Affordability Motivated Buyers in 2010
A Weichert, REALTORS® survey of 1,261 home buyers who made purchases between July 1, 2010, and Dec. 31, 2010, reveals that 28 percent were motivated by “favorable financing,” down from 31 percent in 2009 but up from 14 percent in 2008.
While 26 percent of those polled in 2005 said the desire to own a home and stop renting were motivating factors, very few respondents said the same in 2010. The survey reveals that 12 percent made home purchases because they had to relocate, 28 percent because they wanted a bigger home or more living space, and 11 percent because of potential financial growth.
Dominick Prevete, regional vice president for Weichert, says, “The takeaway is that home buyers who still see long-term potential financial growth in housing are more motivated today by the value presented by very low interest rates and discounted prices than they were five years ago. I think we are back in a period of a more realistic view of home ownership.”
Source: “Survey: Affordability Top Reason for Home Buying in 2010,” The Wall Street Journal, M.P. McQueen (01/18/11)
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Existing-Home Sales Up 7.6% in April
Existing-home sales rose again in April with buyers motivated by the tax credit, improving consumer confidence, and favorable affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales — completed transactions that include single-family, townhomes, condos, and co-ops — increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009. Monthly sales rose 7.0 percent in March.
Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax-credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy, and mortgage interest rates that remain historically low.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.10 percent in April from 4.97 percent in March; the rate was 4.91 percent in April 2009.
Total housing inventory at the end of April rose 11.5 percent to 4.04 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, up from an 8.1-month supply in March. Raw unsold inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million in July 2008.
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Tough Times Mean High Housing Burden
Declining incomes resulted in more people spending 30 percent or more of their pre-tax income on housing, according to an analysis of U.S. Census data by the Joint Center for Housing Studies at Harvard University.
More than 40 million people in 2008 were above the 30 percent level, which is what the government considers affordable. That was about 600,000 more than paid that percentage in 2007, analysts concluded.
The calculations looked at the housing costs for both buyers and renters.
“Although housing affordability for newly purchased homes has improved, overall affordability for renters or owners is unchanged or worse because of the economy,” says Daniel McCue, research analyst at the center. “People are still hurting.”
Source: USA Today, Stephanie Armour and Barbara Hansen
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