Existing Home Sales

Existing Home Sales Approach Bull Market Territory

The housing market finished 2011 with strength, and is carrying measurable momentum into 2012. 

According to data from the National Association of REALTORS®, on a seasonally-adjusted, annualized basis, December’s Existing Home Sales climbed by 220,000 units overall from the month prior on its way to an 11-month high.

An “existing home” is a home that’s been previously occupied; that cannot be considered new construction.

After 4.61 million existing homes were sold in December, there are now just 2.38 million homes for sale nationwide. The last time the national home supply was this sparse was March 2005.

At today’s sales pace, the complete, national home inventory would be exhausted in 6.2 months — the fastest pace since before the recession. A 6.0-month supply is believed to represent a market in balance. 

The December Existing Home Sales report contained noteworthy foreclosure and short sale statistics, too :

• Foreclosures sold at an average discount of 22% to market value
• Short sales sold at an average discount of 13% to market value
• Together, foreclosures and short sales accounted for 32% of all home sales

Clearly, “distressed homes” remain a large part of the U.S. housing market.

Furthermore, in its report, the real estate trade group also noted that one-third of homes under contract to sell nationwide succumbed to contract failure last month. That’s up from 9% one year ago.

Contract failure occurs for a multitude of reasons, most notably homes appraising for less than the purchase price; the buyer’s failure to achieve a mortgage approval; and, insurmountable home inspection issues. December’s high failure rate underscores the importance of getting pre-approved as a buyer, and of buying homes in “good condition”.

For today’s home buyer in Valparaiso Indiana, December’s Existing Home Sales figures may be construed as a “buy signal”. Home supplies are dropping and buyer demand is rising. This is the basic recipe for higher home prices ahead.

If your 2012 plans call for buying a home, consider that home values throughout Indiana are expected to rise as the year progresses. The best values of the year may be the ones secured this winter.

Existing Home Sales

The Week Ahead For Mortgage Rates: January 23, 2012

The outlook for the U.S. economy improved last week, taking the mortgage bond market with it. For the first time this year, conforming mortgage rates rose throughout Indiana and Illinois from one week to the next.

Data was strong across all categories last week.

• Home Resales: Existing Home Sales rose 5%
• New Homes: Single-Family Housing Starts rose 4%
• Builders: Home Builder Confidence rose to a 5-year high
• Jobs: Jobless claims fell to lowest level since April 2008
• Inflation: CPI remained in balance

In addition, European leaders moved closer to a final resolution on the Greek sovereign debt default situation.

Overall, the action gave investors reason for optimism in the U.S. economy, and economies abroad. This drew money away from the U.S. mortgage bond market, which caused mortgage rates to rise.

Freddie Mac reports the average 30-year fixed rate mortgage slipping 0.01 percentage points to 3.88% nationwide, with an accompanying 0.8 discount points and complete set of closing costs. These costs are slightly higher as compared to the week prior.

1 discount point is equal to one percent of the borrowed loan size.

Freddie Mac’s weekly mortgage rate survey puts the conforming 30-year fixed rate mortgage under 4 percent for 7 consecutive weeks.

This week, mortgage rates may rise; the week is anchored by a 2-day Federal Open Market Committee meeting. Whenever the FOMC meets, mortgage rates can be volatile.

The Ben Bernanke-led FOMC is not expected to raise the Fed Funds Rate from its current target range near 0.000 percent, but it’s not what the Fed does that can change mortgage rates as much as it is what the Fed says. 

After its 2-day meeting concludes Wednesday, the FOMC will issue its customary statement to the markets, to be followed by a press conference led by Chairman Bernanke. Wall Street will watch the press release and conference for clues about the Fed’s next steps and its outlook for the U.S. economy.

If the Fed indicates that the economy is growing, mortgage rates in Northwest Indiana are likely to rise. Conversely, if the Fed indicates that the economy is slowing, mortgage rates are likely to fall.

Other factors influencing mortgage rates this week include the President’s annual State of the Union address (Tuesday), the Pending Home Sales Index (Wednesday) and New Homes Sales data for December (Thursday).

Mortgage rates remain low but may not stay that way. If you’re looking for the best rates of the year, this week may be your chance. This is The Week Ahead for Mortgage Rates: January 23, 2012.

Quick general rule of thumb when keeping an eye on mortgage rates.

Strong Economic News: $$$ from Bonds —> Stocks = Home Loan Rates Worsen

Weak Economic News: $$$ from Stocks —> Bonds = Home Loan Rates Improve

If you or someone you know is thinking about buying a home, the combination of low home loan rates and affordable home prices make this an ideal time to buy a home. Want to know if you can afford a new home? Call or text me at 512-522-7284 to discuss your personal situation and your home loan options!

Existing Home Sales

Top Real Estate Headlines for Week Ending: August 27th

As we all look forward to the weekend, let’s pause for a moment to review what the top real estate and mortgage headlines were this week according to the National Association of Realtors.

• July Existing-Home Sales Fall, But Prices Rise
  Home prices rose in July, though existing-home sales continued their slide following the expiration of the home buyer tax credit.
• Is the Housing Slowdown a Sign of a Double-Dip?
  As unemployment and mounting foreclosures continue to bind the housing market, analysts fear a slide back into recession.
• Foreclosures Down, But Late Payments Up
  The inventory of houses in the process of foreclosure are down for the first time since 2006, but the number of loans that are one payment late went back up.
• Commercial Conditions Favor Business Growth
  Rent discounts and other favorable conditions in commercial real estate markets make it a good time for expansion moves by business, an NAR report suggests.
• 4 Business Tips for Social Networking Success
  Are you using social networks to garner more business leads? Read tips on how to expand your reach.
• Mortgage Rates Continue to Fall
  Average interest on long-term mortgages hit a record low for the eighth time in nine weeks, and could go even lower.
• 7 Must-Have Apps for Your Smartphone
  Get ideas on some of the latest apps that can be used in your real estate business, from faxing on-the-go to creating property “reminder” tours.
• Protest Rising Over Resale Charges
  Some builders are now including in contracts a clause that requires buyers to pay them a 1 percent transfer fee every time the house is sold over the next 99 years.
• New York Housing Bucking Trends
  Inventory has dropped in half from a year ago and well-priced apartments are selling in a week.
• Fannie Mae to Prohibit ‘Appraisal Cutting’
  The secondary mortgage market company doesn’t want lenders to cut valuations anymore on appraisals in dispute.
• Military Growth Drives Fastest Rise in Income
  Jacksonville, N.C. tops the list of USA Today’s metro areas with the largest per-capita income gains from 2000 to 2009. See what other cities made the list.

These were the top real estate and mortgage headlines for the week ending August 27, 2010.

Want to know how these national headlines could impact you right here in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our resident local market real estate experts guide you to an informed and successful real estate transaction.

Existing Home Sales

Home Sellers – Feeling Lucky With Your Real Estate Sale?

In case you missed this morning’s headline, Existing Home Sales Swan Dive. That’s right. Sales of existing home sales plummeted 27.2 percent in July. Furthermore, the National Association of Realtors stated that July’s existing home sales is the lowest reading since NAR has been keeping track.

It should also be noted that total housing inventory increased by 2.5 percent in July. It will now take up to 12.5 months to sell the existing homes inventory.

What does this mean for home sellers?

If you’re a home seller, there’s no more time to waste on hoping for a buyer to come along and pay you what you think your home is worth. It’s time for home sellers to get serious and figure out what is their liquidation home sale price.

What are the odds that home sellers will actually sell their homes?

Every real estate market is different, but the growing consensus is the same. Successful real estate transactions are becoming more difficult by the day whether it is due to inflexible home sellers, home buyers remorse, unflattering home inspections and/or below market value home appraisals.

Other mind numbing real estate headlines for home sellers to think about.

• Redfin: Less Than Half of All Home-Sale Attempts Successful in ’09 - The Wall Street Journal
• Nearly Half of the Homes on the Market in July 2010 Had Prices Cut, According to ZipRealty – RISMedia

If home sales is a game of numbers, wouldn’t you want to be on the side with the highest probability of success. Understanding the dynamics of the real estate market is one aspect that your real estate professional must grasp. Working with a local real estate professional who can provide clarity is a must.

Otherwise, if you’re feeling lucky your best bet for your home sale may come down to the flip of a coin.

Existing Home Sales

What’s Ahead for Mortgage Rates This Week: July 26th

Mortgage markets worsened last week for the first time in 6 weeks. Investors were pleased with corporate earnings reports and the European bank stress tests results.  Stocks gained on the news, and bonds lost.

Mortgage rates rose last week, but only slightly. Rate are still hovering near their lowest levels of all-time.

Of the bigger stories last week was Existing Home Sales. As reported by the National Association of Realtors®, sales volume was down in June and home supplies were up. But figures were a bit better than expected, giving some hope for housing.

Notably, the number of move-up buyers outnumbered first-timers and the national median home price rose, suggesting that mid-to-upper home prices are getting some support.

This week, the market gets additional two pieces of housing data to add to the mix:

1. New Homes Sales (Monday)
2. Case-Shiller Index (Tuesday)

Both will have an impact on mortgage rates. In general, better-than-expected data should cause rates to rise in Indiana; worse-than-expected data should cause rates to fall.

Also this week, there’s two consumer confidence reports, the Fed’s Beige Book, and late-in-the-week inflationary data.  Mortgage markets should remain volatile with so much news headed down the pipe.

It’s too soon to declare the current 3-month rally over, but it’s been 3 weeks since rates dipped. This can be a signal that mortgage rates have finally bottomed and that it’s time to lock your rate.

If you’re floating a mortgage rate, or thinking about a refinance, it’s time to get locked in. Rates may drop this week, but then again, maybe they won’t. There’s little sense gambling on a bet as big as a mortgage.

Existing Home Sales

Existing Home Sales Drop But Move Up Buyers Rise In June

Consistent with most post-home buyer tax credit housing news, the National Association of Realtors® says Existing Home Sales eased lower last month.

An “existing home” is a home that cannot be considered new construction.

The 5 percent drop in sales from May to June was expected, but a closer look at the month’s data reveals some interesting trends.

First, repeat buyers accounted for 44 percent of home resales in June, up from 40 percent in May. That’s a healthy increase for just 4 weeks’ time and the tax credit is a likely catalyst. First-timer buyers bought starter homes owned by former first-timers, who were then free to “move up” to larger, more expensive property.

Housing markets can be trickle-up and, not coincidentally, the jumbo/luxury housing market is now in the midst of rebound.

Second, June’s “distressed sales” accounted for 32 percent of all home resales, up from 31 percent in May.

A figure like this hints at the large role foreclosures continue to play in a Portage Indiana home buyer’s home search strategy.  And why not? The National Association of Realtors® suggests that distressed homes are sold at a 15 percent discount.

Lastly, take note that home inventories are still rising in Portage Indiana. As of July 16, 2010, there were 262 homes actively listed for sale in Portage Indiana and inventories are back to their highs from December 2009.

Overall, the Existing Home Sales data from June is a mixed bag. There’s support for the middle- and upper-price tiers, but a growing overhang of supply. The market looks favorable for buyers given low mortgage rates and strong negotiation leverage.

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Existing Home Sales

Advantage Home Buyers After May 2010 New Home Sales Data

One month after the federal homebuyer tax credit’s official expiration, the New Home Sales report turned in its worst showing ever.

In May 2010, for the first time in 11 months, the inventory of unsold new homes crossed the 8-month marker, posting an 8.5 month supply overall.

Additionally, new homes sales volume fell to 300,000 units nationwide — a drop of 32% and its lowest level since the Commerce Department started tracking data in 1963.

Now, universally, the press is referring to the May New Home Sales report as “poor“.  A closer look, however, shows that may not be the case.

For one, we have to keep New Home Sales in perspective as a percentage of overall home sales. Yes, there were just 300,000 new homes sold in May, but there were also 5.66 million “existing” homes sold.

New Home Sales, therefore, accounted for just 5 percent of the total housing market — a very small percentage.

Another reason why the weak New Home Sales data isn’t so awful is that, when New Home Sales stall, it actually benefits home buyers.  Excess supply puts a strain on sellers which, in turn, gives buyers a tremendous amount of leverage in negotiation.

When home inventories are high, builders are more apt to appease their customers in hopes of making a sale.  For home buyers Crown Point Indiana, this can result in buying a better product at a lower price.

Especially with builder confidence plummeting.

Since February 2009, housing has shown steady gains. There’s been both peaks and valleys across units, inventories, and prices, but overall, the market is improving.  May’s New Home Sales data shows how now may an opportune time to “buy new”.

Existing Home Sales

May 2010 Existing Home Sales Is Better Than The Headline

Existing Home Sales dropped in May for the first time in 3 months but still managed to post its second-highest since November 2009, buoyed by the expiring federal tax credit program.

An “existing home” is a home that cannot be considered new construction; a resale of an existing home.  Existing Home Sales fell 2.2 percent in May.

The press is calling the drop in sales “unexpected” and disappointing, but a deeper look at the data shows the news isn’t as bad as it first appears.

First, on a regional basis, sales were mostly solid. Only the Northeast region posted a loss. The West even managed a gain.

• Northeast : -18.3 percent
• Midwest : 0.0 percent
• South : +0.5 percent
• West : +4.9 percent

Second, the supply of homes for sale dropped to 8.3 in May and, because home prices are based on supply and demand, this is a positive for pricing.

By comparison, in 2008, the average existing home inventory was 10.4 months.

Lastly, first-time home buyers represented 46 percent of all buyers in May. The number was likely buoyed by the tax credit program but that doesn’t damper the fact that first-time buyers provide a support floor for the housing market. 

First-time buyers in Crown Point Indiana enable “existing owners” to move-up to bigger homes, which in turn trickles up to the mid-size and jumbo markets.

Analysts expected more from May’s numbers and that may explain why the reaction to the data is generally negative.  However, in many cities, home resales did just fine.

Existing Home Sales

Pending Home Sales Data Shows Great Deals Harder To Find

The Pending Home Sales Index shot higher in April as low mortgage rates and a soon-to-expire federal tax credit spurred home buying in Hobart Indiana and across the county.

A “pending home sale” is a home that’s under contract to sell but not yet closed.

Region-by-region, April’s pending home sales varied versus March’s data:

• Northeast Region: +29.5%
• Midwest Region : +4.1%
• South Region : -0.6% (after a +15.9% posting in March)
• West Region : +7.5%

On an annual basis, the Pending Home Sales Index is higher by 22 percent.

April marks the third straight month that pending home sales are up and today’s buyers should take note. This is because, according to the National Association of Realtors®, 80% of homes under contract close within 60 days.

In other words, May and June’s existing home sales data should be similarly strong, causing the Lake County Indiana real estate market to gently shift in favor of sellers.  In fact, already, we’re seeing home resales touch multi-year highs while new home supplies fall to multi-year lows.

All of it tends to push home prices higher while simultaneously reducing buyer negotiation leverage. That, coupled with the high probability of higher mortgage rates ahead, means that finding “deals” will get tougher for the average home buyer.

In looking at the housing market data, it appears that the best month in which to have bought a home this year was February.  The next best time may be right now. 

Talk to your real estate agent if you’re planning to buy a home this year.  It may be sensible to move up your time frame a few months.

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