Home Prices Increase

I’ve been talking about this for the last couple of months and now there are statistics to back it up. Home prices are back on the upswing. Still riding the fence wondering if the market is going to keep going down. Watching to see if the consumer confidence and spending starts to pick up. What more do you want? In a couple of months it’s going to be what was I thinking and why didn’t I take advantage of the opportunity. If you don’t act soon you’re going to miss out on $8,000 tax credit, low interest rates and the cream of the crop in terms of homes available at super discounted prices. Just like the “cash for clunkers” program time is running out to take advantage of the tax credit.
The monthly index of 20 major cities increased 1.4 percent from May to June to 142, the second straight month the index registered a gain. All but two cities, Las Vegas and Detroit, saw home prices rise, and Dallas and Denver clocked their fourth-straight monthly increase.
Of course, homes should be selling. Prices have fallen more than 32% from their peaks, set in the summer of 2006. Plus, mortgage rates near historic lows makes the cost of purchasing a home lower than they’ve been in nearly 20 years. That’s great news for those families that have been shut out because of the price of Real Estate in certain markets.
In the Seattle area, prices of existing homes were up slightly, 0.4 percent from May to June, but down 16.1 percent from a year earlier. Now remember the housing market is not all of a sudden going to take off and correct itself like it did in the late 90’s early 2000’s. It’s going to take time, how long, I’m not sure but I can tell you that if you get in now it will be well worth it in the end.

Advertisements

NEW Underwriting Guidelines On There Way

As a reminder, Fannie Mae is rolling out new lending guidelines Tuesday, September 1, 2009.

Starting next week, being approved for a home loan could be much more difficult.

The new rules mark the first major underwriting update since April of this year.  The changes are mostly geared at fraud prevention.

Among the updates:

  1. Stock options are no longer eligible for “reserves”
  2. Relocating families can’t use the “trailing” spouse’s projected income
  3. “Tip” income must be documented and verified
  4. Lenders must call employers to verify employment
  5. Lenders must verify tax transcripts against IRS records

But there are other changes, too.  As examples:

  1. Owners and buyers of 2-unit homes are subject to new minimum FICOs with larger downpayment and equity requirements.
  2. Only 70% of stock, bond and mutual values may be used as reserves
  3. Only 60% of retirement assets may be used as reserves

Consider this post to be your advance warning. Not everyone that qualifies for a mortgage on Monday, August 31 will qualify on Tuesday, September 1.

Therefore, if you have a pending need for a mortgage — for either a purchase or a refinance — it’s probably best to talk with a lender as soon as possible.  The deadline is based on the date of application — not the date of closing.

Read the complete Fannie Mae announcement online.

Reblog this post [with Zemanta]

Foreclosures Continue To Concentrate Across Just 3 States

Foreclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-foreclosures-3-_1250193269to-month basis last month.

However, 3 states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined.

  • California : 30.0 percent
  • Florida : 15.7 percent
  • Arizona : 5.4 percent

On a per-household basis, the states ranked 2, 3 and 4. Only Nevada’s foreclosure rate was higher.

Now, we point out these statistics for two reasons.

The first is to remind you that foreclosures can be highly local.  For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others.

And, second — foreclosures can represent a terrific buying opportunity.  Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too.

Furthermore, as banks get better at disposing of foreclosed homes, the process of buying one isn’t as challenging as it was, say, 12 months ago.

As part of its research, RealtyTrac.com catalogues a lot of foreclosed homes and lists them online.  However, you may find it better to start your search with a local real estate agent that knows the foreclosure market.

So long as buying foreclosures is a high-touch process — and it is a high-touch process — you may want to have a human face and agent to guide you through it.

The complete RealtyTrac report is available online.

Reblog this post [with Zemanta]

Mortgage Market Forecast Week of August 10, 2009 (chart)

To say that the mortgage markets took a beating last week would be an understatement.

After better-than-expected consumer spending, housing and employment data, stock markets rallied and mortgage markets suffered.

Mortgage rates unwound completely their gains of the last six weeks and now rest near the loftiest levels from June.

Headed into Monday’s market activity, mortgage rate momentum is moving away from home buyers and would-be refinance.

This week, there isn’t much data to reverse the tide but there is a Federal Open Market Committee meeting.

The FOMC is the policy-setting group of the Federal Reserve and, each time the FOMC meets, markets can get volatile.  This is because of the Fed’s power to speed up or slow down economic growth via the Fed Funds Rate.

When the Fed Funds Rate is rising, the economy is generally expanding at too fast of a pace for the Fed’s comfort and when the Fed Funds Rate is falling, the economy is generally slowing.

Today, the Fed Funds Rate is as low as it’s even been — resting in a “target range” of 0.000-0.250 percent.  The Fed isn’t expected to change that.

However, just because the Fed Funds Rate won’t be changing doesn’t mean that mortgage rates won’t be changing.  Depending on what the FOMC says in its post-meeting press release, mortgage rates could rise or fall — maybe even by a lot.

If the Fed shows concern for inflation, rates should jump; worry of a recession retread would draw rates down.

The FOMC adjourns from its 2-day meeting Wednesday at 2:15 PM so consider locking prior the official announcement.

Mortgage-Rates-August-2009

Reblog this post [with Zemanta]

Buyer’s Settling in and Seller’s Moving UP

If you’re a current Home owner does it make sense to sell in a buyer’s market? Is now the right time?

Of course it does just do the math. With all the pieces of the puzzle in play (tax credit, low interest rates, low home prices) it can be very beneficial to sell your home in today’s market. If you look at it from just a sellers perspective and say I’ll be losing money if I sell my home now think about it from a buyer’s perspective because that’s what you’ll become once you sell your home. Buyer’s are looking for one heck of a deal and want the world and once you sell your home you can do the same.  Would you sell your home and take a $40k-$50k loss if you could purchase the home of your dreams that was a $100k more 2-3yrs ago and the interest rates were higher? Do the math, the investor’s are.

The increase in activity in the first time home buyer range has also fueled an increase in the activity for those looking to move on up like the Jefferson’s. There are plenty of people who have seen the logic in taking a loss know for what becomes a step in the right direction for the future. A step closer too or that step into the home of their dreams, the right home at the right price. How many times in your lifetime or near future do you think that the housing market is going to go through times likes this? Do you think that the prices of homes throughout King County and in greater Washington are ever going to be this affordable again? Do you think that interest rates are going to remain this low for much longer?

With the tax credit deadline of November 30th getting closer, summer ending and the new school year approaching now is the time to take action and make that move if the math makes sense to you and you family.

Statistical Summary by Counties: Market Activity Summary – August 2009

August 2009
Single
Family
Homes
+ Condos

LISTINGS

PENDING
SALES

CLOSED SALES

New
Listings

Total
Active

# Pending
Sales

#
Closings

Average
Price

Median
Price

King

4261

13589

2777

2161

$431,446 $401,500
Snohomish

1711

5659

1164

858

$315,288 $332,500
Pierce

1781

6101

1251

903

$258,259 $255,000
Kitsap

524

2081

359

290

$295,955 $266,500
Mason

162

854

78

58

$214,944 $195,000
Skagit

256

1401

141

116

$263,866 $259,995
Grays
Harbor

196

953

65

53

$146,772 $169,900
Lewis

157

779

90

63

$184,635 $189,900
Cowlitz

148

693

82

68

$162,200 $199,425
Grant

160

737

71

47

$183,073 $165,000
Thurston

607

1881

396

284

$275,278 $256,326
San Juan

47

522

23

18

$498,328 $497,500
Island

233

1260

112

89

$278,500 $255,200
Kittitas

126

678

65

41

$234,689 $218,499
Jefferson

105

632

32

20

$281,662 $275,000
Okanogan

65

411

30

26

$181,875 $130,000
Whatcom

513

2066

324

252

$296,557 $265,000
Clark

93

368

66

55

$252,763 $245,000
Pacific

84

438

33

29

$155,047 $144,000
Others

252

1217

120

96

$220,258 $188,950
MLS TOTAL

11,481

42,320

7,279

5,527

$334,761 $310,000

Pending Home Sales Rise Again

LAS VEGAS - JULY 29:  A sign hangs outside a f...
Image by Getty Images via Daylife

The number of homes under contract to sell rose in June for the fifth straight month.

It’s the Pending Home Sales Index’s longest winning streak since 2003 and another piece of evidence that the housing market may be rebounding.

Separately, the data is interesting. All together, it paints the portrait of a recovery.

That said, we can’t forget that the Pending Home Sales Index is somewhat unique versus other real estate reports.  Whereas data on existing and new home sales measures closed transactions, the Pending Home Sales Index only measures intent to buy.

Just because a home goes under contract, in other words, doesn’t mean that it actually will sell.

Purchase transactions can fall apart for a multitude of reasons including, but not limited to, buyer-seller disputes, failed home inspections, and an inability to secure mortgage financing.  The Pending Home Sales Index doesn’t account for these types of issues.

In general, though, as the number of homes under contract increases, Existing Home Sales increase, too — usually on a 2-month lag.  Home sale data should remain strong through early-Fall, at least.

For active home buyers in Washington, be conscious of the fact that that more home sales plus falling home supplies leads to higher home values.  If you’re looking for a bargain, the longer you wait, the less likely you may be to find it.

Related posts:

  1. Pending Home Sales For December 2008 (31.913) Pending Home Sales still has its place, it’s a terrific…
  2. More Housing Strength : New Home Sales Surge In June (21.58) Once again, the housing market is showing that its worst…
  3. New Home Sales Figures Show Unexpected Improvement (18.813) The national housing market got its third piece of good…
  4. Strength In New Home Sales (17.679) In every American neighborhood, homes that are priced “right” are…
Reblog this post [with Zemanta]

Going, Going, Gone

With the $8,000 tax credit deadline quickly approaching, November 30th 2009, homes are flying off the market. What’s there one day is locked up in a contract the next and most of the times in a multiple bid situation. With all the economic indicators pointing in the direction that the recession is starting to rebound now is the time to take advantage of the opportunities and deals available. No one knows if the same type of conditions- rock bottom prices, tax credit and low interest rates, will exists- my opinion you might have one or two but not all three.
Out of the 61 homes that I have looked at with various clients from Seattle to Federal Way there are only 3 that are still available. I will say out of the 20 contracts that I’ve out in over the past three months 15 of them had multiple bid offers and a large number of those had competing offers that included ALL CASH offers. This factor let me know that there are several investors out there that have been waiting for a time like this to recoup some of the losses that they may have taken in other investments. I have a feeling that there will be a last minute surge as we approach the November 2009- sales must be closed by November 30th.
Charles McMillan, the president of the National Association of Realtors, recently announced the third straight month of pending home sales increases. According to McMillan, “This hopeful sign doesn’t mean our economy is out of the woods, but it does mean we’re moving in the right direction.” Also a new report that just came out shows that sales in King County were up 4% from June sales in 2008 and on top of that King County hasn’t recorded that many sales since October 2007. There is no doubt in my mind why-deals, deals and more deals. According to CNNMoney.com Best Places to Live three cities in King County ranked in the top 25 of the top 100. Having such desirable locations to live within King County and these prices how can you say no. Will we ever see the prices this low in King County again, I doubt it.