Pending Homes Sales Rise Again – nice

Daily Real Estate News  |  July 1, 2009  |   Share

Pending Home Sales Rise Again
Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in May, increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004.

Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing.

“Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he says. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”

Region

• Northeast: The Pending Home Sales Index in the Northeast rose 3.1 percent to 80.9 in May and is 6.8 percent above a year ago.
• Midwest : In the Midwest, the index slipped 1.3 percent to 89.2 but is 11.4 percent above May 2008.
• South: The index in the South declined 1.7 percent to 92.6 in May but is 7.9 percent higher than a year ago.
• West: In the West, the index rose 2.2 percent to 96.9 and is 0.7 percent above May 2008.

The Effects of Appraisals
NAR President Charles McMillan says the appraisal issue is complicated. “We see that distressed homes often are selling for 20 percent less than normal homes in the same area, but some appraisals don’t distinguish between traditional homes and distressed property,” he says. “In many cases appraisers from outside the area are being used, but as everyone knows real estate is local and appraisals should be done by an expert with local expertise.”

McMillan says sellers shouldn’t hesitate to speak with an appraiser about their home. “Sellers should feel free to tell an appraiser about improvements and renovations to their home, and how it compares with other homes in the neighborhood,” he adds.

“Also, if recent sales in the neighborhood were discounted, but not similar to your home in terms of quality or condition, that should be pointed out. It wouldn’t hurt to put all this in writing, especially if an appraiser is not familiar with your area. “

Affordability at a high
NAR’s Housing Affordability Index remains at historic highs. The affordability index fell to 171.6 in May from an upwardly revised 178.8 in April, which was the highest on record dating back to 1970. “Under these conditions the typical family would devote only 14.6 percent of gross income to mortgage principal and interest, which is one of the lowest percentages on record,” Yun says.

The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates, and family income.

A median-income family, earning $60,800, could afford a home costing $296,700 in May with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of what a median-income family can afford. The affordable price was significantly higher than the median existing single-family home price in May, which was $172,900.

First-time buyer tax credits offers a boost
The first-time buyer tax credit also is benefiting the market. “Strong activity by entry-level buyers is helping to absorb inventory and allow some existing owners to make a trade,” Yun says

Existing-home sales should trend up through the end of the year, with normal local market differences. “The big question is how much the appraisal issue will impact the ability of contracts to go to closing,” Yun says. “We are currently conducting a study to assess the degree to which new appraisal rules are impacting home sales.”

— NAR

Budget Vacation

Checkout these neat ideas on budget vacations.

Pricing your home in a Down Market

Pricing your home in a down market

Stats don’t lie. When the housing market has taken a turn for the worst in some markets, it isn’t the end of the day. But be aware that when you sell your home be realistic in pricing your home. Be Aware of the statistics around you. Be aware of the market trends and the economic impact that is happening in your area.
Too many time agents will walk into a sellers home and give them the dog and pony show about how they can sell this and sell that, how they can market the home and attract other agents into the home, do an agent luncheon (which really only helps feed the starving agents out there) and occasionally do an open house or two on Sundays. This actually is not a bad approach. In most cases the firm that agent is associated with is good, maybe the market leader and has the largest market share, and spends the most money on advertising for their agents. That is a good thing. Now we get to the truth of the matter.
Sellers don’t care. All they care about is what agent comes in with the HIGHEST price they can list for. Remember that is only the LIST price not the SOLD price. In our business we call that buying a listing. Psychology tells us that we always gravitate to things that we can either get on sale or sell at the highest price. CAUTION. The list price is not the SOLD price.
Listen to your REALTOR. First ask if that agent is really a REALTOR. Not every agent. There is a difference but I will leave that for another post.
Listen to the market and the trends out there. In the Richmond, VA area home are selling. Here is the breakdown.
< $300,000 5% drop in units sold from 2008 to 2009 not too bad
$400,000 38% drop in units sold from 2008 to 2009 that is not good
>$500,000 44% drop in units sold from 2008 to 2009 That is the Pits.
So when you have a house that is above $500,000 and above you better not over price your home to sell. Be competitive and smart. Taking the agent that gives you the highest list price doesn’t mean a lot when that house is on the market for a long time and several price drops. If you are relocating don’t try to make up for all the improvements you did when you know that price is way too much already. Be realistic and smart about it and go with the agent that has the best tools, the best information, supports that with real time stats and trends, and is being upfront and honest with what a realistic listing price should be. More so what the house will actually sell for in a reasonable amount of time.

The market is going UP.

Average rates on the 30-year fixed-rate home mortgage hit a 25-week high after jumping nearly a half percentage point this week. Freddie Mac reported the 30-year fixed-rate mortgage averaged 5.29% on Thursday, and rates continued to climb on Friday. Last week’s average was 4.91%. We are still well below the 6.09% average from a year ago, but potential buyers and homeowners who were sitting on the fence waiting for lower rates should take notice that rates have moved quickly. It may be wise to lock in even if savings are not as great as they once were.

Here are our weekend rates:

Conf 30 year fixed to $417,000: 5.375%
Conf 30 year fixed ($417,000-$535,900): 5.625%
FHA 30 year fixed: 5.5%
Jumbo 30 year fixed ($528,750+): 6.25%

All rates reflect 1 origination, 0 discount points. Please note rates do vary by credit score, loan amount, and loan to value.

WCR Social Networking and Blogging

I had the pleasure today to present this topic to the local Richmond Chapter WCR group.  Wow, what a great group of energetic REALTORS, looking for new ideas, different ideas and ways to make their life easier with Social Networking.  The greatest thing is that alot of them were already taking advantage of some FREE services out there.  Thanks for a great audience and thank you for the small gift as well. 

Here is my Presentation:  Social Media and Blogging