Doug's News on Real Estate
This area of my website is dedicated to current economic news important to the real estate market as well as my continuing observation of the market conditions. Some articles have been taken from various real estate news sources.
The Current State of The Residential Real Estate Market
There is some evidence that the real estate market, on a national level is showing signs of stabelizing. Many experts are now saying that the real estate market may have hit it's bottom!!!
The following was taken from recent articles providing updated information for the current real estate market:
Related Story:
Home prices rise in some metros, buyers more active in other areas, says NAR
ORLANDO, Fla., Nov. 18, 2008 – Sales of existing single-family homes in Florida rose 5 percent in third quarter 2008 compared to the same period last year, according to the latest housing statistics from the Florida Association of Realtors® (FAR). A total of 33,203 existing homes sold statewide in 3Q 2008; during the same period last year, a total of 31,558 existing homes sold statewide.
“Coming on the heels of positive sales activity in September, Florida’s existing home sales are once again above year-ago levels in the third quarter,” says 2008 FAR President Chuck Bonfiglio. “Despite lending restrictions and the difficulties of finding affordable credit, we’re seeing buyers take advantage of homeownership opportunities in the current market – buyers who want to make a long-term investment in their future. And, more than ever, people are turning to Florida Realtors to find the professional expertise, knowledge and friendly guidance they need to make the complex process of buying or selling their home go more easily and smoothly.”
The statewide existing-home median sales price was $185,400 in the third quarter; a year ago, it was $233,200 for a decrease of 20 percent. In 2003, the third-quarter statewide median sales price was $163,700, which reflects an increase of about 13.3 percent over the five-year period. The median is a typical market price where half the homes sold for more, half for less.
Twelve of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the third quarter compared to the same three-month-period a year ago, while seven MSAs also showed gains in condo sales. A number of local markets have reported increased sales activity over the past few months, according to FAR.
Florida Realtors continued to report positive signs for the state’s housing sector in the third quarter, including an increase in pending home sales (based on contracts signed but not closed) and a slower rate of expansion of inventory levels in some areas.
To gain insight into current trends in Florida’s real estate industry, the University of Florida’s Bergstrom Center for Real Estate Studies conducts a quarterly survey of industry executives, market research economists, real estate scholars and other experts. According to the third quarter 2008 survey, the investment outlook for various types of properties remains steady. “People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” said Dr. Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”
Over the long term, Florida stands to benefit from the migration of new residents, particularly as baby boomers age, Archer said, adding that the Sunshine State’s mild climate and outdoor amenities continue to make it an attractive retirement destination.
In the year-to-year quarterly comparison for condo sales, 9,472 units sold statewide for the quarter compared to 9,680 in 3Q 2007 for a 2 percent decrease. The statewide existing-condo median sales price was $160,000 for the three-month period; in 3Q 2007, it was $196,000 for an 18 percent decrease.
Continuing low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 6.32 percent in third quarter 2008; one year earlier, it averaged 6.55 percent.
The latest industry outlook from the National Association of Realtors® (NAR) cautions the housing sector likely faces disruptions from the still-stabilizing credit market. “Inventory remains high, and price declines are pressuring owners,” said NAR Chief Economist Lawrence Yun. “Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory.”
© 2008 FLORIDA ASSOCIATION OF REALTORS
National City Corp Economist Declares Naples Area
Real Estate Market Slightly Undervalued
In an interview with CNBC Wednesday night, Richard Dekaser, a Senior
Vice President and Chief Economist at National City Corp, singled out
Naples as the first ray of sunshine and a possible end to the housing
crisis.
In the interview, Dekaser, the same analyst who three years ago labeled
Naples the most overpriced market in the U.S. has now said
“Not Anymore.” Although prices have dropped through the second quarter,
the overall reduction in prices now leads him to judge the market as “slightly undervalued.” That
means that home prices are actually lower than where they should be.
“Now, while it could become even more undervalued as I suspect it will, one must appreciate the
adjustment that has already occurred.” He said prices could bottom within six months as
foreclosure rates begin to fall. While not wanting to overstate the case, Dekaser said that we
are in a later stage of stabilization.
At the end of the first quarter of 2006, National City judged that with a median home price of
$383,000, prices were considerably higher than they should be. The median home price is the
price at which half of the homes sell for more and half of the homes sell for less.
In August, the median home price – dropped to $238,000 from $375,000 a year ago, with sales
picking up for seven straight months in the Naples area, as reported by the Naples Area Board
of Realtors.
Brett Brown, President-Elect of the Naples Area Board of Realtors said that if you took out the
under-$300,000 market, where most of the foreclosures and short sales were occurring, the
median price would have been up 5 percent in August. Short sales are sales made for less than
the bank is owed to avoid a foreclosure action.
So the outlook for the Naples and other areas of the State is improving.
buying or selling: 7 top tips for ‘07
NORTH PALM BEACH, Fla. – Jan. 2, 2007 – In most parts of the country, the New Year will dawn on a housing market that’s shockingly different from just a year ago. Overzealous speculation, too-lenient lending and aggressive overbuilding have combined to create the type of home-inventory levels and price stagnations that haven’t been felt in the U.S. since the early to mid-1990’s.
In short, the housing market, after a historic run-up in prices, is correcting. While that’s of little concession to current and would-be sellers, it’s not the end of the world either, especially if you don’t need to sell immediately. Economics elsewhere are encouraging. Recession doesn’t appear imminent. Wall Street appears healthy. Unemployment is low, and the general economy is good.
The market, as it always does, will reach equilibrium again, though probably not before mid-2008 or so, most economists estimate. So reset that panic button and sit back to raise a glass to 2007 as a transition year that will bring us one step closer to healthier home sales. In the meantime, take note of how home-buying and home-selling strategies change in a down market.
Here are seven selling tips and seven buying tips for ‘07 that could help save you a little grief in the short term and a lot of money in the long term.
7 selling tips for the down cycle:
1. Price to sell. If you really must sell now, don’t mess around. List your house based on what the market dictates today, not the prices that friends, relatives and co-workers got last winter or last spring.
2. Consider all credible offers. Holding fast for a better offer might put you in a situation where you’re merely playing catch-up with a moving market. Don’t assume there’ll always be another offer coming down the pike. You may need to come off your price 5 percent in some areas and 10 percent or more in others.
3. Offer to proffer. Buyers are requesting all kinds of enticements to spice the pot. Club memberships, prepaid lawn maintenance, moving-expense reimbursements, all appliances included and liberal repair credits are just a few possible throw-ins. Don’t be shocked if you hear, “Throw in that plasma TV and we’ve got a deal.” Consider in advance how far you’ll be willing to go, but draw the line, however, at “first-born child.”
4. Catch the wave at the source. Prepare your home for sale at the very earliest point this “spring” (actually early March or even late February), the time when seasonal buying interest is just starting to build.
5. Preserve your equity. Until the market stabilizes, refrain from borrowing from home equity (or raiding your 401(k), for that matter) to pay your bills, or for vacations and other purchases.
6. Gain in a sell-buy scenario. If you’ll be buying another home at the same time you’re selling your current one, the price reduction on the new one can compensate for the “loss” you’re taking on the old one. If you plan a “move up” to a better neighborhood and are paying 10 percent below list after selling your old home for 10 percent below list, your net dollar savings will actually be more.
7. Stay if possible. If you’re happy in your home and are meeting your expenses but want to sell due to continuing “housing bubble” fears, sit a spell. A home is a shelter first, and investment second. Except for a handful of markets that are still hyper-inflated, odds are that it will pay to ride out the storm. Generally, the early stages of a downturn are the scariest because that’s when amateur investors are dumping “spec” properties cheaply.
7 buying tips for the down cycle:
1. Negotiate with builders. Don’t be afraid to ask builders for concessions such as steep price discounts, closing-cost waivers, luxury upgrades, free landscaping, free trips and free club memberships. Many builder-incentive packages are worth 10 grand and up! In some markets such as Boston, new condos are selling for 20 percent less than they were in mid-to-late 2005.
2. Negotiate with home sellers. Unlike the go-go market of recent years, offers of 5 percent to 10 percent or more under asking price will not be inappropriate. (See “selling tips” for some of the throw-ins that buyers are being offered.)
3. Educated timing. Read up on local – not national – market trends, religiously read for-sale ads, and get a sense of what’s moving and where, then be prepared to jump on bargains, especially as the last of the speculators are being flushed out of the market and for-sale inventories are at their zenith.
4. Avoid hot spots. Stay away from buying homes in neighborhoods that appreciated significantly above average home prices in recent years – especially if you’re moving for the short term. Once prices in these hot spots are corrected, these often see slower upward movement or remain flat after the overall market heads north again.
5. Modesty is the best policy. Consider more modest homes in well-maintained, established neighborhoods. By contrast, pricing and re-pricing on expensive homes, new homes and new condos make those products riskier during down cycles.
6. Flexibility. For maximum flexibility in pouncing on the right deal, get preapproved for your home loan.
7. Follow fundamentals. Just because a lender will advance you money to live or build beyond your means doesn’t mean you’re standing on sound fiscal footing. At year-end 2006, $330 billion of adjustable-rate mortgages, or ARMs, were creeping upward. Avoid risky interest-only loans and ARMs, opting for fixed-rate mortgages instead. And learn from the recent past: Don’t assume housing will appreciate enough in the near term to cover your home’s rising interest payments.
© 2007 Bankrate.com
