Strength In New Home Sales

Despite turmoil on Wall Street, the housing sector continues to deliver good news.

Last month, led by a 22 percent surge from the West Region, New Home Sales rose 2.7 percent over August.

A “new home” is a newly-built residence, never before lived in.  New homes are usually built and sold by real estate development companies and their respective marketing firms.

The surge in New Home Sales volume is consistent with the other good news we’ve seen from the housing sector.  It marks the 4th positive signal in the last two weeks.

  • October 8: Homes under contract to sell surge 7.4 percent
  • October 23: Foreclosed homes fall 12 percent in September
  • October 24: The supply of “used homes” falls to an 8-month low
  • October 27: The supply of new homes falls by 7 percent

However, it can’t be ignored why housing is showing a statistical improvement.  The main causes are two-fold:

  1. Banks are getting better about selling foreclosed homes
  2. Builders are keen to dump their excess inventory

Both of these factors drive down home sales prices nationwide which, in turn, draws value-seeking home buyers back to the market.  In addition, because the number of active sellers dwarfs the number of active buyers, today’s home seekers enjoy a tremendous amount of negotiation leverage, making real estate even more attractive.

But, as with everything in business, markets seek balance.  As home supplies dwindle, buyers’ ability to negotiate sales prices and closing costs will fall.  It’s Supply and Demand — as supplies drop, relative demand rises, and prices rise with it.

In every American neighborhood, homes that are priced “right” are selling quickly.  And now that banks and builders have figured out the formula, more homes are going under contract than at any time since 2007. 

Much of the current economic climate is being blamed on housing.  If the data is accurate, though, we can infer that the climate may not last much longer.


Home Sales Are Up, Home Supply Is Down — This Is What A Recovering Market Looks Like

Statistics are what you make of them, but sometimes, they can provide good perspective.

For example, from its peak in 2005 to its trough in late-2007, the number of “used” homes sold nationwide plunged.

  • In 2005: Roughly 7 million homes sold annually
  • In 2007: Roughly 5 million homes sold annually

Through all of 2008, though, Existing Home Sales volume has been essentially flat.  Some months up, some months down, but always hovering near the 5 million unit mark.

The data from September is no different. 

For the 13th consecutive month, the number of home resales nationwide straddled the 5 million benchmark, clocking in at 5.18 million units.  This tells us that everyday Americans are still buying and selling real estate at a fairly steady clip — despite what the news keeps telling us.

Versus August, September sales volume grew by 5.5 percent.

Now, couple this two other data points and we can see that the housing market is showing multiple signs of strength:

  1. The national home supply is now down to 9.9 months
  2. The number of homes under contract is up 7.4 percent

Again, though, statistics are what you make of them.  Just as there are positive signals about real estate, there are negative ones, too.  The credit markets are one example of that.   

But, either way, with a full year of stable sales volume behind us and stories of recovery in beat-up markets like California, we can’t ignore the idea that housing may be done trolling its bottom.

It takes willing buyers and willing sellers to turnaround a market.  It appears that housing may have both.

(Image courtesy: The Wall Street Journal Online)

Foreclosures Fell 12 Percent in September 2008

According to foreclosure-tracking service RealtyTrac, the foreclosure rate is falling nationwide. 

Versus August, foreclosures fell by 12 percent in September 2008 as more than half of the states showed month-over-month improvement. 

Most interesting in the data is that several states that led the foreclosure boom in 2007 now appear to be leading the charge out of it.

For example:

  • In Arizona, foreclosures are down 9.43 percent
  • In California, foreclosures are down 31.64 percent
  • In Colorado, foreclosures are down 6.22 percent
  • In Illinois, foreclosures are down 5.14 percent
  • In Michigan, foreclosures are down 22.43 percent

But despite September’s promising data, the press is choosing to report that foreclosures are up 71 percent over the same period last year.  The data is accurate, but not necessarily relevant. 

When home buyers and sellers engage real estate markets, they rarely think in annual terms.  For them, it’s about buying or selling this month, or next month, or the month after that.  When someone is “in” the market, their mentality is “right now”.

In other words, annual data is more befitting of an economist, while month-to-month data is more befitting of you.  Of course foreclosures are up 71 percent since last year — a lot has happened since then.  But on a monthly basis, signals point to improvement.

September’s foreclosure data may be a signal of market recovery, or it may just be a blip.  Time will tell, really.  Either way, RealtyTrac’s foreclosure data reinforces what most real estate professionals already know and that’s that markets all over the country are showing signs of life.

Just because it’s REO that doesn’t make it a good deal!

When it comes to buying a REO (Bank Owned Property) experience has shown in most cases the asset manager has never seen the property and has very little information about the home. Usually the only information they have is from a Realtor’s BPO (Broker Price opinion) which includes some pictures and a vague condition report. Remember the asset manager is not in the business of helping people buy homes. They are in the business of liquidating inventory at the highest possible price. Some buyers have the perception that REO Properties are always a good deal. In some cases this is correct, but in others it has turned into a buyer’s nightmare.

Here are a few free tips for the REO Buyer

Work with an accredited buyer’s agent that has experience with Bank Repossessions. The Realtor you choose can determine the outcome of your purchase. The listing agent works for the seller and is under no obligation to represent you in this transaction. Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a Realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements. Be prepared to buy! Don’t submit an incomplete offer. Have all documentation needed to support your offer such as Lender Approval, Seller Disclosures, Legal description, and even a repair estimate if property has visible issues. REO Properties usually have one thing in common. Repairs are needed! It makes sense that people don’t spend money on a house that is close to foreclosure, but it’s also common for people in this market to have never considered the cost of maintaining a home from the beginning. Get an inspection from a licensed inspector that can also detect pest and termite infestation. Don’t expect a disclosure from the Seller regarding any defects especially since most banks only do patch work repairs in order to get the home sold.

What do you need and want in a home?

Sounds simple, yet, clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small just because the price is right. Perhaps they didn’t consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view. Shopping for a new home is an emotional experience. It’s also time consuming and comes with a myriad of details. Some buyers, however, caught up in the excitement of buying a new home tend to overlook some items. Their home purchase turns into an expensive process. If you have a systematic plan before you shop, you’ll be sure to avoid these costly errors when you purchase a REO.

Where do I Start?

If your looking to Buy or Sell Real Estate in Tacoma, Gig Harbor, Port Orchard or the surrounding area’s call me to get started. Jeff Clancy is a Washington State Licensed Realtor specializing in Residential, Waterfront, Land, and Manufactured Homes. I have been in the housing industry over 12 years and have worked with bank reposessions over 10 years. My experience is your advantage!

Jeff Clancy, 253-720-7588
Realtor, ASR, ABR, SRS, E-Pro
Keller Williams Realty
11515 Burnham DR NW #A
Gig Harbor, Wa 98332