study shows how important the following home-buying factors were to buyers:

    • List Price: 72%
    • Location: 69%
    • Neighborhood: 55%
    • Floor Plan: 37%
    • Square Footage: 28%
    • Schools: 22%

By having the home-buying criteria in mind before walking into a consultation, buyers are off to a better start when meeting with their real estate agent. The consultation allows buyers to fill in any missing gaps within their values, wants, and needs.

 

 

 

 

 

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report.
The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.A� You should not treat any opinion expressedA�in This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.A� Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.A� All information presented herein is intended and should be used for educational purposes only.A� Nothing herein should be construed as investment advice.A� You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.A� All investments involve some degree of risk.A� Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained inA�This Month in Real Estate.

July 2011 Market Update

 

July 2011A� Market Update

The U.S. housing market has shown increased stability in home sales during 2011 compared to the previous year. The trend has been an upward one since the expiration of the tax credit last summer. Home prices have softened, particularly earlier this year, due to a higher-than-normal number of distressed sales. However, both the percentage of distressed sales and the amount of time they spend on the market has decreased in recent months, a positive sign for the market moving forward. In fact, prices have steadily followed a positive monthly trend since February. Mortgage defaults have also declined lately.

While interest rates continue to break new record lows, the number of buyers who are able take advantage of these savings is restricted by tougher underwriting standards for mortgages. 40% of the banks surveyed by the Office of the Comptroller of the Currency tightened lending standards for mortgages within the past year. In his second press conference, Federal Reserve Chairman Ben Bernanke stated that a quicker foreclosure process and additional home price stabilization are key to boosting confidence in the market and bolstering a more robust recovery in the housing sector.

As the economy improves, stimulus efforts by the government and the Fed will most likely continue to wind down, which typically spurs rising interest rates to keep inflation in check. Although inflation has been the source of recent concern, the Fed appears confident it will remain in check for the near term. Meanwhile, buyers continue to benefit from historically favorable buying conditions, and sellers are encouraged by increased market stability.

 

Home Sales

in millions

 

Home sales in May were down 15.3% compared to the same time last year when the impact of the tax credit was at its peak. Compared to the previous month, sales were down 3.8%. NAR Chief Economist Lawrence Yun states that the slower pace of sales is consistent with the slower pace of overall economic activity and that falling gas prices will help to moderate the impact of a sluggish economy. Although he continues to cite unnecessarily tight credit for limiting buying activity, the pace of sales in the second part of the year is expected to be stronger.

Home Price

in thousands

Home prices rebounded 3.4% in May with median home prices rising to $166,500. This is 4.6% below the year-ago level and continues to keep the median price close to 2002a��2003 levels. Just under 1 in 3 homes sold during May were distressed properties, which typically sell at a 10%a��20% discount. This is down 6 percentage points from April and is exactly the same as a year ago. Investors represented 19% of sales, and first-time buyers accounted for 35% of May sales compared to 14% and 46% respectively a year ago at the peak of the tax credit. Home prices and mortgage rates remain favorable for buyers heading into the summer selling season.

 

Inventory- Month’s Supply

in months

 

The supply of homes measured in months on the market at their current pace was up during May compared to April. Inventory levels remained 26% below the peak of 12.5 months in July 2010 and 12% above April of 2010 when the tax credit was in full swing.

Source: National Association of Realtors

Interest Rates

Rates are at a record low after steadily declining throughout May, primarily due to uncertainty in the global and domestic economies. While these incredible rates represent a significant savings for home buyers, experts note that for the benefits to fully be realized, lending conditions must loosen so more buyers can take advantage of them. As overall economic activity gets back on track, rates will likely rise to keep inflation in check. In other words, the window of opportunity for buyers to lock in these historically low interest rates may not remain open much longer.A�

Source: Freddie Mac

This Month’s Video

 

Topics For Home Owners, Buyers & Sellers

Tips for Selling Your House

1. Price it right. Studies show that when homes are priced to sell, they not only sell faster, they ultimately command a higher price than homes that sit on the market and get perceived as a�?stale.a�?

2. Consider a presale inspection. This will help you to know what items need to be fixed before your home goes on the market. Repairs and concessions made during the negotiation process can end up costing sellers more. KW Research reveals that in 2010, 89% of move-up and 82% of first-time buyers purchased a home in good to excellent condition. 75% of sellers started making repairs 1a��8 weeks before listing.

3. Higher may not always be better. While a higher offer can be tempting, be sure to consider the whole offer. An offer without contingencies, conditions, and with a higher down payment may be a more solid deal.

 

June 2011 Market Update

June 2011A� Market Update

The U.S. housing market continues its gradual and uneven progress, despite the expiration of the home buyer tax credit. The remarkable rebound in housing activities from the initial drop following the end of the home buyer tax credit this past July adds to the belief that the risk of a double-dip downturn in housing may be disappearing.

As the housing market continues to work through the excess supply overhang, a result from the glut of foreclosed properties which is keeping home prices below their long-term trend growth, economists anticipate mortgage rates at or above 6% by the end of 2012 and expect buying activity to continue its upward momentum.

Supporting this view is the rising concern about inflationary pressures sparked by political unrest in the Middle East. While surging gas and food prices could prove transitory and pose no major threats, these price increases may weigh down consumer spending, which accounts for two thirds of the economy. While, the Federal Reserve is committed to making necessary policy changes to address such risks. Meanwhile, core price gains, excluding food and fuel, were modest in April, offering some relief to consumers.
As the economy improves, stimulus efforts by the government and the Fed is expected to gradually wind down, which typically spurs rising interest rates to keep inflation in check. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers are encouraged by increased market stability.

 

Home Sales

In Millions

This Month’s Video:

Topics For Home Owners, Buyers & Sellers

Following in the footsteps of its counterpart Fannie Mae, Freddie Mac is offering a summer sales promotion for buyers who purchase a home from its inventory of foreclosures or HomeSteps properties. Since banks typically sell foreclosures a�?as-isa�? without incentives, warranties, or repairs, this incentive could help buyers view a HomePath property more like a traditional sale, and less like a distressed property, during their search process.

For offers received by July 31 that close by September 30, Freddie Mac is offering:

* 3.5% in closing costs to buyers
* $1,200 bonus to buyer agents

This is on top of the incentives already being offered:

* A two year HomeProtect Home Warranty
* Up to 30% savings on new appliances

Note that this program comes with a few eligibility requirements, which includes the home must be a single-family, owner-occupied, financed dwelling used solely for residential purposes.

The number of homes home sales in April were down 12.9% compared to the same time last year when the impact of the tax credit was at its peak. Sales were relatively stable compared to the previous month: less than a 1% decline. NAR Chief Economist Lawrence Yun states that a�?given great affordability conditions and job creation, home sales should be strongera�? and cites unnecessarily tight credit for limiting sales. Gradual but uneven improvement is expected to continue. In fact, home sales have increased six of the past nine months.

 

 

Home Price

In Thousands

Home prices rebounded 2.4% in April with median home prices rising to $163,700. This is 5% below the year-ago level and continues to keep the median price close to 2002 levels. Three out of eight homes sold during April, or 37% of sales, were distressed properties, which typically sell at a 10%a��20% discount. This is down 3% from March. Investors represented 20% of sales, and all-cash buyers were 31% of sales in April, down from a record high of 35% in March. Prices and mortgage rates remain favorable for buyers for the spring selling season.

 

Inventory- Month’s Supply

In Months

 

The supply of homes measured in months on the market, if sales continue at their current pace, inched up during April compared to March. Inventory levels remained 26% below the peak of 12.5 months in July and only 11% above April of 2010 when the tax credit was in full swing.

Source: National Association of Realtors

Interest Rates

Rates have reached a new record lowafter steadily declining throughout May, primarily due to uncertainty in the global and domestic economies. Rates are still expected to follow an upward trend as the year progresses. As overall economic activity gets back on track, rates will likely rise to keep inflation in check. This window of opportunity for buyers to lock in these historically low interest rates may not remain open much longer.