Third Quarter Metro Prices Soften, State Sales Rise
Metro area median existing-home prices in the third quarter generally were down from a year ago, while sales rose in every state from the third quarter of 2010, according to the latest quarterly reportby the National Association of REALTORS®.
The median existing single-family home price rose in 39 out of 150 metropolitan statistical areas (MSAs) in the third quarter from a year earlier; 111 areas showed price declines. In the second quarter, 41 metro areas had posted annual price gains.
Lawrence Yun, NAR chief economist, said the market is holding fairly even. “Home sales need to recover first – only then can prices stabilize. Existing-home sales are little changed from the second quarter but are notably higher than a year ago,” he said. “The good news is inventory levels have been trending gradually down.”
Total state existing-home sales, including single-family and condo, slipped 0.1 percent to a seasonally adjusted annual rate of 4.880 million in the third quarter from 4.883 million in the second quarter, but were 17.0 percent higher than the 4.170 million pace during the third quarter of 2010. Every state and the District of Columbia saw sales rise from a year ago, with 45 states posting double-digit gains.
The national median existing single-family home price was $169,500 in the third quarter, down 4.7 percent from $177,800 in the third quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes, typically sold at a discount of about 20 percent, accounted for 30 percent of third quarter sales, compared with 33 percent in the second quarter; they were 34 percent a year earlier.
Median price measurement reflects the types of homes that are selling during the quarter and can be misleading at times because the level of foreclosures, which artificially depress median prices, can vary notably in given markets. Annual price measures generally smooth out any quarterly swings.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said home sales should be notably higher given the buying power in today’s market. “Housing affordability conditions have been at a record high this year, rents are rising and homes are selling for less than the cost of construction in most of the country,” he said.
“For people with secure jobs, good credit and long-term plans, today’s conditions will be remembered as a golden opportunity to enter the housing market,” Phipps added.
NAR’s Housing Affordability Index stood at 183.8 in the third quarter, the second highest on record after the first quarter of 2011. The index measures the relationship between median home price, median family income and mortgage interest rates; the higher the index, the greater household purchasing power. Recordkeeping began in 1970.
“While it’s tough to get a mortgage given the unnecessarily restrictive underwriting standards, investors are taking advantage of current conditions and paying cash for undervalued homes,” Yun said. “In many cases they’re renovating or repairing these homes to hold as rentals or resell at a profit.”
The share of all-cash home purchases was 29 percent in the third quarter, little changed from 30 percent in the second quarter and 29 percent in the third quarter of 2010. Investors, who make up the bulk of cash purchasers, accounted for 20 percent of transactions in the third quarter; they were 19 percent in the second quarter and 19 percent a year ago.
First-time buyers purchased 32 percent of homes, down from 35 percent in the second quarter and 34 percent in the third quarter of 2010. Historically, entry-level buyers account for four out of 10 home purchases.
In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $167,600 in the third quarter, down 2.2 percent from the third quarter of 2010. Twelve metros showed increases in the median condo price from a year ago and 42 areas had declines.
Existing-home sales by region:
Northeast: increased 0.9 percent in the third quarter to a level of 770,000 and are 11.6 percent above the third quarter of 2010. The median existing single-family home price in the Northeast fell 6.5 percent to $236,700 in the third quarter from a year ago.
Midwest: existing-home sales rose 2.5 percent in the third quarter to a pace of 1.08 million and are 25.1 percent higher than a year ago. The median existing single-family home price in the Midwest declined 2.2 percent to $142,300 in the third quarter from the same quarter in 2010.
South: unchanged in the third quarter at an annual rate of 1.89 million and are 15.5 percent above the third quarter of 2010. The median existing single-family home price in the South was $153,200 in the third quarter, down 2.2 percent from a year earlier.
West: declined 2.6 percent in the third quarter to a level of 1.14 million but are 16.7 percent higher than a year ago. The median existing single-family home price in the West dropped 9.0 percent to $205,700 in the third quarter from the same quarter of 2010. “Western home sales are dominated by cash investors in the lower price ranges,” Yun explained.
Source: NAR
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Weak Appraisals Hamper Home Sales, Experts Say
Weak appraisals are “driving down the real estate market” and “borders on buffoonery,” says William Maxwell, an expert in finance and professor at Southern Methodist University’s business school, who has seen his own Dallas property fluctuate in appraised value by $60,000 in just a year.
While the sluggish economy has pushed home values down the last few years, some real estate professionals and economists say that low-ball appraisals are pushing values down even more and undermining a housing recovery, The Wall Street Journal reports.
The National Association of REALTORS® reported that 16 percent of real estate pros surveyed in June reported a cancelation in a sale, mostly due to a large number of low appraisals.
Erin Wanner, a sales executive with Stirling Sotheby’s International Realty in Orlando, Fla., told The Wall Street Journal that one of her deals fell through when an appraisal came in 40 percent lower than expected for a 7,000-square-foot custom-built lakefront home; the home was under contract for $650,000 but the the appraisal came in at $380,000.
Some real estate professionals are accusing lenders of pressuring appraisers to come in with lower estimates and for basing their valuations largely on nearby distressed sales that often sell at discounted prices. That has prompted at least four states — Illinois, Nevada, Missouri, and Maryland — to consider legislation that would prevent appraisers from using distressed sales when conducting their valuations.
But the Mortgage Bankers Association says more conservative appraisals are needed. The trade association says it’s a way to protect the banks from future problems with investors who buy mortgages.
Source: “Judgment Call: Appraisals Weigh Down Housing Sales,” The Wall Street Journal (Aug. 12, 2011)
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Housing inventory Falling
A parallel NAR practitioner survey shows first-time buyers purchased 46 percent of homes in May, down from 49 percent in April. Investors accounted for 14 percent of transactions in May compared with 15 percent in April; the remaining sales were to repeat buyers. All-cash sales were at 25 percent in May, edging down from a 26 percent share in April.
Total housing inventory at the end of May fell 3.4 percent to 3.89 million existing homes available for sale, which represents an 8.3-month supply at the current sales pace, compared with an 8.4-month supply in April. Raw unsold inventory is 1.1 percent above a year ago, but is still 14.9 percent below the record of 4.58 million in July 2008.
Single-family home sales declined 1.6 percent to a seasonally adjusted annual rate of 4.98 million in May from a pace of 5.06 million in April, but are 17.5 percent above the 4.24 million level in May 2009. The median existing single-family home price was $179,400 in May, which is 2.7 percent above a year ago.
Single-family median existing-home prices were higher in 16 out of 20 metropolitan statistical areas reported in May from a year ago. In addition, existing single-family home sales rose in 18 of the 20 areas from May 2009.
Existing condominium and co-op sales fell 6.8 percent to a seasonally adjusted annual rate of 680,000 in May from 730,000 in April, but are 32.6 percent above the 513,000-unit pace in May 2009. The median existing condo price was $181,300 in May, up 3.4 percent from a year ago.
NAR
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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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Faulty Appraisals Harming Housing and the Economy
Twenty-six percent of builders are seeing signed sales contracts fall through the cracks because appraisals on their homes are coming in below the contract sales price, according to a nationwide survey conducted by NAHB. “Home builders are increasingly concerned that inappropriate appraisal practices are needlessly driving down home values. This, in turn, is slowing new [...]
First-time Buyers Drive February Sales.
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Existing-home sales increased in February, reversing losses in January, according to the latest report by the NATIONAL ASSOCIATION OF REALTORS®. However, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to NAR.
Existing-home sales— including single-family, townhomes, condominiums and co-ops—rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Existing-home sales are 4.6 percent below the 4.95 million-unit level in February 2008. Seasonal adjustment factors are more volatile in winter months, but sales rates over the past few months show dampened sales activity, according to NAR.
Lawrence Yun, NAR chief economist, says first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. Full Story.
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Zillow Report Shows Homeowners Facing Reality, Sort Of.
When it comes to real estate, more Americans are moving from denial to acceptance. Zillow.com, a Web site that provides housing-market information, says it found in a recent survey that 57% of participants believe their homes lost value during the past year. That was up from just 38% in a similar survey during last year’s second quarter.
Zillow estimates that values declined on 76% of all U.S. homes during 2008. Full Story
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New House or an Old One?
As you embark on your venture to buy a home, one of the first decisions to make is whether
to buy new or purchase an existing home. Each choice has its advantages, and there is no
single answer that works for everyone.
You may be drawn to the shiny new, energy-efficient appliances, the great room, and the
beautiful master suite offered in a new home. But you may also like the charm, the canopy of
trees that drape over the sleepy neighborhood streets, and the increasing value of an
existing home you’ve been eying.
Here are some things you’ll want to ponder as you decide which route to take.
Existing homes offer many considerations for potential homebuyers, including:
* The neighborhood. Many people are drawn to developed neighborhoods for the sense of
community that has been established. The mature landscaping and developed trees are often a
considering factor.
* Maintenance and repair. If you’re considering an existing home, be sure you have a
good handle on the working status of all major systems. Hire a professional home inspector
to check out the house. As appliances and systems age they naturally require repair and
replacement, something which may be reflected in a purchase price.
* Home improvement. If you enjoy small repairs and home improvement projects around the
house, then an existing home would be your cup of tea.
* Existing features. When you buy an existing home, you typically don’t have to worry
about buying the extras, such as blinds for the window, a security system, or a landscaped
back yard.
* Land. In most metro centers, new homes may have less land than newer properties. Why?
Because of changes in land-use patterns.
* Location. Existing homes are often found in older, more convenient metro core areas
rather than outlying suburbs.
* The opportunity to remodel. In some cases buyers may prefer an older home in a
particular location which can be modernized or expanded. In effect, use the existing home as
a base to build a unique property.
* Price. In general terms, existing homes tend to be less expensive than new properties.
As well, existing homes are likely to come complete with items which may represent new home
extras—blinds, landscaping, built-ins, etc.
* Track record. When you purchase an existing home, you know how much the property has
appreciated over the years — in effect, you have an index of sorts which measures the
community’s marketplace appeal. At the same time, like stocks and bonds, you know that past
results do not guarantee future marketplace performance.
* Taxes. Depending on your state, you will likely have lower property tax rates. Also,
many older households aren’t required to pay for local bonds associated with new
development, such as schools, parks, or road or transportation improvements.
* Traditional layout. If you like the formal living and dining rooms, an existing home
will likely satisfy you.
Full story from www.Realtor .com.
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US home sales see surprise rise
© BBC MMIX
US home sales unexpectedly rose in December as buyers took advantage of much lower house prices, industry figures have showed.
Sales of existing homes rose 6.5% to an annual rate of 4.74 million, up from 4.45 million units in November, the National Association of Realtors said.
Analysts had been expecting December sales to total 4.4 million.
For 2008 as a whole, sales fell 13.1% to 4.91 million units, the worst year in a decade.
“It appears some buyers are taking advantage of much lower home prices,” said Lawrence Yun, the association’s chief economist.
“Buyers will continue to have an edge over sellers for the foreseeable future.”
The association said that existing home prices fell by 15.3% in December from the same period a year earlier, with 45% of transactions viewed as “distress sales”, where the seller was forced to sell at a discounted price.
2009 rebound?
The rise in home sales was also down to a fall in the number of unsold homes on the market.
However, analysts said that this trend could reverse, as sellers were likely to resume putting their homes up for sale in the spring.
“The bottom line is that existing home sales have weakened markedly following the credit market seizure in September,” said Paul Ashworth, senior economist at Capital Economics.
“The subsequent decline in mortgage rates may spur a rebound in 2009, but nothing is guaranteed,” he added.
New home construction has also been hit by the economic slowdown.
Housing starts in the US fell by 15.5% in December to hit an all-time low, official statistics released last week showed. The rate of new construction was down 45% from December 2007.
Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/7852011.stm
Published: 2009/01/26 17:07:33 GMT
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Home prices see sharp dip.
A new government report reveals declines that are steeper than usual – even for this market.By Les Christie, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — Home prices continued to plunge in November, according to a new government report released Thursday. Full story.
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Time away.
CNNMoney: Protecting your home while away
The Holidays were right around the corner, but before you take off for the holiday weekend, make sure your home is safe when you’re not there. Here are some guidelines to keep your home protected.
Existing home sales increase by largest amount in 5 years
Sales of existing homes rose by the largest amount in more than five years in September, a real estate trade group said Friday. The data is a possible glimmer of hope that the housing slump could be starting to bottom out.
The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom.
More on this story at AikenStandard.com