Coastal North Carolina Real Estate Blog

Thursday, 02 July 2009

Have We Reached Bottom? 10 Factors to Consider

RISMEDIA, June 24, 2009-Historically, the value of real estate goes through cycles. Many factors affect the value of homes including the laws of “supply and demand.” From the Appraisal Institute, here’s a quick reference guide to some of the factors involved and advice on how to spot a turning point in the market:

1. A spike in local sales activity. A spike refers to a significant rise in the number of home sales (or values) in a local market area, which generally is measured month to month. A spike does not necessarily mean continued growth, i.e. it could be a one month phenomenon.

2. Higher asking and selling prices vs. appraisal value opinions for residential properties. Appraisers study the markets; they do not make the markets. When the data shows higher sale prices in comparable properties market value opinions will increase proportionally. Appraisers seek evidence of value but do not create the value. In time periods with low activity, evidence of any kind is difficult to find.

3. More activity at open houses. Open houses with five to eight attendees is considered average, so a dozen or more people attending an open house means buyer interest is picking up. Also, the mood of the attendees is important. Are they optimist and upbeat? Buyers interest alone does not always translate to effective purchasing power. If the number of buyers in the market increases but they do not have requisite down payments, the sales may still not occur.

4. Shorter marketing times. In some markets, houses have been up for sale for more than a year. In most balanced residential markets, properties that are priced competitively will typically sell in less than six months. If the Days On Market (DOM) is shortening, many practitioners will read an improvement in the market.

5. Reduced number of foreclosures and short sales. A reduction in these transactions commonly signals a more balanced market. If lenders are reluctant to foreclose because of an oversupply of inventory, they may choose to wait to repossess the properties, which could allow a spike in the number of foreclosures later despite a better market condition.

6. Stabilized employment. Stable or increasing employment rates provide the necessary confidence for potential buyers to invest in a home. Since most buyers rely on borrowed funds to make real estate purchases and borrowing money usually requires a source of repayment and that usually means jobs, an increase in this basic need, will enable more real estate sales.

7. Fewer buyer incentives and seller concessions. Seller-paid incentives or concessions are a sign of seller motivation. If there are fewer builders offering “free” upgrades and fewer sellers sweetening the deal with big screen TVs, it may be a sign of lessening supply and therefore a better market.

8. New construction starts. Most builders are quite attune to their markets and will not build new homes without a corresponding contract for sale or a perceived increase in demand. An increase in the number of building permits usually indicates higher demand and higher prices. If residential properties are selling for 25% less than they cost to build, only a few new homes will be built. It would be prudent to buy an existing home rather than build a new one for a much higher price.

9. “Move-up” buyers entering the market. More buyers willing to move to a larger or superior quality home indicates a healthy market. The lack of buyers at the lower end of the price range will have a chain reaction throughout the market. If a buyer for a high priced home has a lower priced home to sell first, the sale of the higher priced home may have to occur before the higher priced one can sell.

10. Apartments advertising renter specials - fewer renters in the market may indicate more people are moving into owner occupied homes or it could indicate a reduction in population. Lower population will cause an oversupply of housing which will oftentimes permeate throughout several markets.

If you would like to buy or sell Wilmington, NC real estate, contact Sandy and Steve Thornton for all your home buying and selling needs. Specializing in Wilmington, Leland, Hampstead, Sneads Ferry, Jacksonville, Topsail Island including Surf City, Topsail Beach, North Topsail Beach, Beach and waterfront properties covering New Hanover County, Pender County, Brunswick County and Onslow County areas.

Experience the Gold Standard

Sandy and Steve Thornton
Century 21 Sweyer & Associates
Brokers Realtors CSP Centurions
unrealestate1@aol.com
www.ncdreamhomes.com
910-352-3526 910-554-2441

POSTED BY: Sandy & Steve Thornton AT 07:54 am | Permalink | 0 Comments | E-mail this

Thursday, 04 June 2009

Pending Home Sales Up for Three Months in a Row

RISMEDIA, June 2, 2009-Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7% to 90.3 from a reading of 84.6 in March, and is 3.2% above April 2008 when it was 87.5.

Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

The Pending Home Sales Index in the Northeast shot up 32.6% to 78.9 in April and is 0.8% above a year ago. In the Midwest the index rose 9.8% to 90.4 and is 11.1% above April 2008. The index in the South slipped 0.2% to 93.0 in April but is 3.5% higher than a year ago. In the West the index rose 1.8% to 94.8 but is 2.9% below April 2008.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.

“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”

NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. 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; tracking began in 1970.

A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80% of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.

Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”

The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.

For more information, visit http://www.realtor.org.

POSTED BY: Sandy & Steve Thornton AT 08:06 am | Permalink | 0 Comments | E-mail this

Thursday, 14 May 2009

Home Builder Confidence Posts Biggest Gain in 5 Years

RISMEDIA, April 17, 2009-Builder confidence in the market for newly built, single-family homes rose five points in April to the highest level since October 2008, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This gain was the largest one-month increase recorded since May of 2003, and brings the HMI out of single-digit territory for the first time in six months - to 14. Every component of the HMI reflected the boost, with the biggest gain recorded for sales expectations in the next six months.

“If you’re a potential buyer who’s been sitting on the fence waiting for a sign that now is the time to act, this is it,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “Some of the most favorable buying conditions in a lifetime are now in place, and they are drawing more consumers back to the market.”

“This is a very encouraging sign that we are at or near the bottom of the current housing depression,” said NAHB Chief Economist David Crowe. “With the prime home buying season now underway, builders report that more buyers are responding to the pull of much-improved affordability measures, including low home prices, extremely favorable mortgage rates and the introduction of the $8,000 first-time home buyer tax credit.”

Crowe cautioned, however, that a key issue that still must be addressed is the ongoing lockdown on builder acquisition, development and construction (AD&C) financing. “Restoring health to our nation’s economy will require a substantial housing recovery, and that recovery is contingent on breaking the logjam in AD&C lending that presents an ever-increasing obstacle for home builders,” he said.

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations in the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Each of the HMI’s component indexes recorded substantial gains in April. The largest of these gains was a 10-point surge in the component gauging builder sales expectations for the next six months, which brought the index to 25. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose five points, to 13 and 14, respectively.

The HMI also rose in every region in April, with an eight-point gain to 16 in the Northeast, a six-point gain to 14 in the Midwest, a five-point gain to 17 in the South and a 4-point gain to 9 in the West.

For more information, visit www.nahb.org.

POSTED BY: Sandy Thornton AT 03:08 pm | Permalink | 0 Comments | E-mail this

Wednesday, 13 May 2009

How the Stimulus Plan May Affect Your Mortgage

RISMEDIA, February 26, 2009-Now that President Barack Obama’s $787 Billion Economic Stimulus Bill has been signed into law and will take effect on March 4, many American homeowners are anxiously wondering how this bill may affect the housing market. Despite primarily focusing on bolstering the economy by creating jobs and reviving spending, the bill includes steps to revitalize this critically important segment of the American economy. But what impact will the stimulus package directly have on your mortgage?

President Obama’s plan, named the American Recovery and Reinvestment Act, is designed to address two groups of homeowners: those who are current on payments but have high interest rates and not enough equity to qualify for refinance, and those who are at risk of losing their homes. The plan also intends to provide $200 billion in additional financial backing to Fannie Mae and Freddie Mac to increase money available for home lending.

These steps will directly help homeowners and new home buyers seeking a new mortgage, says Michael Isaacs, president and CEO of Residential Finance Corporation (www.residentialfinance.com), a nationwide mortgage lender specializing in FHA refinances. “The stimulus package aims to make money more readily available for lenders to help those who are currently in need,” says Isaacs. “The American Recovery and Reinvestment Act will directly help those seeking to refinance out of bad mortgages as well as those looking to become homeowners for the first time.”

The American Recovery and Reinvestment Act offers the following provisions:

- FHA Loan Limits - FHA loan amount limits will be raised to $729,750 for homes in high-cost areas. Areas with higher-valued homes will enjoy the many benefits of an FHA loan, such as low rates and easier qualification standards. The bill reinstates 2008 FHA loan limits, with a maximum cap of $729,750. The bill also provides the option, if warranted, to increase loan limits for any “sub-area”, i.e. an area smaller than a county. These limits will expire December 31, 2009.

- Home Ownership Tax Credit - A non-refundable tax credit of up to $8,000 will be available for buyers who purchase a home this year-before December 1, 2009–and who have not bought a house in the previous 3 years. This tax credit amount is based on 10-percent of the home’s purchase price, up to $8,000. To qualify, homeowners must keep their home for at least 3 years.

- Simplified Refinancing - Borrowers with less than a 20-percent equity stake in a traditional loan guaranteed by Fannie Mae or Freddie Mac (commonly referred to as “conforming” loans) may now refinance to up to 95-percent of their home’s market value without purchasing private mortgage insurance, which typically can increase monthly payments by hundreds of dollars.

- Neighborhood Stabilization - $2 billion in additional funding is also made available to create the Neighborhood Stabilization Program (NSP) to address the problems facing whole neighborhoods that are decimated by foreclosures. Funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. States and localities can also use these funds to establish financing methods for purchasing and redeveloping foreclosed properties.

- Reverse Mortgages - Loan limits on Home Equity Conversion Mortgage (HECM) - or “reverse mortgage” loans will rise to $625,500 until the end of 2009. Current limits, which mirror conforming loan limits, will be raised to open up reverse mortgage options for many seniors who may want to rely on home equity as a stable source of income.

- Low Income Housing - States will receive financing for construction and rehabilitation of low-income housing.

- Rural Housing Programs - 100-percent financing will be made available for rural housing loan programs.

- Energy Efficiency Benefits - Tax credits for energy-efficient upgrades will be extended through 2010.

- Foreclosure Protection - $75 billion program will be established to subsidize loan modifications for participating lenders to help many homeowners facing foreclosure.

“Rates are still at historically low levels and this is still a great time to refinance,” says Isaacs. “However, there has been much talk that banks and lenders will make it harder for borrowers to qualify for loans for both new and refinanced mortgages, especially for borrowers with less than perfect credit scores. I urge people contemplating a new mortgage or refinancing an existing mortgage loan to move quickly to lock in their best loan rate and options.”

For more information, visit http://www.residentialfinance.com/.

POSTED BY: Sandy Thornton AT 03:14 pm | Permalink | 0 Comments | E-mail this

Thursday, 30 April 2009

Residential Real Estate Price Declines Slowed in February

RISMEDIA, April 29, 2009-Data through February 2009, released by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, one of the leading measures of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 10 of the 20 metro areas showing record rates of annual decline, and 15 reporting declines in excess of 10% versus February 2008. For the first time in 16 months, however, the annual decline of the 10-City and 20-City composites did not set a new record.

The 10-City and 20-City Composites recorded annual declines of 18.8% and 18.6%, respectively. This is a slight improvement from their returns reported for January, where they fell by 19.4% and 19.0%, respectively.

“While the declines in residential real estate continued into February, we witnessed some deceleration in the rate of decline in some of the markets,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “All 20 metro areas recorded a monthly decline in February, but 16 of the 20 metro areas saw an improvement in their monthly returns compared to January. Nine of the 20 metro areas showed improvement in their annual returns compared to their returns in January. Furthermore, this is the first month since October 2007 where the 10- and 20-City Composites did not post a record annual decline. We will certainly need a few more months of data before we can determine if home prices are finally turning around.”

As of February 2009, average home prices across the United States are at similar levels to where they were in the third quarter of 2003. From the peak in mid 2006, the 10-City Composite is down 31.6% and the 20-City Composite is down 30.7%.

All 20 metro areas reported negative monthly and annual rates of change in average home prices in February. In January’s report, seven metro areas and the 20-City Composite posted record monthly declines. In February, Cleveland was the only metro area having a record monthly decline, returning -5.0%. Cleveland, Charlotte, New York and Washington were the only MSA’s showing larger declines in home prices in February compared to January’s report.

In terms of annual declines, the three worst performing cities continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.2%, Las Vegas declined 31.7% and San Francisco fell 31.0%. Dallas, Denver and Boston faired the best in terms of annual declines, down 4.5%, 5.7% and 7.2%, respectively. Dallas also had the distinction of being the best performer for the month, returning -0.3%.

Looking at the data from peak-thru-February 2009, Dallas has suffered the least, down 11.1% from its peak in June 2007; while Phoenix is down 50.8% from its peak in June of 2006. The rates of decline from the respective peak of each market are evidence of how much each market has given back from the gains earned in the past 10-15 years. All of the 20 metro areas are in double digit declines from their peaks, with ten of the MSA’s posting declines of greater than 30% and seven of those - Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego - in excess of 40%.

For more information, visit http://www.standardandpoors.com.

POSTED BY: Sandy Thornton AT 03:46 pm | Permalink | 0 Comments | E-mail this