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Monday, March 15, 2010
Monday, March 8, 2010
National Real Estate News
Last week's one housing report gave us the National Association of Realtors Pending Home Sales index, down 7.6% for January. Year over year, the NAR index is up 12.3%. Also, it's now at 90.4 and a score of 100 equals the average level of contract activity for 2001, the base year, when activity was at a then record high. Pending sales are still in pretty good territory.
Meanwhile, a quarterly report from a builders group and a major bank revealed that home prices are at near record levels of affordability. In the last three months of 2009, a family making the median income of $64,000 a year could afford to buy 70.8% of all homes sold during that time! According to this report, a home is affordable if a family making the metro area's median income would have to spend no more than 28% of their take-home pay for housing. Of course, there are variations in affordability around the US, but this is a great overall trend.
Buyers, however, shouldn't expect great affordability to last forever. According to a Freddie Mac index, in the last quarter of 2009 four out of nine regions showed home price gains! The NAR's monthly market forecast, out last Thursday, projected the median price of existing homes UP 2.8% for 2010 with the new home median price UP 2.0%. In addition, no one knows what will happen to mortgage rates once the Fed stops buying mortgage bonds at the end of this month. Smart buyers shouldn't drag their feet, especially those wanting the tax credit, which requires a signed contract by April 30.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Eastside Statistics - February, 2010
Current Residential & Condo listings - 3,944 (down 16.72% from last year)
New listings taken this month - 1,303
Pending sales this month - 835 (up 93.74% from last year)
Percent of listings that sold this month - 21.17%
Median closed sales price - Feb. ‘09, $435,000
Median closed sales price - Feb. ‘10, $437,500
Rate of appreciation = 0.57%
~ Courtesy of NWMLS
New listings taken this month - 1,303
Pending sales this month - 835 (up 93.74% from last year)
Percent of listings that sold this month - 21.17%
Median closed sales price - Feb. ‘09, $435,000
Median closed sales price - Feb. ‘10, $437,500
Rate of appreciation = 0.57%
~ Courtesy of NWMLS
King County Statistics - February, 2010
Current Residential & Condo listings - 11,539 (down 9.76% from last year)
New listings taken this month - 4,122
Pending sales this month - 2,621 (up 62.69% from last year)
Percent of listings that sold this month - 22.71%
Median closed sales price - Feb. ‘09, $348,000
Median closed sales price - Feb. ‘10, $343,500
Rate of appreciation = -1.29%
~ Courtesy of NWMLS
Snohomish County Statistics - February, 2010
Current Residential & Condo listings - 5,177 (down 9.13% from last year)
New listings taken this month - 1,759
Pending sales this month - 1,133 (up 70.89% from last year)
Percent of listings that sold this month - 21.89%
Median closed sales price - Feb. ‘09, $301,750
Median closed sales price - Feb. ‘10, $269,000
Rate of appreciation = -10.85%
~ Courtesy of NWMLS
New listings taken this month - 1,759
Pending sales this month - 1,133 (up 70.89% from last year)
Percent of listings that sold this month - 21.89%
Median closed sales price - Feb. ‘09, $301,750
Median closed sales price - Feb. ‘10, $269,000
Rate of appreciation = -10.85%
~ Courtesy of NWMLS
Northwest MLS brokers say housing market in Washington State indicates recovery
Northwest Multiple Listing Service members reported strong gains in home sales during February, with brokers pointing to several encouraging signs for a busy spring season. Improving consumer confidence and a looming deadline for homebuyer tax credits are helping to boost activity, according to NWMLS officials.
"We are entering what is traditionally our busiest home selling season," said NWMLS director OB Jacobi, general manager of Windermere Real Estate Company. "With the first job increase since 2008 and closed sales in King County up about 45 percent, there is every indication that our market is in recovery," he added. Jacobi reported "significant traffic" at open houses, which he attributes to the first-time homebuyer tax credit and rising consumer confidence.
Pending sales (offers made and accepted, but not yet closed) jumped nearly 45 percent last month compared to a year ago, marking the 11th straight month of month-over-month increases. Twelve of the 21 counties in the MLS market area reported double-digit gains in pending sales, led by San Juan County (up 85.7 percent), Snohomish County (up nearly 71 percent) and King County (up nearly 63 percent).
Closed sales also outperformed year-ago totals, rising 33.5 percent. Members tallied 3,214 completed transactions last month, up from the 2,407 closed sales for February 2009.
Prices, while showing signs of stabilizing, still lagged year-ago figures. Area-wide, the median price for last month’s closed sales of single family homes and condominiums (combined) was $260,000, down about 6.5 percent from a year ago. The median price for single family homes (excluding condos) dipped 4.6 percent, while condo prices declined nearly 9 percent.
In the four-county Puget Sound region, the median price for single family homes that sold and closed last month was $297,000, down about 2.6 percent from the year-ago figure of $305,000. Condo prices in the area fell 7.7 percent, from the year-ago selling price of $253,000 to $233,500 for last month’s sales.
MLS members added 10,663 new listings to inventory last month, bringing the total number of active listings in the system to 36,350. That total is down 7.5 percent from the same month a year ago, creating a more balanced market that favors neither buyers nor sellers.
Move-up buyers are accounting for some of the surge in activity. Brokers credit the combination of a $6,500 tax incentive for qualified repeat buyers and thawing jumbo loan market as factors in spurring activity for this segment.
"Over the past 90 days there has been a buildup of positive momentum in the housing market and we continue to see evidence that the tax credit extension/expansion is working," remarked J. Lennox Scott, chairman and CEO of John L. Scott, Inc.
Scott noted higher priced areas, such as Mercer Island, Redmond, and Issaquah, are seeing an uptick in home sales – suggesting more move-up buyers are engaging in the market. "Historically low interest rates continue to be a motivating factor which when combined with the tax credit give buyers a significant purchasing power advantage," he commented.
Interest rates on jumbo loans (more than $567,500 in King, Snohomish and Pierce counties) fell to 5.79 percent on a 30-year fixed-rate loan in the past few weeks. That’s a five-year low, according to Informa Research Services, whose clients include the nation’s top 25 banks.
Noting the peak real estate season is approaching, MLS director Meribeth Hutchings, pointed to several encouraging signs. "Homes are more affordable, mortgage rates are at all-time lows, and employment in the state appears to be on the rise," said Hutchings, the broker at Windermere Real Estate/Lake Stevens. "All signs point to a strong spring," she added.
Earlier in the week, the state Employment Security Department reported the state’s economy "picked up some steam in January," adding an estimated 12,400 jobs – the first monthly gain since November 2008.
NWMLS Dick Beeson, broker/owner of Windermere Real Estate/Commencement Associates in Tacoma, attributes the lift in activity to lower prices and a hopeful jobs picture. He said the price point of new listings in some areas is 10-to-15 percent lower than the asking price of new listings added at this time a year ago, which is opening up opportunities for more buyers.
"The plethora of shorts sales and foreclosures has diluted the price point of many homes that are selling, making appraisals more challenging," Beeson reported. He believes the tax credit has "helped only marginally." The real potential of a recovered housing market, according to Beeson, will come with new employment for many displaced workers. Recent employment gains and reports of rising consumer confidence are encouraging, he noted.
"We can see and hear the rumblings of pent-up demand from buyers," Beeson commented, adding he expects spring and summer sales to outpace last year because there are such good price values in the market. He said they are reminding buyers of the possibility of rising mortgage interest rates due to the Federal Reserve’s plan to stop buying mortgages by the end of March.
~ Courtesy of NWMLS
"We are entering what is traditionally our busiest home selling season," said NWMLS director OB Jacobi, general manager of Windermere Real Estate Company. "With the first job increase since 2008 and closed sales in King County up about 45 percent, there is every indication that our market is in recovery," he added. Jacobi reported "significant traffic" at open houses, which he attributes to the first-time homebuyer tax credit and rising consumer confidence.
Pending sales (offers made and accepted, but not yet closed) jumped nearly 45 percent last month compared to a year ago, marking the 11th straight month of month-over-month increases. Twelve of the 21 counties in the MLS market area reported double-digit gains in pending sales, led by San Juan County (up 85.7 percent), Snohomish County (up nearly 71 percent) and King County (up nearly 63 percent).
Closed sales also outperformed year-ago totals, rising 33.5 percent. Members tallied 3,214 completed transactions last month, up from the 2,407 closed sales for February 2009.
Prices, while showing signs of stabilizing, still lagged year-ago figures. Area-wide, the median price for last month’s closed sales of single family homes and condominiums (combined) was $260,000, down about 6.5 percent from a year ago. The median price for single family homes (excluding condos) dipped 4.6 percent, while condo prices declined nearly 9 percent.
In the four-county Puget Sound region, the median price for single family homes that sold and closed last month was $297,000, down about 2.6 percent from the year-ago figure of $305,000. Condo prices in the area fell 7.7 percent, from the year-ago selling price of $253,000 to $233,500 for last month’s sales.
MLS members added 10,663 new listings to inventory last month, bringing the total number of active listings in the system to 36,350. That total is down 7.5 percent from the same month a year ago, creating a more balanced market that favors neither buyers nor sellers.
Move-up buyers are accounting for some of the surge in activity. Brokers credit the combination of a $6,500 tax incentive for qualified repeat buyers and thawing jumbo loan market as factors in spurring activity for this segment.
"Over the past 90 days there has been a buildup of positive momentum in the housing market and we continue to see evidence that the tax credit extension/expansion is working," remarked J. Lennox Scott, chairman and CEO of John L. Scott, Inc.
Scott noted higher priced areas, such as Mercer Island, Redmond, and Issaquah, are seeing an uptick in home sales – suggesting more move-up buyers are engaging in the market. "Historically low interest rates continue to be a motivating factor which when combined with the tax credit give buyers a significant purchasing power advantage," he commented.
Interest rates on jumbo loans (more than $567,500 in King, Snohomish and Pierce counties) fell to 5.79 percent on a 30-year fixed-rate loan in the past few weeks. That’s a five-year low, according to Informa Research Services, whose clients include the nation’s top 25 banks.
Noting the peak real estate season is approaching, MLS director Meribeth Hutchings, pointed to several encouraging signs. "Homes are more affordable, mortgage rates are at all-time lows, and employment in the state appears to be on the rise," said Hutchings, the broker at Windermere Real Estate/Lake Stevens. "All signs point to a strong spring," she added.
Earlier in the week, the state Employment Security Department reported the state’s economy "picked up some steam in January," adding an estimated 12,400 jobs – the first monthly gain since November 2008.
NWMLS Dick Beeson, broker/owner of Windermere Real Estate/Commencement Associates in Tacoma, attributes the lift in activity to lower prices and a hopeful jobs picture. He said the price point of new listings in some areas is 10-to-15 percent lower than the asking price of new listings added at this time a year ago, which is opening up opportunities for more buyers.
"The plethora of shorts sales and foreclosures has diluted the price point of many homes that are selling, making appraisals more challenging," Beeson reported. He believes the tax credit has "helped only marginally." The real potential of a recovered housing market, according to Beeson, will come with new employment for many displaced workers. Recent employment gains and reports of rising consumer confidence are encouraging, he noted.
"We can see and hear the rumblings of pent-up demand from buyers," Beeson commented, adding he expects spring and summer sales to outpace last year because there are such good price values in the market. He said they are reminding buyers of the possibility of rising mortgage interest rates due to the Federal Reserve’s plan to stop buying mortgages by the end of March.
~ Courtesy of NWMLS
Monday, March 1, 2010
National Real Estate News
New home sales fell 11.2% in January to a record low level. Existing home sales weren't very pretty either, down 7.2%, though they're UP 11.5% over a year ago. Let's remember that last Fall we all thought the tax credit was going away at the end of November. Many sales got pushed into October and November, causing sales drops the next two months. The median new home price is down just 2.4% year over year and the average price is now UP 3.7%. For an existing home, the median price is unchanged from a year ago and the average price is UP 2.6%. More evidence home prices are stabilizing, with some analysts expecting modest gains for the year. Supporting this, the Case-Shiller home price index was UP 0.3% in December, its seventh straight monthly rise.
Even more interesting was the news that this has actually been a very good decade for home prices. From January 2000 to December 2009, prices were UP 46%, making residential real estate a clearly profitable investment. That's not even factoring in the mortgage interest and real estate tax deductions homeowners get!
Finally, we've reported that the Fed will stop buying mortgage bonds at the end of this month and experts feared rates may edge up. Now analysts say mortgage rates might not move much at all. This stems from the fairly calm market reaction to last week's hike of the Fed's discount lending rate (which is NOT the key Fed funds rate). Seeing little or no move in today's low mortgage rates is good news for the near term.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Wednesday, February 24, 2010
A leading indicator for home prices? Follow the rents!
The big question for home buyers and sellers today is: "Where are home prices headed?" People want to know if now is a good time to buy or sell, or if they should wait. We all need to stay on top of trends in real estate values -- so what's a good way to analyze the situation?
Yale economist Robert Shiller states it bluntly: "If you look at the trend in rents to see where housing prices are headed, you're looking at the right measure." Shiller is the co-developer of the S&P Case/Shiller Home Price Indices that monthly track residential real estate values nationally and in 20 metro areas.
Traditionally, people have been willing to pay a modest premium to own a home rather than rent it. Recent studies report that in 1999, rents averaged 87% of the after-tax mortgage payment for houses and condos of similar size in the same neighborhood.
When home prices took off, this percentage changed. By mid-2006, rents had fallen to less than 60% of after-tax mortgage payments. In some markets, owners were paying twice as much as renters for a similar property in the same neighborhood. In a few places, owner monthly payments were three times average rents.
The 87% ratio of rent to ownership cost for 1999 is a good benchmark because it stayed around that level throughout the 1990's and the steep rise in home prices hadn't really begun.
With that as our guide, we can conclude that home prices at last appear to be stabilizing. By the end of October 2009, rents on average were up to 83% of ownership costs!
Conditions vary from market to market, so check your own area. But with historically low mortgage rates, plus the homebuyer tax credit, this is a great time to be buying or selling.
Yale economist Robert Shiller states it bluntly: "If you look at the trend in rents to see where housing prices are headed, you're looking at the right measure." Shiller is the co-developer of the S&P Case/Shiller Home Price Indices that monthly track residential real estate values nationally and in 20 metro areas.
Traditionally, people have been willing to pay a modest premium to own a home rather than rent it. Recent studies report that in 1999, rents averaged 87% of the after-tax mortgage payment for houses and condos of similar size in the same neighborhood.
When home prices took off, this percentage changed. By mid-2006, rents had fallen to less than 60% of after-tax mortgage payments. In some markets, owners were paying twice as much as renters for a similar property in the same neighborhood. In a few places, owner monthly payments were three times average rents.
The 87% ratio of rent to ownership cost for 1999 is a good benchmark because it stayed around that level throughout the 1990's and the steep rise in home prices hadn't really begun.
With that as our guide, we can conclude that home prices at last appear to be stabilizing. By the end of October 2009, rents on average were up to 83% of ownership costs!
Conditions vary from market to market, so check your own area. But with historically low mortgage rates, plus the homebuyer tax credit, this is a great time to be buying or selling.
Monday, February 22, 2010
National Real Estate News
Builders are jumping on the recovery bandwagon, as January Housing Starts beat consensus estimates, heading UP 2.8% to an annual rate of 591,000 units. Single-family starts are now 35.6% up from their low a year ago. Total new building permits dropped a tad in January, but single-family permits were up 0.4% for the month and UP 48.2% from a year ago.
The trend indicates more improvement ahead. Permits for single-family homes are 7.4% higher than starts in states requiring building permits, well above the historical norm. Many observers feel home building is in the early stages of a serious rebound. Supporting this, the National Association of Home Builders reported builder confidence higher in February, going from 15 to 17 points, 8 points up from a year ago.
Although the Fed will stop buying Mortgage Backed Securities (MBS) at the end of March, some analysts now feel this may not cause mortgage rates to rise much, if at all. That's because Fannie Mae and Freddie Mac recently announced their plan to buy up to $200 billion in delinquent loans from their own MBS and pass-through pools. Friday, the Mortgage Bankers Association (MBA) reported the percentage of delinquent home loans shrank in Q4. MBA chief economist Jay Brinkmann feels that fewer new problem mortgages could be signaling the "beginning of the end" of the foreclosure crisis. Let's hope so...
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
The trend indicates more improvement ahead. Permits for single-family homes are 7.4% higher than starts in states requiring building permits, well above the historical norm. Many observers feel home building is in the early stages of a serious rebound. Supporting this, the National Association of Home Builders reported builder confidence higher in February, going from 15 to 17 points, 8 points up from a year ago.
Although the Fed will stop buying Mortgage Backed Securities (MBS) at the end of March, some analysts now feel this may not cause mortgage rates to rise much, if at all. That's because Fannie Mae and Freddie Mac recently announced their plan to buy up to $200 billion in delinquent loans from their own MBS and pass-through pools. Friday, the Mortgage Bankers Association (MBA) reported the percentage of delinquent home loans shrank in Q4. MBA chief economist Jay Brinkmann feels that fewer new problem mortgages could be signaling the "beginning of the end" of the foreclosure crisis. Let's hope so...
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Friday, February 19, 2010
Inflation Concerns in the Future
The Consumer Price Index is a very closely watched report as it is one of the leading indicators of inflation. In January the CPI rose by .2%, less than the .3% expected. This left the year over year CPI at 2.6%, below expectations of 2.8%. The more closely watched Core CPI fell by .1%, below expectations of a .1% rise. The last time the Core CPI showed a negative monthly reading was 28 years ago.
While inflation is virtually non-existent right now, things can change down the road. There is much talk about inflation amongst Fed officials, economists and the media. There are many different opinions surrounding the topic. Whenever there is an abundance of money being pushed into the system, one must worry about inflation resulting.
Fed President Thomas Hoenig has recently expressed much concern over future inflation. He is so passionate about it, he has in his office a framed picture of a 500,000 German mark bill – which would have purchased a home in 1921, but due to sudden inflation, wouldn’t purchase a loaf of bread just two years later.
Real estate is an investment that has been utilized as a hedge against inflation. With future inflation concerns, low home prices, homebuyer tax credits, and historically low interest rates, now represents one of the best opportunities in history to purchase real estate!
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
While inflation is virtually non-existent right now, things can change down the road. There is much talk about inflation amongst Fed officials, economists and the media. There are many different opinions surrounding the topic. Whenever there is an abundance of money being pushed into the system, one must worry about inflation resulting.
Fed President Thomas Hoenig has recently expressed much concern over future inflation. He is so passionate about it, he has in his office a framed picture of a 500,000 German mark bill – which would have purchased a home in 1921, but due to sudden inflation, wouldn’t purchase a loaf of bread just two years later.
Real estate is an investment that has been utilized as a hedge against inflation. With future inflation concerns, low home prices, homebuyer tax credits, and historically low interest rates, now represents one of the best opportunities in history to purchase real estate!
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
Tuesday, February 16, 2010
National Real Estate News
The National Association of Realtors last Thursday reported existing home sales UP 27.2% for the last three months of 2009 versus a year earlier. This amounted to a seasonally adjusted annual rate of 6 million homes. -- a 13.9% increase over the third quarter's annual rate of 5.29 million homes. Clearly, buyers are taking advantage of the low mortgage interest rates and the tax credit that was extended and expanded by Congress.
The existing home sales increase from Q3 to Q4 occurred in 48 states and D.C., with 32 of those states showing double-digit gains. Year-over-year, sales were higher in 49 states and D.C., up by double digits in all but 3 states. Distressed property made up just 32% of Q4 sales versus 37% of sales a year ago.
The national median price of an existing single-family home, at $172,900, was down 4.1% year-over-year -- but that was the smallest price decline in over two years. Even better, out of the 151 metropolitan statistical areas studied, 67 of them showed a RISE in the median home price!
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
The existing home sales increase from Q3 to Q4 occurred in 48 states and D.C., with 32 of those states showing double-digit gains. Year-over-year, sales were higher in 49 states and D.C., up by double digits in all but 3 states. Distressed property made up just 32% of Q4 sales versus 37% of sales a year ago.
The national median price of an existing single-family home, at $172,900, was down 4.1% year-over-year -- but that was the smallest price decline in over two years. Even better, out of the 151 metropolitan statistical areas studied, 67 of them showed a RISE in the median home price!
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Monday, February 8, 2010
Eastside Statistics - January, 2010
Current Residential & Condo listings - 3,742 (down 15.09% from last year)
New listings taken this month - 1,462
Pending sales this month - 723 (up 68.93% from last year)
Percent of listings that sold this month - 19.32%
Median closed sales price - Jan. ‘09, $447,500
Median closed sales price - Jan. ‘10, $445,000
Rate of appreciation = -0.56%
~ Courtesy of NWMLS
King County Statistics - January, 2010
Current Residential & Condo listings - 10,679 (down 11.27% from last year)
New listings taken this month - 4,312
Pending sales this month - 2,211 (up 47.40% from last year)
Percent of listings that sold this month - 20.70%
Median closed sales price - Jan. ‘09, $364,137
Median closed sales price - Jan. ‘10, $350,000
Rate of appreciation = -3.88%
~ Courtesy of NWMLS
New listings taken this month - 4,312
Pending sales this month - 2,211 (up 47.40% from last year)
Percent of listings that sold this month - 20.70%
Median closed sales price - Jan. ‘09, $364,137
Median closed sales price - Jan. ‘10, $350,000
Rate of appreciation = -3.88%
~ Courtesy of NWMLS
Snohomish County Statistics - January, 2010
Current Residential & Condo listings - 4,901 (down 12.40% from last year)
New listings taken this month - 1,924
Pending sales this month - 949 (up 42.07% from last year)
Percent of listings that sold this month - 19.36%
Median closed sales price - Jan. ‘09, $295,000
Median closed sales price - Jan. ‘10, $267,995
Rate of appreciation = -9.15%
~ Courtesy of NWMLS
New listings taken this month - 1,924
Pending sales this month - 949 (up 42.07% from last year)
Percent of listings that sold this month - 19.36%
Median closed sales price - Jan. ‘09, $295,000
Median closed sales price - Jan. ‘10, $267,995
Rate of appreciation = -9.15%
~ Courtesy of NWMLS
Northwest MLS members report a 28 percent increase in pending sales from last year
“More certainty” and “more stability” in the market contributed to a boost in activity during January, according to officials from Northwest Multiple Listing Service (NWMLS). Brokers reported an increase of nearly 27% in pending sales (purchase offers made and accepted, but not yet closed) from December and a 28% jump from twelve months ago.
Two other indicators of activity fell -- inventory and sales prices. There were 3,915 fewer active listings of single family homes and condominiums in the NWMLS system compared to a year ago, a drop of about 10.3%. Sales prices area-wide for January’s closed sales declined about 4.8% from year-ago figures. (The NWMLS service area covers 21 counties.)
“We anticipated there would be improved sales in the first-time buyer market and are encouraged to see activity gaining ground in the higher price ranges as well,” observed NWMLS director Joe Spencer, the president and COO of John L. Scott Real Estate. He cites historically low interest rates, great affordability, and the home buyer tax credits as factors for “helping push us into a more stable market,” and noted he expects to see this momentum continue in the coming months.
Currently, there is about a 6.1 months supply (ratio of houses for sale to houses sold). Economists consider a supply of 3-to-6 months to be a balanced market.
“The market has definitely picked up, with more interest and action by buyers,” reports Dick Beeson, broker/owner of Windermere Commencement Associates in Tacoma and a member of the NWMLS board of directors. “Sellers are expecting better results this year than last year, but not necessarily higher prices,” he remarked.
Short sales and tax credits may be skewing some of the data, according to industry insiders. “The short sale inventory continues to climb yet many banks are starting to get their act together and actually making it easier for agents and buyers to get faster answers to their offers,” Beeson said. “Shorter closing times are good for everyone,” he stated.
Lawrence Yun, chief economist for the National Association of Realtors (NAR), believes the tax credit is skewing market data. Commenting on NAR’s report of December activity, which showed a 10.9 percent jump in pending sales from December 2008 and 1.0 percent increase from November, Yun said “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded.” Noting December was the fifth highest monthly tally in two years, Yun stated “These swings are masking the underlying trend, which is a broad improvement over year-ago levels.”
Beeson said the fast-approaching tax credit deadline is expected to boost activity in the next few months. “This year will be better than last because of more certainty in the market,” he remarked.
Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30 to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
Two other indicators of activity fell -- inventory and sales prices. There were 3,915 fewer active listings of single family homes and condominiums in the NWMLS system compared to a year ago, a drop of about 10.3%. Sales prices area-wide for January’s closed sales declined about 4.8% from year-ago figures. (The NWMLS service area covers 21 counties.)
“We anticipated there would be improved sales in the first-time buyer market and are encouraged to see activity gaining ground in the higher price ranges as well,” observed NWMLS director Joe Spencer, the president and COO of John L. Scott Real Estate. He cites historically low interest rates, great affordability, and the home buyer tax credits as factors for “helping push us into a more stable market,” and noted he expects to see this momentum continue in the coming months.
Currently, there is about a 6.1 months supply (ratio of houses for sale to houses sold). Economists consider a supply of 3-to-6 months to be a balanced market.
“The market has definitely picked up, with more interest and action by buyers,” reports Dick Beeson, broker/owner of Windermere Commencement Associates in Tacoma and a member of the NWMLS board of directors. “Sellers are expecting better results this year than last year, but not necessarily higher prices,” he remarked.
Short sales and tax credits may be skewing some of the data, according to industry insiders. “The short sale inventory continues to climb yet many banks are starting to get their act together and actually making it easier for agents and buyers to get faster answers to their offers,” Beeson said. “Shorter closing times are good for everyone,” he stated.
Lawrence Yun, chief economist for the National Association of Realtors (NAR), believes the tax credit is skewing market data. Commenting on NAR’s report of December activity, which showed a 10.9 percent jump in pending sales from December 2008 and 1.0 percent increase from November, Yun said “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded.” Noting December was the fifth highest monthly tally in two years, Yun stated “These swings are masking the underlying trend, which is a broad improvement over year-ago levels.”
Beeson said the fast-approaching tax credit deadline is expected to boost activity in the next few months. “This year will be better than last because of more certainty in the market,” he remarked.
Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30 to finalize the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
National Real Estate News
The Pending Home Sales Index recovered from its November slump, increasing 1.0% in December, putting it 10.9% over its level of a year ago. National Association of Realtors (NAR) chief economist Lawrence Yun sees "...a broad improvement over year-ago levels. December activity was the fifth-highest monthly tally in two years." The slump was attributed to the rush before November to grab the tax credit set to expire at the end of that month.
We now know the tax credit was extended to buyers who can sign a contract by April 30 and close on the home by June 30. It's also been expanded, adding a $6500 credit for repeat buyers to the $8,000 credit for first timers. The NAR's Yun estimates 2.4 million households should take advantage of the credit this year.
The NAR also released their adjusted overall outlook for this year and next. They estimate existing home sales will grow from 5.19 million in 2009 to 5.66 million in 2010 and 5.7 million in 2011. They see new home sales growing from 375,000 in 2009 to 446,000 in 2010 and 637,000 in 2011. They believe prices have bottomed, projecting a 3.4% hike in the median price for existing homes to $179,800 this year and then a 4.3% rise to $187,500 in 2011. New homes should go up 3.7% this year to a $221,300 median price and then 4.7% in 2011 to $231,700.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
We now know the tax credit was extended to buyers who can sign a contract by April 30 and close on the home by June 30. It's also been expanded, adding a $6500 credit for repeat buyers to the $8,000 credit for first timers. The NAR's Yun estimates 2.4 million households should take advantage of the credit this year.
The NAR also released their adjusted overall outlook for this year and next. They estimate existing home sales will grow from 5.19 million in 2009 to 5.66 million in 2010 and 5.7 million in 2011. They see new home sales growing from 375,000 in 2009 to 446,000 in 2010 and 637,000 in 2011. They believe prices have bottomed, projecting a 3.4% hike in the median price for existing homes to $179,800 this year and then a 4.3% rise to $187,500 in 2011. New homes should go up 3.7% this year to a $221,300 median price and then 4.7% in 2011 to $231,700.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Friday, February 5, 2010
Unemployment Reports Cause Major Volatility
The jobs reports were released today and the numbers were both good and bad… depending on which survey you are looking at!
Analysts were expecting to see a gain of 15,000 new jobs created. Instead, the report showed a loss of 20,000 jobs. At the same time, the unemployment report was released at 9.7%, down from 10.0% just a month ago. Unemployment numbers for both October and December have been revised considerably worse as well.
Both the stock and bond markets have been trying to make up their mind as to how to react to this information, causing great volatility in the markets today. On January 19th, the Dow was at 10,725, and is currently down to 9,974. Mortgage bonds started out the day down 25 basis points and have since turned around and at one point were up by 19 basis points…a nearly 50 point swing in one day!
Volatility may be more prevalent in the weeks ahead as the Fed purchasing of mortgage backed securities comes to an end. We have been warning for several weeks now that higher rates are likely on the horizon. If you or someone you know is in the market to purchase or refinance, don’t miss out on these rates!
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
Analysts were expecting to see a gain of 15,000 new jobs created. Instead, the report showed a loss of 20,000 jobs. At the same time, the unemployment report was released at 9.7%, down from 10.0% just a month ago. Unemployment numbers for both October and December have been revised considerably worse as well.
Both the stock and bond markets have been trying to make up their mind as to how to react to this information, causing great volatility in the markets today. On January 19th, the Dow was at 10,725, and is currently down to 9,974. Mortgage bonds started out the day down 25 basis points and have since turned around and at one point were up by 19 basis points…a nearly 50 point swing in one day!
Volatility may be more prevalent in the weeks ahead as the Fed purchasing of mortgage backed securities comes to an end. We have been warning for several weeks now that higher rates are likely on the horizon. If you or someone you know is in the market to purchase or refinance, don’t miss out on these rates!
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
National Real Estate News
The week began with December Existing Home Sales dropping 16.7%. Some observers felt this was the result of uncertainty over the homebuyer tax credit, scheduled to expire at the end of November. The tax credit was, as we now know, extended into this year, but it wasn't announced soon enough to help December sales. Nonetheless, Existing Home Sales are UP 15.0% over a year ago. And the median price of an existing home is now $178,300, UP 1.5% over a year ago and the best year-over-year comp since 2006. Finally, inventories are now down to 3.29 million, their lowest reading since March 2006.
Wednesday, New Home Sales were reported at a 342,000 annual rate, down 7.6% for December. But inventories are now at 231,000, 59.6% below their mid-2006 peak and at their lowest level since 1971, when the population was two thirds its size today. The Case-Shiller index of home prices in the 20 biggest markets went up a seasonally-adjusted 0.2% in November. This was the sixth month in a row the index gained and prices increased in 14 of the 20 markets. The FHFA price index for homes bought with conforming mortgages went up 0.7% in November, its fifth advance in the last seven readings.
According to Freddie Mac's weekly Primary Mortgage Market Survey, mortgage rates inched down for the fourth week in a row. Prospective homebuyers and owners looking to refinance should note that the Fed reiterated its intention to end mortgage bond purchases on March 31. Many experts feel this will make rates head up a bit.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Wednesday, New Home Sales were reported at a 342,000 annual rate, down 7.6% for December. But inventories are now at 231,000, 59.6% below their mid-2006 peak and at their lowest level since 1971, when the population was two thirds its size today. The Case-Shiller index of home prices in the 20 biggest markets went up a seasonally-adjusted 0.2% in November. This was the sixth month in a row the index gained and prices increased in 14 of the 20 markets. The FHFA price index for homes bought with conforming mortgages went up 0.7% in November, its fifth advance in the last seven readings.
According to Freddie Mac's weekly Primary Mortgage Market Survey, mortgage rates inched down for the fourth week in a row. Prospective homebuyers and owners looking to refinance should note that the Fed reiterated its intention to end mortgage bond purchases on March 31. Many experts feel this will make rates head up a bit.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Upcoming FHA Changes Announced
The Federal Housing Administration (FHA) has announced details of changes intended to strengthen its capital reserves which were reported to be headed into dangerously low territory late last year. The changes are designed to increase FHA’s income from borrowers while reducing its portfolio’s risk. The increased popularity of FHA in the absence of alternative products has resulted in FHA funding 30% of real estate transactions today.
Policy changes go into effect for case numbers assigned as of April 5th, 2010:
Upfront Mortgage Premium to be raised from 1.75% to 2.25%.
On a $300,000 loan, the .5% increase is equivalent to an extra $1,500 financed into the loan amount which will increase the borrower’s payment by roughly $8 month.
Allowable Seller Concessions reduced from 6% to 3%.
The current level exposes FHA to excess risk of inflated values.
Increased Enforcement of FHA Lenders.
Enhanced monitoring of lender performance and compliance with FHA guidelines and standards. HUD is pursuing increased legislative authority for enforcement.
Consumers with FICO scores below 580 must put 10% down.
Nothing lost here as most lenders already require a 660 minimum credit score for all borrowers. FHA is continuing to review its overall response to housing market conditions and evaluating lending standards.
If you have specific questions about the upcoming changes, please contact LoanCentral.
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
Policy changes go into effect for case numbers assigned as of April 5th, 2010:
Upfront Mortgage Premium to be raised from 1.75% to 2.25%.
On a $300,000 loan, the .5% increase is equivalent to an extra $1,500 financed into the loan amount which will increase the borrower’s payment by roughly $8 month.
Allowable Seller Concessions reduced from 6% to 3%.
The current level exposes FHA to excess risk of inflated values.
Increased Enforcement of FHA Lenders.
Enhanced monitoring of lender performance and compliance with FHA guidelines and standards. HUD is pursuing increased legislative authority for enforcement.
Consumers with FICO scores below 580 must put 10% down.
Nothing lost here as most lenders already require a 660 minimum credit score for all borrowers. FHA is continuing to review its overall response to housing market conditions and evaluating lending standards.
If you have specific questions about the upcoming changes, please contact LoanCentral.
~ Courtesy of Wendy Charles, LoanCentral LLC, 425.468.9321, WendyC@LoanCentral.com
Monday, January 11, 2010
National Real Estate News
It was reported last week that Pending Home Sales (contracts on existing homes) fell 16% in November, not at all surprising since buyers expected the $8,000 tax credit to expire at the end of October. This artificially boosted contract signings for August-October and artificially depressed them for November. Still, November pending sales were higher than at any time from mid-2007 to mid-2009.
Wednesday, the minutes from the Fed's December 15–16 meeting were released, revealing some debate over the future of their purchases of Mortgage Backed Securities (MBS), which helped keep interest rates at record lows. The Fed said it would end MBS purchases March 31, but according to the minutes, "a few" of the Fed's 12 members are in favor of expanding and extending the program. On the other side, one member felt "improvement in...the economic outlook suggested that...(MBS purchases) could be scaled back."
Who knows what will happen. Most experts feel the rates on 30-year fixed-rate mortgages will head up during the next two years, so smart homebuyers are focusing on taking advantage of the present very favorable rate situation along with the tax credit still available.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Wednesday, the minutes from the Fed's December 15–16 meeting were released, revealing some debate over the future of their purchases of Mortgage Backed Securities (MBS), which helped keep interest rates at record lows. The Fed said it would end MBS purchases March 31, but according to the minutes, "a few" of the Fed's 12 members are in favor of expanding and extending the program. On the other side, one member felt "improvement in...the economic outlook suggested that...(MBS purchases) could be scaled back."
Who knows what will happen. Most experts feel the rates on 30-year fixed-rate mortgages will head up during the next two years, so smart homebuyers are focusing on taking advantage of the present very favorable rate situation along with the tax credit still available.
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
Thursday, January 7, 2010
Eastside Statistics - December, 2009
Current Residential & Condo listings - 3,460 (down 18.30% from last year)
New listings taken this month - 612
Pending sales this month - 573 (up 79.06% from last year)
Percent of listings that sold this month - 16.56%
Median closed sales price - Dec. ‘08, $470,000
Median closed sales price - Dec. ‘09, $465,000
Rate of appreciation = -1.06%
~ Courtesy of NWMLS
King County Statistics - December, 2009
Current Residential & Condo listings - 9,652 (down 17.05% from last year)
New listings taken this month - 1,986
Pending sales this month - 1,767 (up 51.41% from last year)
Percent of listings that sold this month - 18.31%
Median closed sales price - Dec. ‘08, $370,700
Median closed sales price - Dec. ‘09, $350,000
Rate of appreciation = -5.58%
~ Courtesy of NWMLS
Snohomish County Statistics - December, 2009
Current Residential & Condo listings - 4,436 (down 17.49% from last year)
New listings taken this month - 935
Pending sales this month - 719 (up 31.44% from last year)
Percent of listings that sold this month - 16.21%
Median closed sales price - Dec. ‘08, $307,000
Median closed sales price - Dec. ‘09, $280,000
Rate of appreciation = -8.79%
~ Courtesy of NWMLS
Western Washington pending home sales mark best December since 2006
“Home for the holidays" took on special meaning for 4,399 buyers whose purchase offers were accepted during December, according to the latest report from Northwest Multiple Listing Service. That volume of pending sales was up more than 35 percent from a year ago and marked the best December since 2006.
Brokers say it's a tough market, but point to several indicators for good activity during this year's first quarter. "The distance seems great, but the direction is a good one," observed NWMLS director Dick Beeson.
"With what our agents already have in the pipeline, I'm optimistic about a positive first quarter," said NWMLS director Meribeth Hutchings, the broker at Windermere RE/Lake Stevens. "We had a very strong December and the momentum seems to be there to keep things moving," she remarked, noting three agents were in the office on New Year's Eve writing offers.
Shrinking inventory, the extension of the first-time home buyer tax credit, and favorable interest rates are among factors brokers believe will sustain activity.
"Affordability has never been better," said Dick Fulton, a past chairman of the NWMLS board of directors whose career spans more than two decades. Fulton, the executive vice president at Coldwell Banker Bain, suggests would-be sellers list their property soon, rather than wait until spring, to take advantage of favorable conditions. With inventory much smaller than a year ago, sellers should benefit from more exposure to a good pool of buyers, he suggests.
Inventory area-wide is down about 15.6 percent from a year ago. For the four-county Puget Sound region, the number of active listings is down more than 18 percent.
NWMLS members reported 4,711 closed sales during December, up 54.7 percent from the year-ago total of 3,045 when the holiday slowdown was compounded by record low temperatures and snow.
Dick Beeson, owner/broker of Windermere Commencement Assoc. in Tacoma, said the market is "chugging along," despite hurdles associated with the lending market, appraisals and foreclosures. "The hardest part of the process still remains the uncertainty of the lending market as banks continue to ratchet up the qualifications and criteria for borrowers. Appraisals are difficult because even if the value comes in at the purchase price many lenders do a second review of the appraisal and find fault with the outcome, therefore creating a problem for buyers and sellers." He also noted the large volume of foreclosures has driven down prices – something he believes will persist throughout much of this year.
Brokers say it's a tough market, but point to several indicators for good activity during this year's first quarter. "The distance seems great, but the direction is a good one," observed NWMLS director Dick Beeson.
"With what our agents already have in the pipeline, I'm optimistic about a positive first quarter," said NWMLS director Meribeth Hutchings, the broker at Windermere RE/Lake Stevens. "We had a very strong December and the momentum seems to be there to keep things moving," she remarked, noting three agents were in the office on New Year's Eve writing offers.
Shrinking inventory, the extension of the first-time home buyer tax credit, and favorable interest rates are among factors brokers believe will sustain activity.
"Affordability has never been better," said Dick Fulton, a past chairman of the NWMLS board of directors whose career spans more than two decades. Fulton, the executive vice president at Coldwell Banker Bain, suggests would-be sellers list their property soon, rather than wait until spring, to take advantage of favorable conditions. With inventory much smaller than a year ago, sellers should benefit from more exposure to a good pool of buyers, he suggests.
Inventory area-wide is down about 15.6 percent from a year ago. For the four-county Puget Sound region, the number of active listings is down more than 18 percent.
NWMLS members reported 4,711 closed sales during December, up 54.7 percent from the year-ago total of 3,045 when the holiday slowdown was compounded by record low temperatures and snow.
Dick Beeson, owner/broker of Windermere Commencement Assoc. in Tacoma, said the market is "chugging along," despite hurdles associated with the lending market, appraisals and foreclosures. "The hardest part of the process still remains the uncertainty of the lending market as banks continue to ratchet up the qualifications and criteria for borrowers. Appraisals are difficult because even if the value comes in at the purchase price many lenders do a second review of the appraisal and find fault with the outcome, therefore creating a problem for buyers and sellers." He also noted the large volume of foreclosures has driven down prices – something he believes will persist throughout much of this year.
Monday, January 4, 2010
National Real Estate News
Last Tuesday the Case-Shiller Home Price Index for 20 cities came in UP a seasonally adjusted 0.4% for October. This was the fifth consecutive monthly increase for the index. Year-over-year, prices are still down 7.3%, but that's a less steep rate of decline than we've been seeing.
It looks like home prices could be stabilizing, though well below their peaks in most markets. This price decline, plus the dramatic drop in mortgage rates, have made homes more affordable than they've been in a long time. A writer for the Wall Street Journal compared home price index values, mortgage rates and average weekly earnings going back to 1987. The finding? On average, housing is as affordable now as it was in the mid-1990's, when homes were a real steal. Of course, this conclusion is based on average prices, so affordability may be greater or less in individual markets.
Christmas Eve, the Treasury lifted the limit on the money it can put into Fannie Mae and Freddie Mac to keep their net worth positive over the next three years. Some economists point out that Fannie and Freddie could now replace the Fed as a big buyer of mortgage-backed securities to help keep mortgage rates down after March 31. That would be great, but nothing is certain. Smart buyers are taking advantage of TODAY'S low mortgage rates AND the expanded tax credit that requires a signed contract by April 30 and a closing by June 30!
~ Courtesy of Chuck Chrobak, Golf Savings Bank, 425.330.9657, CChrobak@GolfSavingsBank.com
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