Tuesday, August 25, 2009

Long Term Trends Indicate Good News for Housing

Existing Home Sales July 2009It seems that this may be another in what is appearing to be a string of articles about the possibly recovering housing market. After years of continuous bad news, the housing market continues to surprise. Last week, the latest good news came in the form of the monthly Existing Home Sales report.

An "existing home" is a home sold by an existing owner as opposed to a developer. It's non-new construction property, and in our market in Philadelphia and New Jersey, it is overwhelmingly the largest portion of the housing stock

The data on Existing Home Sales was noteworthy for its trends:

  1. Sales volume rose over four straight months for the first time in 5 years

  2. Sales volume rose year-to-year for the first time in 4 years

  3. Median home prices fell for the first time since April

Furthermore, first-time home buyers and buyers of "distressed" homes accounted for nearly one-third of the market activity each.

But, before we declare a bottom in housing, it's important that we remember the First Rule of Real Estate -- All Real Estate Is Local, and Philadelphia and the surrounding areas have always been more resilient than most markets throughout the country.

The Existing Home Sales report is not neighborhood-specific. It lumps cities like San Diego and Saint Paul into a giant sample set and fails to account for regional differences in real estate, let alone neighborhood ones.

This is the primary reason why on-the-ground real estate agents are better sources for a market pulse versus a report from a national trade group. The national group can't know the happenings of every street and every home in a market, and our market has not had some of the issues wuth fraud found in other states, nor the huge amount of speculative building that was part of the market problems in others.

That said, however, the national data isn't completely useless.

Looking a

Real EstateImage by Thomas Hawk via Flickr

t the long-term patterns in the Existing Home Sales report, we can infer that ample supplies, low mortgage rates and tax credits are spurring home sales in a lot of U.S. markets. As a result, our offices are seeing more activity, both from our agencies and other firms, and we see properties going under agreement more rapidly, with multiple offer situations again being created.

Eventually, this will lead home prices higher.

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Wednesday, August 19, 2009

Teaching Social Media In Cincinnati

Getting ready to teach another CSM class!Image by reeltor99 via Flickr

Here we are on the second day of the CSM designation course sponsored by the Cincinnati Area Board of REALTORS.

The class so far has been fun and we're just learning how to make a quick blog post. The participants have learned about Social Capital, Ethics of Blogging, how to use permission based marketing, and how to engage in the conversation.

At the end of the first day the class has a firm grounding in the social basis of social media. Now we're on to the second day and we all are pretty excited about the possibilities!

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A Cool Project: Building Invisible Shelves

If you're looking to add invisible shelves in your home or workplace, you can either buy them on Amazon.com for $14 a piece, or you can build them yourself with a just a few simple tools.

In this 3-minute video, life-help website VideoJug shows how to install invisible shelves in an easy-to-understand, anyone-can-do-it fashion. The acting is a little goofy, but the instruction is right on.

Invisible shelves can be used to store and display books, clocks, knick-knacks and photos. They're called "invisible" because objects appear to float on the walls on which they're shelved.

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Monday, August 17, 2009

Three States Hold 50% of U.S. Foreclosures

3 states account for more than half of July 2009 foreclosuresForeclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-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. In Pennsylvania for example, there are only 1 foreclosure for every 1030 housing units as opposed to New Jersey where there is one foreclosure for every 541 housing units, or the national average of one foreclosure for every 355 household units.

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. By buying a home after the foreclosure sale, all liens and encumbrances are removed, and the buyer will have title as clear and pristine as in any other type of sale. Title Insurance is still needed for the buyer's protection, but is normally provided at settlement.

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 catalogs 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. To search for foreclosure properties , just check the Century 21 Advantage Gold Web site.

The complete RealtyTrac report is available online.

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Thursday, August 13, 2009

Reviewing the August 12 2009 FOMC AnnouncementThe Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

It also reiterated plans to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the U.S. economy is "leveling off" and that financial markets continue to improve.

The change in verbiage is the rosiest from the Fed since the start of the recession and it may signal that the downturn's end is near.

That said, the Fed highlighted lingering economic soft spots that could still impact a recovery through the end of 2009 and into 2010.

  1. Ongoing job losses
  2. Reduced "housing wealth"
  3. Tight credit conditions

Furthermore, rising energy costs remain a threat to inflation.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market.

Market reaction to the Fed's press release is muted. With no real change in message and a basic confirmation of what most investors already knew, Wall Street sees no reason to panic. Mortgage rates are unchanged.

The Fed's statement is another of a growing list of indicators that while we may have hit the bottom of our economic issues, they are not yet over. However, from my vantage point as a layman, it seems to me that real estate might once again see signs of the recovery before the entire economy does. Just as we were the first sector of the economy impacted by the economic woes, we might just be one of the first sectors to feel the benefits of the recovery. Sort of a "first in, first out" scenario. Of course, I temper that by reminding the reader that I am no economic expert, and my guesses are as invalid as any of yours.

The FOMC's next scheduled meeting is September 22-23, 2009.

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Monday, August 3, 2009

More Signs the Real Estate Market is Getting Better

Months of Supply (New Homes) -- June 2009Once again, the housing market is showing that its worst days may be over.

According to the Census Bureau, the number of new homes sold in June leapt by 11 percent from the month prior. It stands as the biggest one-month jump in 8 years.

A "new home sale" is when a home in any stage of construction -- not yet started, under construction, or already completed -- goes under contract, often with a builder. It's the opposite of an "existing home sale".

In addition to surging sales, the monthly supply of new homes fell to its lowest level in 11 years. In our market, where there are not as many new homes as in expanding markets out west or in the retirement areas of the south, this supply is not perhaps as significant, but the number is important nonetheless.

Because home values are based on the relative supply and demand for a particular home in a particular area, anytime that demand for homes grows faster than supply, we would expect prices to rise.

Indeed, that's what we've been seeing. The combination of low interest rates, seller-paid incentives and a first-time home buyer tax credit is bringing buyers into the market faster than new supply can come online. It's one reason why home prices have stopped falling across many parts of the country.

It's also why home buyers may find it tougher to get "a good deal" in real estate later this year and into 2010. If demand stays high and supplies fall further, sellers should regain the upper-hand in contract negotiations. Brokers are already seeing signs of of this in the number of "low ball" offers that are being rejected by sellers in favor of better offers and the re-emergence of multiple offer situations on well priced homes.

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