Category — National Housing Market

With the amount of inventory in the real estate market at record highs, there are many homeowners that want to sell their houses for various reasons.  Mike Larson, an expert in the real estate industry has some insight on selling real estate since he recently placed his home on the market.  Here are three key points that he feels everyone should analyze before selling their home. 

1. Closely study local conditions before choosing a listing price and marketing strategy.  The amount of inventory in Peoria, Illinois dosent really matter if your selling a home in South Florida.

• In Mike Larson’s Case, he found that in his local areas he notced that local inventories were falling and that bargain hunters were the results of this as they capitalized on deals that were offered in the area.

1. Make sure you get an agent who knows what he or she is doing — and who is realistic about local market conditions. Even today, there are plenty of pie-in-the-sky agents who won’t be realistic with their sellers. They’re perfectly content to leave overpriced properties on the market for months and months, either because they’re incompetent or they’re afraid to offend their sellers.

• Based on actual conditions, not what you hope for.  In Mike’s case, he expressed his wishes upfront and set some expectations for his agent.

1. Forget about sentimentality. You have to look at any home sale as a business transaction. Too many people get wrapped up in their own personal sentiments about their homes, and that just gets in the way of actually selling.

• It is important to be realistic when selling your home.  Mike’s neighbor was not pleased when he priced his house according to market conditions, his response was “tough luck”
• Mike also made another interesting point: “I was able to undercut competitors because I “bought smart” in the first place. I signed the purchase contract in 2003, before the housing market got too nutty. I would have rented if my search began in 2005 when valuations were totally in the stratosphere.”

These are vital considerations to make when you feel that it is the time to sell your home.  It is also important to work closely with a real estate professional who is in tune with the local market.

According to CNN.com, new home sales jumped in March at the fastest single-month rate in 47 years!

It seems buyers are busy making purchases ahead of the tax credit that’s set to expire.

New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 last month, compared to an upwardly revised annual rate of 324,000 in February, the Census Bureau said. The increase ended a four-month streak of declines.

The March sales were the strongest since last July, and the percentage gain was the biggest on a month-over-month basis since a 31% gain in March 1963.  The increase was seen in every region of the U.S.; with the South leading the way with a 43.5% increase.    

Keep an eye out for the Coldwell Banker Buyer Bonus set to start at the beginning of May.

According to MarketWatch.com, resales of U.S. homes and condos rose 6.8% in March to a seasonally adjusted annual rate of 5.35 million. Sales were up 16.1% compared with March 2009.  Existing-home sales rose in all four regions of the country in March.

“The tax credit has done its work,” said Lawrence Yun, chief economist for the National Association of Realtors.

Keep an eye out for a great Buyer Bonus from Coldwell Banker starting in early May!

New Construction

Housing starts have seen an increase in the month of March.  The Wall St. Journal reports that the number of starts has risen 1.6%  in March to 626,000, as reported by the Commerce Department last week. 

This growth is a stronger than many experts expected.  February starts also showed an increase after a loss was predicted.  “The bottom line is that there is an upward trend [and] construction will be moving higher provided that new-home sales improve as well,” said Michelle Meyer, economist at Barclays Capital.

The strength in March came from many multifamily status consumers.  There was a slight decrease in starts of single-family homes. Starts of single-family homes fell 0.9% to a 531,000 rate in March, while starts of multifamily units surged 39.7% to 88,000.  The strength was concentrated in the South; all other regions declined in March.  ”This was a modestly positive report. It is nice that construction is improving.” 

The number of housing starts has risen for 8 months straight.  New construction is also showing an increase across the country.  The number of building permits has risen 7.5% to the highest level since August 2009.  Experts are prediciting an upward swing in new construction.

Experts are saying that now is a great time to buy homebuilder stocks  as a means of diversifying your stock portfolio.  With the recent improvements in the economy, and a boost in the job market, consumers will become more confident to become homeowners. 

Americans are realizing that mortgage rates are low and that there are many deals available in the real estate marketplace.  Warren Buffet thinks that the worst is over with the downturn in the housing market.  In a recent newsletter, Buffet wrote:  ”within a year or so residential housing problems should largely be behind us.” 

Many investors have begun to move into the purchasing of homebuilder stock.  “We now think the homebuilders are beginning to look quite attractive,” says George Putnam of the Turnaround Letter, consistently ranked one of the top investing newsletters by Hulbert Financial Digest.

Realtors all over the country have begun to noticed an increase in the number of pending home sales over the past couple of months.  To many experts, this could signal a bottom, and the start to a rise, in housing market.  Experts also believe that this rise is largely a response to the extended tax credit. 

The Pending Home Sales Index is a number that serves great importance when taking into account the nations overall housing market strenght.  A sale is considered pending when a buyer enters into a contract, but the sale has not closed.  Typically, the sale will take a month or two to close.  This index is based on a sample of the total home sales in the country. The index usually represents around 20 percent of the total home sales.  It is used to demostrate sales activity for any given month.

In February, the index rose 8.2 percent from January to 97.6.  The number remains 17.3 percent above February of last year, which was 83.2.

Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring.  The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”

Video: Pending Home Sales on the Rise

The Wall St. Journal reported this morning that apartment rents rose during the first quarter, ending five straight quarters of declines and signaling the worst may be over for the hard-hit sector.

The prices of single family homes in the US has risen for the eight month in a row.  The S&P Shiller index of 20 metropolitan areas unexpectedly rose by .3% seasonally adjusted matching the December increase. 

“Whether there is housing market stability remains to be seen, without government incentives,” said Pierre Ellis, senior global economist at Decision Economics. “Healing is happening, but it’s happening very slowly.” 

Pricing is also the lowest it has been in quite some time. Now could be the time to buy, with mortages rates at 5% and projected not to increase greatly within the year, itcould be perfect time to make the investment of real estate.

Why is now a smart time to buy?

• I.I.I.P.  Inventory, interest rates, incentives and price.  In most markets around the nation, home inventory has increased giving buyers a greater choice.  At the same time, mortgage rates remain at near historic lows and home prices have decreased the last two years which is the first time that has ever happened since World War II.  Prices dropped about 2% in 2007, 9.3% in 2008 and 12.4% in 2009 according to the National Association of Realtors.  This has made home affordability the best since at least 1973 and maybe ever.  Add in the first-time homebuyer incentive to make it a smart time to buy.
• Consumers also have to gain confidence in housing.  Reading headlines is not a great way to gain information.  Real estate professionals need to educate the local community on such issues as inventory, appreciation and time on market and remind everyone that all real estate is local.
• We have to remember that homes are selling when they are well-prepared for sale and priced right.  The reason is because people buy and sell homes for lifestyle reasons.  Births, marriages, new jobs, job transfers, retirement and others are all drivers.  Following the advice of a full-service professional, who knows market conditions and a home’s competition, is critical in readying a home for sale.
• What has happened is that sellers have become much more realistic in setting the price and continue to understand that a home is home, not a winning lottery ticket.
• We also have to see a reduction in foreclosed homes and short sales on the market.  These are a drag on prices and inventory. 

•  
  • We need to have Main Street American homeowners buying from Main Street American homeowners.  While getting first-time homebuyers back into the market is critical and the extension of the tax credit helps, the nation’s economy also needs the move up buyer back in the market.  That is why the tax credit expansion is so important.

When will the real estate market turn?

•  
  • I don’t have a crystal ball, but we have some positives.  The first is that the market downturn has brought home affordability levels to the best in many, many years – at least to levels not seen since 1973 and maybe ever.  The unsustainable increases we had in 1995-2005 have leveled off.  Sellers have become much more reasonable in setting prices and as consumers begin to gain more confidence that prices have leveled off they will return to the market.  Inventory drops are the biggest indicator of a turning market.  And I’m encouraged that inventory has dipped to a 7.2 month supply, down 11.1% from a year ago, the lowest level since March 2006.   Total inventory is 3.29 million homes. 

•  
  • No one has a crystal ball to predict the future, but it is fair to look at the demographics driving the real estate market.  Real estate is positioned well for the future.

                                                              i.      Baby boomers are in their prime real estate buying years and are 78 million strong.

                                                            ii.      The Pew Research Center reports minority homeownership levels still have room for improvement.  The gaps between white and minority households remain significant with homeownership rates for Asians (59.1 percent), African-Americans (47.5 percent) and Latinos (48.9 percent) well below the 74.9 percent among whites.

                                                          iii.      Immigrants are moving to the U.S. by the tune of 1.1-1.5 million a year depending on the source.  These are legal immigrants who add value to our country and society.  They need housing.

                                                          iv.      Echo boomers will likely have similar economic impact in coming years that their baby boomers parents have had through their lives.  Echo boomers are born between 1977 and 1994 and are 73 million strong and according to the Joint Center for Housing Studies at Harvard University, 4 million turn 21 each year. 

                                                            v.      Household formation is also an important statistic.  The Joint Center for Housing Studies at Harvard University projects at least 1.25 million households will be created annually from 2010-2020 and will be led by the echo boomers.

                                                          vi.      People move for lifestyle.  There have been 4 million marriages and a record more than 8 million babies born in the last two years indicating there is demand for housing.  Many of these growing families have not bought a home and are either renting or living with family as they save for a down payment.  We know there is pent up demand.  Look at coldwellbanker.com numbers where we have had 30 million visitors each of the last two years.