Home Inventory Dwindles Into The New Year

Existing Home Sales jumped another 6 percent in November, the report's third month of improvement since bottoming in July.
According to the National Association of REALTORS®, a quarter-million more existing homes were sold during the annual period ending in November as compared to October.  An "existing home" is a home that cannot be considered new construction.
Additionally, the national housing supply dropped by a full month. At the current pace of existing home sales, the complete stock of homes for sale will be exhausted in 9.5 months.
November's strong housing data is yet another signal to buyers in Palmyra that the housing market's foundation has been rebuilt, and that a rebound is imminent.  It's helped that there are great "deals" on which for buyers to pounce.
In November, short sales and foreclosures accounted for one-third of all existing homes sold, and carried an average price discount of 10 percent and 15 percent, respectively, as compared to non-distressed sales.
Repeat buyers continue to power the market, too, representing more than half of all home buyers.

• First-time buyers : 32% of all buyers
• Investors : 19% of all buyers
• Repeat buyers : 51% of all buyers

This breakdown suggests that housing has regained its footing. First-time buyers can't support a market long-term like repeat buyers can and, as compared to 12 months ago, the percentage of repeat buyers is now up 14 points.
Home buyers take note. Raw sales volume is rising and available inventory is dropping. Basic supply-and-demand tells us that this will lead home prices higher. Furthermore, mortgage rates are rising quickly, increasing the cost of homeownership.
If buying a home is a part of your plan for 2011, consider accelerating your purchase time frame. Existing homes account for more than 80% of homes sold nationwide. If the market keeps improving like this, your home affordability will worsen.

NAR makes history in a vote to amend the Code of Ethics to include sexual orientation - vid...

This video makes me really proud to be a REALTOR, but even prouder to have been part of the process that led to what is a historic moment for the National Association of REALTORS and our 97 year old Code of Ethics.

Last year, during my term as Chairman of the Interpretations and Procedures sub-committee of the Professional Standards Committee, this amendment to the Code prohibitinh discriination based on sexual orientation was suggested by state associations. The sub-committee discussed the matter, and began the process needed to move this forward.

The change to our Code is significant because it is the first time in the history of the code that REALTORS have set a standard against discrimination that is higher than the law in many places. And did it quickly, unanimously and with little discussion at the meeting. (Though I did love the woman who suggested that we should just say "REALTORS shouldn't discriminate")

The people in this video from left to right are Linda Paige, Steve Roscoe, Domenic Cardone, and Rodney Ganshoe. They are the Chairman of the Professional Standards Committee, the Chairman of the Interpretations and Procedures sub-committee, the Vice-Chairman of the Professional Standards Committee, and one of the best association staff people on the planet. Oh, and yes, I am the Bill Steve mentions in the video (and I was paying attention before he said "sex" )

Thanks to all of the members and staff who made this possible so that we can as an organization move forward in such a positive manner.

(NOTE: Though this was approved by the Committee and the Board of Directors, it also needs to be approved by the Delegate Body at the Annual Meetings In New Orleans in November 2010.)

Home Resales Boom Into The End Of The Tax Credit; Home Values Seen Rising.

Existing Home Sales rose in March, as expected. U.S. home buyers closed on 7 percent more homes as compared to February.

Furthermore, versus March 2009 -- a month many people equate to the low point of the U.S. economy -- sales volume was up 16 percent.

"Existing home sale" is the technical term for a home resale; a home previously inhabited by a person. It's the opposite of a "new home sale" which is a sale of a newly-constructed home.

Existing Homes Data is tracked by the National Association of Realtors® and a closer look at the March data reveals some other interesting notes:

1. Year-over-year sales are higher for the 9th straight month
2. Real estate investors represented 19 percent of all homes purchased
3. First-time home buyers account for 44 percent of all buyers

Also worth noting is that the supply of available homes is down on a broader basis. At the current rate of sales, the existing home inventory will be exhausted in 8 months.

Despite banks releasing foreclosures and REO into the Palmyra market, that's still one half-month less from February.

When supplies drops, home prices tend to rise. It suggests an underlying strength in housing that should support home prices through the next few months -- especially as the home buyer tax credit finishes working its way through the system.

That said, real estate markets are local. You shouldn't assume that what's happening on the national level is also happening here at home. Be sure to check with your real estate agent about local market conditions before making a decision to buy or sell.

How To Properly Screen A Prospective Tenant

According to the the National Association of Realtors®, "distressed homes" represented nearly 2 of every fifth home sold in January 2010. Clearly, real estate investors in Mount Holly and around the country are taking advantage of good deals on cheap property. But there's risk involved.

This NBC Today Show interview first ran in March 2009, featuring real estate expert Barbara Corcoran. Despite its age, the message remains relevant. Today may be a terrific time to buy a bank-owned home -- just make sure you do your research first. There's plenty of ways for investors to get burned.

Some of the tips in the video include:

• Buy in your own backyard
• Start small, then build to a bigger portfolio
• Watch receipts -- rent rolls don't matter if tenants aren't paying rent

Corcoran also gives pointers on how to evaluate a prospective tenant.

Foreclosures should represent a large number of 2010's total home sales and will offer interesting opportunities to bona fide real estate investors. Before you jump in, make sure to watch the video. The rents you save may be your own.

Remember, the stats and the data are from 12 months ago, but the advice stays meaningful. Real Estate investing, when you apply sound principles is still a great way to build income and acquire wealth. You just have to take time and investigate it completely.

Pending Home Sales Predicts A Stronger Spring Market

After the snow storm this weekend, its hard to think about the spring market, but that is what we're entering, and the condition of the market is of interest to potential home buyers and sellers in Philadelphia and Surrounding areas. One of the indicators is the Pending Home Sales Index which rose slightly in December, climbing 1 percent from November.

A Pending Home Sale is a home that is under contract to sell, but not yet sold. It's a figure compiled by the National Association of Realtors® using sales data from over 100 regional listing services and more than 60 large brokerages around the country.

Because each pending sale is a true measure of sales activity, the Pending Home Sales Index is purported to be the most reliable forward-looking indicator for housing.

Recent data supports this hypothesis.

After Pending Home Sales plunged 16 percent in November, Existing Home Sales fell by 17 percent in December. Based on the most recent Pending Sales Index, therefore, we can expect January's closed sales to be similarly level.

For home buyers in Philadelphia and Palmyra , this is all a bit of good news. Home prices are based on the supply-and-demand balance that exists between buyers and sellers. When buyers outnumber sellers, like they did through most of 2009, home supplies dip and, in fact, the national home inventory nearly halved during the 12 months ending November 2009.

With fewer homes for sale, multiple-offer situations were almost commonplace and home values rose as result.

Activity has since slowed, however, and fewer buyers are in today's market. The supply-and-demand equation has shifted back some. In December, home supplies rose for the first time in 7 months and January will likely show the same.

The net result: Home buyers have more homes from which to choose and that can create negotiation leverage for better prices and better concessions. As people begin to take advantage of the remaining time for the home buyer tax credit though, we have been seeing activity start to increase in our offices.

With mortgage rates still low and a looming deadline on the homebuyer's tax credit, market activity should be strong between now and April. Take your time and bid right. And when you're ready, be ready. The best deals likely won't last.

Home Buyers Get A Green Light : Pending Home Sales Plunge In November

Just one month after touching a 3-year high, the National Association of Realtors® Pending Home Sales index plunged in November. A "pending" home sale is a home that is under contract to sell, but has yet to close.

The 16 percent drop marks the first retreat in Pending Home Sales since January of last year.

The weak Pending Home Sales data is an indication that Existing Home Sales data will be soft this month. This is because, historically, 80 percent of Pending Home Sales convert to "closed sales" within 60 days, and most of the rest close within 120.

Even with Pending Home Sales down, the Philadelphia housing market should not lose much of its momentum. For today's home buyers, this "lack of slack" can represent both a concern and a terrific opportunity. Though the weather keeps some buyers inside, the tax credit provides a real incentive to get out and participate in the market. Acting now allows you to get a financial benefit and to deal with sellers who have possibly held their homes into the winter.

Home prices are a function of supply and demand; of buyers and sellers. When buyers outnumber sellers, competition leads to bidding wars, ultimately, and higher home prices overall. The imbalance can also create a sense of urgency that results in over-paying for a home.

When buyers are sparse, on the other hand, the psychology of real estate shifts.

Home sellers are keenly aware of foot traffic and requests for second and third showings. Without buyers, their homes can't sell. They also note a lack of general feedback from the market.

It's at this point that seller fear can creep in and it becomes a buyer's best time to buy.

Based on November's Pending Home Sales data, it's clear that home sellers are in abundance right now. Home buyers have leverage.

It may not last.

With mortgage rates easing lower this week, the federal home buyer tax credit still in effect, and the Holiday Season officially over, buyers are getting back to business in Mount Holly and everywhere.

Plus, with the tax credit deadline of April 30, 2010 fast approaching, buyer activity should increase over the next 4-6 weeks.

The market looks ripe for a buy but don't rush it. Take your time and bid right. But when you're ready, be ready -- once the market momentum shifts back to sellers, you might lose all that leverage you built up through the winter.

Fannie Mae Makes it Tougher for Buyers - Again!

Fannie Mae raised the bar for mortgage applicants last weekend. Getting approved for a home loan just got harder, as if loan liquidity weren't already the biggest problem facing home buyers.

In its official announcement, Fannie Mae says the updates minimize long-term lending risks. If that's the case, this won't be the last guideline change Fannie Mae makes -- especially with loans defaulting at an above-normal clip.

The immediate changes are major. The first pertains to credit scores.

Effective December 13, 2009, the bulk of Fannie Mae's loans require a 620 credit score minimum. There are very few exceptions. As a result, buyers with damaged credit may need to make repairs to their credit to qualify.

A second relates to loans with private mortgage insurance.

Homeowners whose loan-to-value exceeds 80 percent now have a choice:

1. Pay higher mortgage insurance premiums month-after-month


2. Pay a one-time fee paid at closing to compensate for higher risk

Both options result in higher consumer loan costs. This change probably has less impact since rates are so low, the monthly increase will probably be bearable for buyers, though it does result in less "bang for the buck" in the new loan - since the total payment is the target for most buyers, the increase in the amount of PMI means a decrease in the portion of the payment needed to handle the actual loan.

A third change concerns maximum debt-to-income ratio. Fannie Mae will no longer approve loans with debt ratios exceeding 45 percent except with very strong assets and very high credit scores.

In no case whatsoever may debt-to-income exceed 50 percent.

There are other changes, too, including the elimination of seldom-used mortgage products and additional risk-based fees for "expanded level" mortgage approvals. These updates affect just a small part of the population.

The National Association of REALTORS took a lot of heat from people who thought their ad campaign "There's Never Been a Better Time to Buy a Home" was too optimistic. However, the ad campaign may have been nothing but the truth. Home prices are rebounding, mortgage rates are low, and -- for 5 more months at least -- there's a federal tax credit for qualified buyers. You don't have to buy a home now, but with mortgage guidelines sure to tighten in 2010, now may be a better time than later.

The best "deal" won't matter if you can't get qualified on your mortgage.

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Can You Still Catch the Buyer's Market?

The national housing supply fell to a 2-year low last month, according to the National Association of Realtors®.

At the current sales pace, existing home inventories would sell out in 7.8 months -- 30 percent faster versus November 2008.

For a 10-month window, that's a major housing supply reduction and it helps to explain why multiple-offer situations have been so common lately.

Moreover, the same report from NAR showed sales activity reaching its highest point since July 2007, too.

If you're looking for evidence that the long-standing Buyers Market is ending, this month's Existing Home Sales report might be it.

Even median sales prices -- typically dragged lower by distressed and foreclosed properties -- declined at its slowest pace in a year. The market may have turned a corner.

Home prices are rooted in the basic economics of supply and demand.

• When supply outweighs demand, home prices fall
• When supply lags demand, home price rise

Since March 2009, the market has been moving in the right direction. Low mortgage rates, ample housing supply and a first-time home buyer tax credit fueled buy-side demand so that home prices are now rising in many U.S. markets.

If home supplies stay on this path into 2010, expect home prices to rise even more.

Everybody Thinks the Real Estate Market has Recovered

Image by reeltor99 via Flickr

Well maybe not everybody, and maybe not quite recovered yet, However a consensus of several major real estate groups says that 2010 is the time for the expansion of the real estate market. According to several studies, the market of 2009 will mark the end of the real estate "contraction" and next year will mark an expected increase of almost 10% with a projected total of 5.403 million units closed in 2010 compared to an estimated 4.929 million units registered in 2009.

The compilation of housing forecasts released was released earlier this week on Real Estate Economy Watch.com. The Web site , operated by former NAR economist David Lereah presented the September housing forecasts of the National Association of Realtors, the National Association of Homebuilders, the Mortgage Bankers Association, Fannie Mae and Freddie Mac and then calculated the consensus (mean) prediction for each major housing measure for the group as a whole.

Of course the impact of foreclosures on the market, and the renewed activity of investors and home buyers looking to take advantage of the well priced inventory, combined with the $8,000 tax credit have positively impacted the market this year. Local tracking indicates that each quarter this year so far has seen increases in sales activity. However the tax credit is currently due to end in November, and if it is not extended, the impact on the marketplace will have to be seen to be judged.

The article goes on to say "At present, the housing sector is experiencing a recovery in home sales and housing starts. Both measures are meaningfully above their January cyclical lows. Home price movements are also improving. Home price declines on a year over year basis have decelerated in monthly reporting, while home prices have increased in recent months on a monthly basis." In our local market area, where prices were not reduced as drastically as some parts of the country, this impact is good news for homeowners and a caution for home buyers that want to take advantage of the current combination of low rates and attractive prices.

In the meantime, as things seem to get brighter, we can't forget that miracles do sometimes happen. After all the Phillies are in the World Series for the 2nd year in a row!

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Are We Seeing the First Signs of a Housing Recovery?

Don't let the plunging median sales price fool you -- December's Existing Home Sales data has home sellers smiling.

Just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring's Buying Season could be a competitive one.

Falling home prices helped fuel home sales. Nationally, the median sales price -- the point at which half of all homes sold for more and half sold for less -- was $175,400, down $32,000 from last year.

However, the most important part of December's Existing Home Sales report isn't making headlines.

At December's sales pace, it would now take 9.3 months to exhaust the existing home supply. Last month it was 11.2 months. This means that buyers are competing to purchase fewer homes which, in turn, puts upward pressure on home prices.

This is Supply and Demand at its most basic definition.

Economists have long said that the keystone of housing's recovery will be rebalancing in home supply. Coupled with the all-time low in housing starts, December's Existing Home Sales data signals future strength.

(Image courtesy: The New York Times)

Existing Housing Sales Stable!

In real estate, the term existing home refers to a "used" property; one that can't be classified as new construction.

The number of existing homes sold each month is tracked by the National Association of REALTORS. The report is often used as a gauge for the health of the real estate market nationwide.

In October, nearly 5 million existing homes sold across the U.S. This figure represents a slight drop from September's reading, and a equally slight drop from the October 2007 data.

But, October's Existing Home Sales figures marked the 14th straight month in which Existing Home Sales straddled 5-million units. This is a remarkable statistic because 14 months of anything is a pattern, not a blip. Despite what the news tells us, Americans are buying and selling real estate at a somewhat steady clip.

In Philadelphia, our real estate market has seen some decline in the number of homes sold through the MLS this year, but a remarkable stability in price. Combined with the affordable interest rates available to buyers to day, our city is poised (according to Smart Money Magazine) for a housing recovery. Smart buyers who can should be out there buying right now.

As we head into the Holiday Season, buyer activity should slow, reducing demand for homes. At the same time, however, widespread foreclosure moratoriums should reduce the number of homes available to buy. These forces should counter-act to help keep the market (and prices) in balance.

(Image courtesy: USA Today)

Pending Home Sales Jump!

Buyers are returning to the housing market.

Each month, The National Association of REALTORS^® tracks homes under contract to sell, but whose closing has not yet happened.  It calls them "pending sales" and publishes a monthly report to quantify them. 

The Pending Home Sales report is important because it's meant to predict future home sales activity.  History shows that 80 percent of homes under contract will "close" within 60 days, and most of the rest will close within 120 days. 

If Pending Home Sales are up, it's believed, actual home sales will be up, too.

In August, Pending Home Sales jumped 7 percent from the month prior, returning to levels not seen in over a year.

The report's strength suggests that buyers are returning to the housing market, continuing the trend that started in March.  This is tremendously good news for sellers because more buyers on the hunt means more demand for homes which, in turn, leads sale prices higher. 

The Pending Homes Sales report is not a perfect predictor, however.  For one, it's not measuring an actual sale -- just the expectation of one.  In addition, it only accounts for "used" homes, ignoring new construction. 

But that aside, the strong uptick in August tells us that home buyers are re-engaging at a quickening pace and finding that "now" is a good time to buy real estate.  When buyer demand rises, the real estate market as a whole isn't usually that far behind.

(Image courtesy: The Wall Street Journal Online)

Small Housing Supply Better for Sellers Than BuyersB

The August Existing Home Sales report was released last Wednesday, showing a decline in the number of homes sold nationwide, and a reduction in the median sales price.

Not surprisingly, the media singled these two statistics out, playing them as a big negative.

They're not.

The decline in sales wasn't good, but it wasn't terrible, either -- sales were actually up in half of the regions around the country.

And, citing "median sales price" is somewhat pointless because median sales price only measures the price point at which half the homes sold for more, and half sold for less.

No, it's the third statistic in the report that deserves as much -- if not more -- attention that the previous two. According to yesterday's press release, the national home supply is decreasing.

This is terrific news for home sellers.

In its report, the National Association of REALTORS said that the nation's existing supply of homes for sale fell by 7 percent in August.

At the current pace of sales, that represents a 10.4-month supply, down from 10.9 months in July. With a reduced supply of homes for sale, all things equal, home prices would increase.

This is Supply and Demand in its most basic form.

Economists and experts have long noted that reducing the housing supply is one of the key elements to a sustainable housing recovery and we've seen several indications that this is happening, including builders not building as much.

Longer-term, this is good news for home sellers because a reduction in housing supply tends to lead to higher prices.

(Images courtesy: The Wall Street Journal Online)

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