ARE WE THERE, YET?
The talk I keep hearing is that while things have spun 180 degrees from a Seller's Market to a Buyer's Market we still don't quite know fr sure if we have reached the bottom...yet.
Currently (and that's all that really matters) sales are on a pace that is 25% lower than last year at this time. And by all accounts last year was the slowest year anyone every remembers seeing.
So if we're not at the bottom, I sure hope we can see it from here!
This has been an extremely challenging time for all of us in the Real Estate Industry. Everyone has been feeling the pain - not just Agents - but also Loan Officers, Title Closers, Home Inspectors, Decorators, Moving Companies, Builders, the list goes on and on.
There have and will continue to be casualties. People are leaving the profession seeking something more stable, and I can't say I blame them. These are scary times.
But those of us who have been in it for the long haul and are determined to stick it out do so because we believe that this market, like all markets, is cyclical. There will be brighter days ahead.
I know a lot of people out there -especially the "Freakonomics" fans - are taking some delight in the current situation. To them, all of us over-payed agents are now getting our "just desserts." The "free ride" we have been enjoying for far to long is over. Time for "Realtors to Face Reality?"
And I can understand these sentiments to a point, only because I remember what the profession looked to me from the outside. But once you live it, and your livelihood depends on it, you really see it an entirely different light. We work solely on commission and if a deal doesn't close -for any reason- we don't get paid. We are all splitting the commissions that are paid with the participating agents and their brokerages and once we get our piece of the pie there are marketing bills to pay, taxes, health insurance, social security, transaction fees, desk fees, and any other business related expenses.
There's not an agent I know who doesn't feel the stress and strain of sweating out deals that we NEED to close from time to time, no matter how big a profile they have, the fancy car they drive (likely lease), and how "successful" they appear- you're always only as good as your last CLOSED deal.
It's definitely not for everyone.
Now I know this might sound like POOR ME and maybe it is a little bit, but I genuinely believe most people have very little idea how our job works. We put our clients first, working evenings, weekends, holidays, late into the night in an effort to provide them with the best possible service.
And sometimes despite our best efforts the deal still doesn't work out, financing falls through, a buyer get cold feet, the market grinds to a halt, a house doesn't pass the inspection...
That's when we pick ourselves out and charge back into the game again, head held high, smile on our faces, stepping back into the void and hoping, visualizing, planning, striving, working for the best.
So the next time you meet some agent at an Open House and they seem a little too friendly or a little too desperate to get you attention or your business, at least now you might know why. And maybe knowing what you know now you'll see just how determined we as Agents are to do our absolute best for you.
Well, I think that is true for most of us anyway.
I'd love to read your comments on this. Please leave them below. Thanks!
Thursday, August 30, 2007
Wednesday, August 29, 2007
Say Goodbye to Pre-Payment Penalties?
This news from NAR (National Association of Realtor's caught my eye today:
To address subprime mortgage woes, House Financial Services Committee Chairman Barney Frank (D-Mass.) is expected to put the finishing touches on legislation upping underwriting standards for all mortgages, prime and subprime. In a main focus, the bill would subject mortgage originators (lenders and brokers) to rules similar to those that apply to depository institutions. The new rules would subject originators to a licensing requirement and prohibit loans to consumers who have no reasonable ability to repay. NAR has been working with Rep. Frank's staff to incorporate its Responsible Lending Principles into the bill, among them a prohibition on prepayment penalties, which critics say can trap borrowers in loans they can't afford.
Separately, NAR will continue to tout FHA reform as a much-needed antidote to the abusive subprime loans that have rocked mortgage markets. The reforms have bipartisan support in the House and the Senate but progress is slowed as lawmakers look at whether a national housing trust fund should be passed as part of the bill. Along with FHA reform, NAR is calling for the federal government to let secondary mortgage market giants Fannie Mae and Freddie Mac temporarily hold more loans in their portfolios than they're currently permitted. Such a move would help calm markets by signalling the companies' commitment to ensuring continued liquidity for lenders' mortgage businesses.
While I am more than a little wary that Government regulation might cripple people chances of getting loans there is no doubt that pre-payment penalties are a bad thing. It puts homeowners in a lose-lose situation way too often.
Here's more of the release:
President Bush Announces Support for FHA Reform
NAR applauded President George W. Bush's statement of support for programs that would give home owners greater flexibility to refinance their loans through the Federal Housing Administration. NAR has been advocating regulatory changes to the FHA program to help families keep their homes in light of the decline of the subprime market and impending interest-rate adjustments. In a press conference last week, President Bush signaled his support for such an effort in “making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes.” At present, FHA programs do not allow home owners to refinance if their mortgage is in jeopardy.
NAR Urges New Regulations to Combat Deceptive Lending
The financial markets are struggling with the results of abusive lending practices in the subprime market, including the collapse of several investment funds and the failure of more than 100 subprime lenders, noted NAR in a letter to the Federal Reserve. NAR urged the Board to adopt regulations that combat unfair, deceptive, and abusive mortgage lending acts and practices. Among its recommendations: NAR asked the Fed to eliminate prepayment penalties for all categories of mortgages or to bar prepayment penalties for subprime mortgages and other mortgages where abuses are found. NAR also urged the Board to require that subprime lenders mandate an escrow reserve for taxes and insurance.
It will be very interesting to see if the Fed acts on these two issues. These would have a far greater impact in terms of helping borrowers than other protectionist measures in my opinion.
To address subprime mortgage woes, House Financial Services Committee Chairman Barney Frank (D-Mass.) is expected to put the finishing touches on legislation upping underwriting standards for all mortgages, prime and subprime. In a main focus, the bill would subject mortgage originators (lenders and brokers) to rules similar to those that apply to depository institutions. The new rules would subject originators to a licensing requirement and prohibit loans to consumers who have no reasonable ability to repay. NAR has been working with Rep. Frank's staff to incorporate its Responsible Lending Principles into the bill, among them a prohibition on prepayment penalties, which critics say can trap borrowers in loans they can't afford.
Separately, NAR will continue to tout FHA reform as a much-needed antidote to the abusive subprime loans that have rocked mortgage markets. The reforms have bipartisan support in the House and the Senate but progress is slowed as lawmakers look at whether a national housing trust fund should be passed as part of the bill. Along with FHA reform, NAR is calling for the federal government to let secondary mortgage market giants Fannie Mae and Freddie Mac temporarily hold more loans in their portfolios than they're currently permitted. Such a move would help calm markets by signalling the companies' commitment to ensuring continued liquidity for lenders' mortgage businesses.
While I am more than a little wary that Government regulation might cripple people chances of getting loans there is no doubt that pre-payment penalties are a bad thing. It puts homeowners in a lose-lose situation way too often.
Here's more of the release:
President Bush Announces Support for FHA Reform
NAR applauded President George W. Bush's statement of support for programs that would give home owners greater flexibility to refinance their loans through the Federal Housing Administration. NAR has been advocating regulatory changes to the FHA program to help families keep their homes in light of the decline of the subprime market and impending interest-rate adjustments. In a press conference last week, President Bush signaled his support for such an effort in “making sure that financial institutions like the FHA have got flexibility to help these folks refinance their homes.” At present, FHA programs do not allow home owners to refinance if their mortgage is in jeopardy.
NAR Urges New Regulations to Combat Deceptive Lending
The financial markets are struggling with the results of abusive lending practices in the subprime market, including the collapse of several investment funds and the failure of more than 100 subprime lenders, noted NAR in a letter to the Federal Reserve. NAR urged the Board to adopt regulations that combat unfair, deceptive, and abusive mortgage lending acts and practices. Among its recommendations: NAR asked the Fed to eliminate prepayment penalties for all categories of mortgages or to bar prepayment penalties for subprime mortgages and other mortgages where abuses are found. NAR also urged the Board to require that subprime lenders mandate an escrow reserve for taxes and insurance.
It will be very interesting to see if the Fed acts on these two issues. These would have a far greater impact in terms of helping borrowers than other protectionist measures in my opinion.
Tuesday, August 28, 2007
Weekly Twin Cities Real Estate Market Activity Report
Here's the latest from MAAR:
In step with national real estate market news, the corrective recalibration period is still underway in the Twin Cities. For the week ending August 18, newly signed purchase agreements (pending sales) were behind the same week in 2006 by 26.8 percent. New listings on the market are also on the decline but not as dramatically as buyer activity. Compared to this time last year, new listings decreased 2.3 percent.
As summer activity slows into the fall school season, it's time to take stock of our industry. While the big decline in buyer activity and slight decline in home prices seen in the last 18 months have caused short-term discomfort, it is essential to recognize that there is positive value in the correction taking place. Lending standards are reforming as financial markets relearn to properly assess risk, home values are softening after several years of unsustainable increases, and we are being reminded that every market requires sound fundamentals to sustain healthy growth.
In sum, the transformative changes our market is experiencing are paving the way for a better future. Through it all, the public's passion for real estate has not waned, and the undeniable financial, emotional and social benefits of homeownership are firmly rooted.
Sunday, August 26, 2007
So You Want to Buy a Foreclosure....
BEWARE THE "BARGAIN" THAT IS FORECLOSURES
I hear from a lot of Buyers who are interested in Foreclosure properties. And why wouldn't they be? In a market that is already on the ropes, the Foreclosures seem like they would be the lowest hanging fruit. Juicy delicious and irresistible?
Unfortunately the reality is not always so appetizing.
For one, many times Foreclosure properties are in very rough shape, they haven't been occupied for months and sometimes they have had the heat and electricity turned off.
Who pays to get the lights turned back on? The Buyers.
Because appliances are considered personal property, Foreclosured properties often have NONE.
Who buys the new Stove, Fridge, Washer, Dryer, Microwave? The Buyer.
In Minneapolis there is a time of sale inspection (The Truth in Housing Inspection) and often time in Foreclosed properties there are a number of "R & R's" - Required Repairs that must be taken care of an reinspected.
Who does this - and pays for it? The Buyer.
Because most Lenders are awash in a sea of Foreclosures they are often unable to respond to the offers than Buyer's submit. Even if they are full price.
Also, most lenders like to play by their own rules. They like to make sure all offers include NON-REFUNDABLE Earnest Money (often 1% of the sales price and typically more). So if the Buyer loses his job and can't get financing or decides after the Inspection that the property is in need of too many costly repairs - rather than getting their Earnest Money back like in a normal sale - they lose it.
It's important that you work closely with your agent to identify properties that might be more rouble than they are worth. And Buyer's need to realize that just because a property is in foreclosure or a short sale is possible - that usually doesn't mean the Bank will unload the property for a low ball offer.
While it's true that you can get some good deals by seeking out Foreclosures you need to be realistic and make sure you can be patient while waiting for a response. You'll want to proceed with caution. And remember - foreclosures aren't the only good deal in town. There are a lot of other properties available at just as good a price for a lot less hassle.
I hear from a lot of Buyers who are interested in Foreclosure properties. And why wouldn't they be? In a market that is already on the ropes, the Foreclosures seem like they would be the lowest hanging fruit. Juicy delicious and irresistible?
Unfortunately the reality is not always so appetizing.
For one, many times Foreclosure properties are in very rough shape, they haven't been occupied for months and sometimes they have had the heat and electricity turned off.
Who pays to get the lights turned back on? The Buyers.
Because appliances are considered personal property, Foreclosured properties often have NONE.
Who buys the new Stove, Fridge, Washer, Dryer, Microwave? The Buyer.
In Minneapolis there is a time of sale inspection (The Truth in Housing Inspection) and often time in Foreclosed properties there are a number of "R & R's" - Required Repairs that must be taken care of an reinspected.
Who does this - and pays for it? The Buyer.
Because most Lenders are awash in a sea of Foreclosures they are often unable to respond to the offers than Buyer's submit. Even if they are full price.
Also, most lenders like to play by their own rules. They like to make sure all offers include NON-REFUNDABLE Earnest Money (often 1% of the sales price and typically more). So if the Buyer loses his job and can't get financing or decides after the Inspection that the property is in need of too many costly repairs - rather than getting their Earnest Money back like in a normal sale - they lose it.
It's important that you work closely with your agent to identify properties that might be more rouble than they are worth. And Buyer's need to realize that just because a property is in foreclosure or a short sale is possible - that usually doesn't mean the Bank will unload the property for a low ball offer.
While it's true that you can get some good deals by seeking out Foreclosures you need to be realistic and make sure you can be patient while waiting for a response. You'll want to proceed with caution. And remember - foreclosures aren't the only good deal in town. There are a lot of other properties available at just as good a price for a lot less hassle.
Friday, August 24, 2007
The Subprime Shakeout Continues...
Big Players Appear on a Bad List
The Wall Street Journal Online recently published a very comprehensive list of Sub-prime Lenders that have been shut down and/or had to stop many of their lending programs.
The big names in Minnesota are Countywide, SouthStar, Wells Fargo, First Horizon, Summit, Option One, Millennium, H&R Block mortgage, Ameriquest, Maribella, New Century, Fremont, and First Franklin.
Click HERE to see the complete list.
If you currently have a sub-prime deal going with any of these...BE CAREFUL!
The Wall Street Journal Online recently published a very comprehensive list of Sub-prime Lenders that have been shut down and/or had to stop many of their lending programs.
The big names in Minnesota are Countywide, SouthStar, Wells Fargo, First Horizon, Summit, Option One, Millennium, H&R Block mortgage, Ameriquest, Maribella, New Century, Fremont, and First Franklin.
Click HERE to see the complete list.
If you currently have a sub-prime deal going with any of these...BE CAREFUL!
Thursday, August 23, 2007
Rates Drop: Buyers to Bust a Move?
Mitch Yost needs to get back in the game. (Pictured are Mitch & Sissy Yost.)Mortgage Rates Drop to Lowest Point Since May
Freddie Mac reported today that 30-year, fixed-rate mortgages averaged 6.52 percent. That was down from 6.62 percent last week and was the lowest rate since the week ending May 31, when rates stood at 6.42 percent.
This is great news for anyone trying to get a loan in the current belt-tightening environment. Hopefully this will get some of the Buyers off of the sidelines and into the game and start reducing some of the back log of inventory.
Could this be the makings of a legit Spring Market this year?
Stay tuned...
Wednesday, August 22, 2007
Most People Move Every 6 Years
How Often Do You Move?
According to a recent NAR Survey most people move every six years. In my experience this is pretty accurate but it will be interesting to see how this changes as the Gen X, Y, and Zer's start getting more and more active in the housing market. In an era of instant gratification whether on the Web or TiVo I think this time will become even shorter. People like to be a part of the "next big thing" and this seems to be a different set of values than the pre- and post WWII generations who valued "settling down."
Of course, the next generations make look to rent rather than buy for the same reasons. One thing is clear, the days of looking at your home like you would a stock or other similar investment are on the way out.
NAR President Pat Combs said recently:
“While local conditions vary greatly, a typical owner who bought six years ago is seeing a 45 percent increase in the value of their home. Even so, it isn’t valid to directly compare homeownership with stocks. Although a home is normally a long-term appreciating asset, it is primarily shelter – most owners sell when their needs change, not when the market turns.”
I think those of us who work as Realtors really need to pay heed to these words. We are here not to help people "make a killing in the market" as much as we are here to help people with their changing needs. Service is our primary commodity.
Don't get me wrong, I love to see people make a pile of money when they sell. Likewise, I love to negotiate the best possible deal for my Buyers. Those are both primary aspects of my job. But I am not a stock broker. I am in the service industry.
I am here to help...when you need me!
According to a recent NAR Survey most people move every six years. In my experience this is pretty accurate but it will be interesting to see how this changes as the Gen X, Y, and Zer's start getting more and more active in the housing market. In an era of instant gratification whether on the Web or TiVo I think this time will become even shorter. People like to be a part of the "next big thing" and this seems to be a different set of values than the pre- and post WWII generations who valued "settling down."
Of course, the next generations make look to rent rather than buy for the same reasons. One thing is clear, the days of looking at your home like you would a stock or other similar investment are on the way out.
NAR President Pat Combs said recently:
“While local conditions vary greatly, a typical owner who bought six years ago is seeing a 45 percent increase in the value of their home. Even so, it isn’t valid to directly compare homeownership with stocks. Although a home is normally a long-term appreciating asset, it is primarily shelter – most owners sell when their needs change, not when the market turns.”
I think those of us who work as Realtors really need to pay heed to these words. We are here not to help people "make a killing in the market" as much as we are here to help people with their changing needs. Service is our primary commodity.
Don't get me wrong, I love to see people make a pile of money when they sell. Likewise, I love to negotiate the best possible deal for my Buyers. Those are both primary aspects of my job. But I am not a stock broker. I am in the service industry.
I am here to help...when you need me!
Tuesday, August 21, 2007
2nd Quarter Market & Economic Report
LOTS OF NUMBER CRUNCHY GOODNESS
Today the RMLS Released some pretty interesting stats about the current -s l o w - market.
Here's a quick breakdown for Hennepin County:
JOBS
In the 2nd Quarter 6,405 New Jobs were added. This is part of a very positive overall trend in a reduction in the average unemployment figures whic dropped from 3..9% to 3.8%.
Average Price
First Quarter: $301,300
Second Quarter: $296,300
Third Quarter Forecast: Rising
So some obvious adjustment is taking place here.
Number of Homes on Market
First Quarter: 13,321
Second Quarter: 16,957
Third Quarter Forecast: Flat
While Inventories continued to rise they did so at a much slower rate than previously. This will help to level the playing field between Buyers & Sellers.
Number of Homes Sold
First Quarter: 2,964
Second Quarter: 4,378
Third Quarter Forecast: Declining
Welcome numbers but not surprising considering the seasonal adjustments we all make.
Average Number of Days on Market
First Quarter: 79
Second Quarter: 64
Third Quarter Forecast: Rising
What is clear here is that Sellers need to remain patient when selling their homes.
One more bit of positive news...on average homes in the Twin Cities are selling for 96-98% of their original list price. So while it is a Buyer's Market, Sellers who are priced at where the market value is are still getting what they are asking.
My mantra these days is: "Price it Right, Sell it Fast."
Today the RMLS Released some pretty interesting stats about the current -s l o w - market.
Here's a quick breakdown for Hennepin County:
JOBS
In the 2nd Quarter 6,405 New Jobs were added. This is part of a very positive overall trend in a reduction in the average unemployment figures whic dropped from 3..9% to 3.8%.
Average Price
First Quarter: $301,300
Second Quarter: $296,300
Third Quarter Forecast: Rising
So some obvious adjustment is taking place here.
Number of Homes on Market
First Quarter: 13,321
Second Quarter: 16,957
Third Quarter Forecast: Flat
While Inventories continued to rise they did so at a much slower rate than previously. This will help to level the playing field between Buyers & Sellers.
Number of Homes Sold
First Quarter: 2,964
Second Quarter: 4,378
Third Quarter Forecast: Declining
Welcome numbers but not surprising considering the seasonal adjustments we all make.
Average Number of Days on Market
First Quarter: 79
Second Quarter: 64
Third Quarter Forecast: Rising
What is clear here is that Sellers need to remain patient when selling their homes.
One more bit of positive news...on average homes in the Twin Cities are selling for 96-98% of their original list price. So while it is a Buyer's Market, Sellers who are priced at where the market value is are still getting what they are asking.
My mantra these days is: "Price it Right, Sell it Fast."
Monday, August 20, 2007
Rain Can't Dampen Spirit of Peace
Japanese Lantern Lighting Festival
On Sunday we attended the Japanese Lantern Lighting Festival at the Como Zoo Conservatory.Despite the heavy rain, we were delighted to attend. There was a decent sized crowd there to see the various performer and demonstrations. Everything from Drum Circles, Dancers, Martial Arts Demos, and lots and lots of tasty food. The highlight was the Lantern Lighting at dusk. It was like watching the mellowest fireworks of all time. Awe-inspiring in a super low-key way.
We definitely hope to make this an annual event!
Friday, August 17, 2007
As a Buyer Do I REALLY NEED a Realtor?
Short answer: Yes.
Here's the long answer:
There are plenty of houses on the market today. You're smart enough to know what you want, so why bother with a Realtor?
For starters, purchasing a home is one of the largest financial decisions you'll ever make. Even the most savvy person can appreciate the value of professional assistance when making such a major purchase. So, what can a Realtor do for you that can make their service so valuable?
Resources: Nothing beats the value of knowing what and where to find just what you need. That applies to locating the perfect home as well as getting the small details taken care of, including financing and inspections. Not every available property has a sign in front or an ad in the paper. Your Realtor knows where these hidden treasures are.
Negotiation: Once you've located the 'right home' negotiating the price is just the beginning. There are a myriad of other items that might come into play. Have you factored in the cost of utilities? Are the appliances included? Will the seller be willing to fix items that come up on the inspection list? Are their moving dates in line with yours?
A Keen Eye: Your Realtor can look past the pretty decor and be able to see hidden potential as well as possible challenges. There are some things about a home's amenities you might be able to change, but altering the floor plan can be expensive. Your Realtor will be able to give you valuable insight on how this home works for you.
A Cool Head: Above all, it's important to remain calm and objective in a real estate transaction. This is a financial decision but there are so many emotions that can arise. Owners may have mixed feelings about leaving their beloved home. After all, they have much invested here. You, on the other hand, may be anxious and a little frightened. All that is normal. Your Realtor will be there through the entire process from the initial search to the final closing date and beyond.
It's your Realtor's job to guide the process along in a professional manner, taking care of the many details, providing the service you need and doing a little bit of hand holding. Before you decide to go it alone, give all this serious consideration.
BEST OF ALL - OUR SERVICES ARE FREE FOR BUYERS!
Because we get paid out of the Commission that the Seller has agreed to pay the List Agent, as a Buyer you don't have to pay anything out of pocket for our services...and that is really what being a Realtor is all about imho - providing people the best possible service.
Here's the long answer:
There are plenty of houses on the market today. You're smart enough to know what you want, so why bother with a Realtor?
For starters, purchasing a home is one of the largest financial decisions you'll ever make. Even the most savvy person can appreciate the value of professional assistance when making such a major purchase. So, what can a Realtor do for you that can make their service so valuable?
Resources: Nothing beats the value of knowing what and where to find just what you need. That applies to locating the perfect home as well as getting the small details taken care of, including financing and inspections. Not every available property has a sign in front or an ad in the paper. Your Realtor knows where these hidden treasures are.
Negotiation: Once you've located the 'right home' negotiating the price is just the beginning. There are a myriad of other items that might come into play. Have you factored in the cost of utilities? Are the appliances included? Will the seller be willing to fix items that come up on the inspection list? Are their moving dates in line with yours?
A Keen Eye: Your Realtor can look past the pretty decor and be able to see hidden potential as well as possible challenges. There are some things about a home's amenities you might be able to change, but altering the floor plan can be expensive. Your Realtor will be able to give you valuable insight on how this home works for you.
A Cool Head: Above all, it's important to remain calm and objective in a real estate transaction. This is a financial decision but there are so many emotions that can arise. Owners may have mixed feelings about leaving their beloved home. After all, they have much invested here. You, on the other hand, may be anxious and a little frightened. All that is normal. Your Realtor will be there through the entire process from the initial search to the final closing date and beyond.
It's your Realtor's job to guide the process along in a professional manner, taking care of the many details, providing the service you need and doing a little bit of hand holding. Before you decide to go it alone, give all this serious consideration.
BEST OF ALL - OUR SERVICES ARE FREE FOR BUYERS!
Because we get paid out of the Commission that the Seller has agreed to pay the List Agent, as a Buyer you don't have to pay anything out of pocket for our services...and that is really what being a Realtor is all about imho - providing people the best possible service.
Monday, August 13, 2007
WOW! Tunes of Yummy Real Estate Market Stats Yummy Goodness!
In addition to this week's Market Update from MAAR I want to share with you this report.(Click on the following link for some cool graphs and such!)
JULY 2007 MINNEAPOLIS MARKET UPDATE
Here's some of the Highlights:
Minneapolis JULY YEAR TO DATE
2006 2007 Change 2006 2007 Change
New Listings 1,210 1,108 -8.4% 8,560 8,208 -4.1%
Closed Sales 511 461 -9.8% 3,427 2,636 -23.1%
Ave. Sales Price $272,250 $267,178 -1.9% $272,778 $261,905 -4.0%
Percent of Original
List Price Received
at Sale 96.7% 95.1% -1.7% 97.8% 94.8% -3.0%
Average Days on
Market Until Sale NA 124 NA NA 127 NA
Total Current
Inventory NA 3,738 NA -- -- --
Single-Family
(Exclude Condos) NA 2,759 NA -- -- --
T. J. 's Take:
The GOOD
New Listings are continuing to tail off. While there are less NEW options for Buyers they still have about a 9 month supply of homes to choose from. For Sellers they have less new competition so this is good for both.
The BAD
127 Days is a long time to have your house on the market. While we don't have comparable stats from last year, we can clearly see that this is something that would test the patience of almost anyone. This really indicates 2 things, in my opinion. First, quite a few Buyers are continuing to sit on the sidelines, despite the great interest rates and the plethora of choices and, second, some of the List Prices might still be too high.
OVERALL
I think you can look at this as being rather positive. Statistically July can be the SLOWEST month of the year and perhaps this is THE bottom that we can begin to grow from. Only time will tell, and as Merv Griffin once said, "Stay tuned."
As promised here's the Weekly Real Estate Market Update from MAAR:
Weekly Market Activity Report
Activity in the regional housing market continues its downward trend as buyers and sellers respond to a changing market landscape. For the week ending August 4, newly signed purchase agreements (pending sales) posted 802 residential unit sales, down 15.4 percent from the same week in 2006. Sellers and builders are slowing their activity as well, as new listings were 8.0 percent behind for the same time period comparison. In the last 19 weeks, this is the 17th week of year-over-year declines in listings.
This week's edition of the MAAR Weekly Market Activity Report features updated figures for Percent of Original List Price Received at Sale, our Housing Affordability Index (HAI) and our Housing Supply Outlook (HSO). The average percent received at sale for July was 95.3 percent, down slightly from last month. The HAI held steady at 127 due to flat interest rates and home prices. And our HSO grew to a 9.7 months supply of homes on the market.
To see how the Twin Cities housing market performed in July, see our July 2007 Monthly Indicators. This report features a new format designed to be consumer friendly and easy to understand.
Friday, August 10, 2007
What Buyers Want
Results of Recent National Association of Realtor's Survey
The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR's last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What's more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.
NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.
Other priorities for today’s home buyers include:
Air conditioning: three out of every four respondents surveyed ranked this as “very important.”
Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.
Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.
Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.
Energy efficiency: especially among new-home buyers — 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.
Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.
West want oversize garages (66 percent), followed by central air conditioning at 59 percent.
Fixing up the Nest
According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom.
New-home owners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.
“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,” says Paul Bishop, NAR manager of real estate research. “Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.”
Indeed, more than half of home buyers said they believe their home has high investment potential, and another four out of 10 say it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.
Generational Differences
Age was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent).
On the other hand, most buyers between the ages of 25-34 wanted a backyard or play area (60 percent).
More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.
Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.
Home Growth
Overall, the survey also revealed that while homes are getting bigger, the number of bedrooms is shrinking. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during that same period.
The median age of the home reported in the current survey is 12 years, down from 15 years in 2004.
Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says.
The number of buyers expressing a desire for oversized garages grew 16 percentage points since NAR's last survey of buyer preferences in 2004. About 57 percent of home buyers surveyed now say they want an oversized garage. What's more, among buyers who purchased homes without big garages, 56 percent said they would have paid more for an oversized garage, compared to only 6 percent in the 2004 survey.
NAR's latest home buyer preference survey, which reports responses from buyers who purchased homes in 2006, asks buyers about the importance of 75 home features and room types.
Other priorities for today’s home buyers include:
Air conditioning: three out of every four respondents surveyed ranked this as “very important.”
Master bedroom walk-in closet: 53 percent of buyers rated this as an important feature in a home.
Hardwood floors and granite countertops: each gained 7 percentage points in popularity since the 2004 survey; 28 percent and 23 percent, respectively, of buyers labeled these home features as very important.
Cable/satellite TV-ready: 46 percent, a growth of 6 percentage points from the 2004 survey, said this was important.
Energy efficiency: especially among new-home buyers — 65 percent of new-home buyers said energy efficiency home features are very important compared to 39 percent for buyers of existing homes.
Buyers also said they're willing to pay more for these extras. For example, 65 percent of buyers said they would be willing to pay a median $1,880 extra for a home with central air conditioning. One out of four buyers also was willing to pay a median of $4,760 more for waterfront property.
West want oversize garages (66 percent), followed by central air conditioning at 59 percent.
Fixing up the Nest
According to the survey, nearly six out of 10 recent home buyers took on remodeling or home improvement projects within three months of their purchase. Close to half of home buyers who remodeled or made improvements updated their kitchen, and nearly half remodeled or improved their bathroom.
New-home owners spent a median of $4,350 on home improvement or remodeling projects undertaken within three months of purchase.
“The fact that a majority of home buyers quickly remodel key areas of their homes ties into the fact that their home is a good, long-term investment,” says Paul Bishop, NAR manager of real estate research. “Regardless of market conditions in the short term, when purchased for the long term, housing is one of the safest investments consumers can make.”
Indeed, more than half of home buyers said they believe their home has high investment potential, and another four out of 10 say it has moderate investment potential. Only 3 percent felt their home’s investment potential was low.
Generational Differences
Age was the biggest differentiation in what buyers were looking for in a home. Buyers 75 years old and older wanted a single-level home (74 percent) that was less than 10 years old (43 percent) with a walk-in closet in the master bedroom (74 percent).
On the other hand, most buyers between the ages of 25-34 wanted a backyard or play area (60 percent).
More than half of buyers over 65 wanted a separate shower enclosure in the master bathroom, compared to only one-fourth of buyers ages 25-34.
Also, older buyers placed a higher priority on energy efficiency home features than did younger buyers — 63 percent of buyers 75 and older said it was very important, but only 32 percent of buyers who were 18-24 agreed.
Home Growth
Overall, the survey also revealed that while homes are getting bigger, the number of bedrooms is shrinking. From 2004 to 2006, the size of the typical home purchased increased by about 100 square feet to 1,840 square feet, while the median number of bedrooms dropped from four to three during that same period.
The median age of the home reported in the current survey is 12 years, down from 15 years in 2004.
Real estate practitioners see hundreds, if not thousands, of houses with their buyer clients every year and know exactly what buyers are looking for in a home, says NAR President Pat V. Combs. “This insight is one more way REALTORS® add value to the real estate transaction,” Combs says.
Thursday, August 09, 2007
Sales Go Down But Prices Hold Steady
The National Association of Realtors Revised Forecast
U.S. home sales will hit a five-year low this year as wary lenders cut back on loans for many borrowers, he National Association of Realtors said Wednesday.
U.S. home sales will hit a five-year low this year as wary lenders cut back on loans for many borrowers, he National Association of Realtors said Wednesday.
The National Association of Realtors' revised forecast calls for existing home sales of 6.04 million in 2007, down 6.8 percent from last year. The forecast was 1 percent lower, or 70,000 fewer homes, than July’s prediction of 6.11 million.
This year’s sales would be the lowest since 2002, when sales hit 5.63 million. Last year’s sales were 6.48 million.
Next year, the trade group expects sales to climb to 6.38 million, up slightly from the forecast it gave in July of 6.37 million.The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well.
“With fewer affordable loans available, that will cut back on some of the homebuyers who wanted to enter the market,” Lawrence Yun, the trade group’s senior economist, said in an interview. However, Yun projected that demand would rebound next year.
As of May, more than 16 percent of mortgageissued to subprime borrowers were behind on their payments by 60 days or more — nearly double last year’s levels, according to research firm First American LoanPerformance.
As delinquencies rise, lenders are reducing the availability of credit to those borrowers.
While sales fall, some elements of supply are expected to be down as well. More than 1.4 million housing starts, including multifamily units, are forecast this year and in 2008, but that is down from 1.8 million last year.
Median nationwide existing-home prices are expected to fall by 1.2 percent to a median of $219,300 this year, before climbing back next year to $223,600. Median new home prices are projected to fall 2.3 percent to $240,800 this year and then rise to $246,300 in 2008.
Wednesday, August 08, 2007
Is the Window Closing for First Time Buyers?
Many Lenders Eliminating No Money Down Mortgage Products
In the wake of a meltdown in the subprime mortgage market, many lenders have stopped offering no money down mortgage products. Now, more than ever, is the time for Congress to act by passing FHA reform legislation, which would provide consumers with a safe, and valuable no money down mortgage option. Federally backed home loans by the FHA have decreased consistently in recent years due to stringent down payment requirements and low loan limits. As a result, many consumers have been pushed into the subprime market, with attractive teaser rates and no or negative money down financing options. As housing prices have stagnated, and interest rates on these exotic mortgage products have readjusted, many of these loans have resulted in foreclosure, which harms the consumer, the lender, and the economy in general. Just last week American Home Mortgage which had over 7,000 employees joined New Century Financial, by declaring bankruptcy and closing it's doors as a result of offering too many loans that resulted in delinquency
Read NAR's position on subprime loans, and FHA modernization.
In the wake of a meltdown in the subprime mortgage market, many lenders have stopped offering no money down mortgage products. Now, more than ever, is the time for Congress to act by passing FHA reform legislation, which would provide consumers with a safe, and valuable no money down mortgage option. Federally backed home loans by the FHA have decreased consistently in recent years due to stringent down payment requirements and low loan limits. As a result, many consumers have been pushed into the subprime market, with attractive teaser rates and no or negative money down financing options. As housing prices have stagnated, and interest rates on these exotic mortgage products have readjusted, many of these loans have resulted in foreclosure, which harms the consumer, the lender, and the economy in general. Just last week American Home Mortgage which had over 7,000 employees joined New Century Financial, by declaring bankruptcy and closing it's doors as a result of offering too many loans that resulted in delinquency
Read NAR's position on subprime loans, and FHA modernization.
Tuesday, August 07, 2007
Weekly Twin Cities Real Estate Market Activity Report
Here's the latests from the Minneapolis Area Association of Realtors
As summer enters its final full month, both seller and buyer activity are beginning to gradually decline in the Twin Cities housing market. For the week ending July 28, there were just over 2,100 new listings on the market, down a few hundred units from the weekly velocity levels seen earlier this summer. Similarly, newly signed purchase agreements (pending sales) are down from the higher absorption levels seen in May and June. Compared to this time in 2006, new listings were behind by 1.9 percent and pending sales were behind by 22.0 percent.
This week's edition of the MAAR Weekly Market Activity Report features updated August 2007 figures for Supply-Demand Ratio (SDR) and Mortgage Rates. The SDR posted a figure of 8.57, which means that there are 8.57 houses on the market for every buyer. Mortgage rates held steady from last month at 6.7 percent. While rates have risen in recent months, they remain favorable relative to historical conditions.
Friday, August 03, 2007
Mortgages rates drop, good news for homebuyers
Freddie Mac to the Rescue!
Mortgage rates around the country edged down this week, with rates on 30-year home loans sinking to their lowest point in a month, good news for prospective buyers.
Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.68 percent. That was down slightly from 6.69 percent last week and was the lowest since early July, when rates stood at 6.63 percent.
The moderation is welcome for people in the market to buy a home. In mid-June, rates on 30-year mortgages had climbed to 6.74 percent, an 11-month high.
Rates on mortgages are ebbing as recent stock market turbulence has prompted investors to plow money into bonds, driving down rates on bonds. That, in turn, has pushed down rates on mortgages.
"Market investors seeking safety from the subprime fallout bought Treasury securities, pushing bond yields down and allowing mortgage rates to drift a bit lower," explained Frank Nothaft, Freddie Mac's chief economist.
Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, also moved lower this week. They dropped to 6.32 percent from 6.37 percent last week.
For five-year adjustable-rate mortgages, rates dipped to 6.29 percent this week. That was down a bit from 6.30 percent last week. Rates on one-year adjustable-rate mortgages sank to 5.59 percent this week, compared with 5.69 percent last week.
The mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a nationwide average fee of 0.3 point. Five-year and one-year ARMs each carried an average fee of 0.5 point.
A year ago, rates on 30-year mortgages stood at 6.63 percent, 15-year mortgages were at 6.27 percent, five-year adjustable-rate mortgages also averaged 6.27 percent and one-year ARMs were at 5.69 percent.
After a five-year boom, the housing market fell into a slump last year. Sales turned weak as did home prices. The slump is expected to drag on probably through the rest of this year.
Worries about the sour housing market along with fears that problems with higher-risk subprime mortgages will spread, caused stocks to crater last week. The carnage left the Dow Jones industrials down more than 585 points, its worst week in five years. Stocks have gyrated since then, reflecting lingering anxiety among investors.
Thursday, August 02, 2007
Be Safe & Hug Your Kids
Perspective
The KG Trade? The reeling Real Estate Market? The Airport Noise Lawsuit?
It all seems so trivial in context with yesterday's unexpected 35W Bridge tragedy.
The days and weeks to come will certainly bring more grief to many people.
Take a moment to hug your kids, or your spouse, or your dog, or just walk outside and remember how lucky you are, we all are, just to be alive.
That's what I did today and it really brought the important things in life, into greater focus.
The KG Trade? The reeling Real Estate Market? The Airport Noise Lawsuit?
It all seems so trivial in context with yesterday's unexpected 35W Bridge tragedy.
The days and weeks to come will certainly bring more grief to many people.
Take a moment to hug your kids, or your spouse, or your dog, or just walk outside and remember how lucky you are, we all are, just to be alive.
That's what I did today and it really brought the important things in life, into greater focus.
Wednesday, August 01, 2007
Pending home sales index rises 5 percent
Apparently it's not ALL bad news in the Real Estate Market
Today some news that is actually quite positive!
According to head Number Cruncher or the National Association of Realtors Lawrence Yun, pending sales of existing homes rose by 5 percent in June compared with the previous month, a surprisingly positive sign for our beleaguered housing market.
Today some news that is actually quite positive!
According to head Number Cruncher or the National Association of Realtors Lawrence Yun, pending sales of existing homes rose by 5 percent in June compared with the previous month, a surprisingly positive sign for our beleaguered housing market.
NAR also said it was the largest monthly gain in more than three years and that increases in pending sales were reported across the country. However Yun, wasn't overly optimistic, and the pending sales index remained 8.6 percent below year-ago levels.
"It is too early to say if home sales have already passed bottom," Yun said in a statement.
Since there typically is a period of one to two months between when buyers and sellers sign a sales contract and when the property changes hands, pending home sales in June are likely to be completed between July and August. This appears to me that the typical Spring Market did indeed start - in Summer!
The Index is considered an indicator of how sales will perform in the coming weeks because it measures home purchases in which a sales contract has been signed, but the deal has not yet been closed. Once the deals close then we will know how the prices have been affected by the changes to the market.
Keep in mind the EVERY market goes in cycles and rarely do they stay flat. Eventually what goes down must go UP!
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