at the end of the newsletter.
+++++++++++ May 1, 2011 +++++++++++++++++++
CONTENTS:
Introduction: Resale and New Sales Rise From February
Mortgage Rate Update: Rates Drop a Notch
This Month's Tip: Riding the Foreclosure Wave
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Introduction: Resale and New Sales Rise From February
Welcome to the May edition of the Home Buyer's Newsletter. Although
both new home and resale activity was up from the month of February,
both were down from their performance a year ago.
Sales of existing-home sales rose in March, continuing an uneven recovery
that began after sales bottomed last July, according to the National
Association of Realtors®.
Existing-home sales, which are completed transactions that include single-
family, townhomes, condominiums and co-ops, increased 3.7 percent to a
seasonally adjusted annual rate of 5.10 million in March from an upwardly
revised 4.92 million in February, but are 6.3 percent below the 5.44 million
pace in March 2010. Sales were at elevated levels from March through June of
2010 in response to the home buyer tax credit.
Lawrence Yun, NAR chief economist, expects the improving sales pattern to
continue. "Existing-home sales have risen in six of the past eight months,
so we're clearly on a recovery path," he said. "With rising jobs and
excellent affordability conditions, we project moderate improvements into
2012, but not every month will show a gain – primarily because some buyers
are finding it too difficult to obtain a mortgage. For those fortunate
enough to qualify for financing, monthly mortgage payments as a percent of
income have been at record lows."
Likewise, we saw in increase in new home sales figures from February to March.
Sales of new single-family houses in March 2011 were at a seasonally adjusted
nnual rate of 300,000, according to estimates released jointly on April 25th
by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 11.1 percent (±21.7%) above the revised February rate of 270,000, but
is 21.9 percent (±10.3%) below the March 2010 estimate of 384,000.
The median sales price of new houses sold in March 2011 was $213,800; the
average sales price was $246,800. The seasonally adjusted estimate of new houses
for sale at the end of March was 183,000. This represents a supply of 7.3
months at the current sales rate.
Although these sales figures are positive in the short term, they still continue
to be a challenge in the long term.
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Mortgage Rate Update: Rates Drop a Notch
Mortgage rates dropped a bit during the month of April, largely due to bond market
pricing and several key economic reports. According to mortage company Freddie
Mac, 30-year fixed-rate mortgages stood at an average of 4.78% in the period that
ended April 28th after beginning the month at an average of 4.86%. 15-year fixed-
rate loans decreased to under 4.00% for the first time since early March with an
average of 3.97%. These rates began the month of April at an average of 4.09%.
Going forward, it is always a good idea to keep a close eye on Treasury Bond
yields as a fairly accurate barometer of trends that to a large degree convert
to the mortgage market.
For current average mortgage rates, see:
<A HREF="http://www.ourfamilyplace.com/homebuyer/rates.html">Mortgage Rates</A>
For an extensive discussion of all aspects of mortgages, see the section on the
site devoted to this subject. <A HREF="http://www.ourfamilyplace.com/homebuyer/mortgage.html">Mortgages</A>
++++++++++++++++++++++++++++++++++++++++++++++
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++++++++++++++++++++++++++++++++++++++++++++++
This Month's Tip: Riding the Foreclosure Wave
Wherever you turn, the discussion on foreclosures is front and center. A direct
result of the housing crunch, the number of foreclosures has ballooned in the
last three years. Nationally, foreclosure sales have been running north of 30%
of all sales, which has a big effect on the overall market. In individual regions,
the foreclosure sales percentage is even higher, causing additional impacts in
those areas.
For a buyer entering the market at this time, the effects of the foreclosure
situation can be felt almost immediately, both in positive and negative aspects.
For buyers, the most positive perspective is in pricing. Large numbers of
foreclosures put a challenge on home prices not only because of competition,
but because the sellers--financial companies--have no emotional attachment to
the properties. Unlike homeowners who have years of memories and good times
in their home and won't "give it away," generally these sellers single goal
is to get the property sold as quickly as possible. And that almost always
converts to pricing pressure.
Another positive aspect is the amount of inventory available. In some areas,
there are more homes available now than there have been for years. This
not only gives the buyer more options for their purchase, but because of
the competition, puts additional pricing pressure on the market.
Like so much in life, though, what makes something good can also make it
bad. Lower prices and more choice can be double edged swords. If prices
remain low (or continue to erode) for the near future, then it becomes
more difficult to gain equity in the home, which is one of the primary
benefits of home ownership. This also could be a potential problem if
the need arises to sell the home in a few years, before a price recovery
has occurred.
Another potential downside to purchasing foreclosures concerns the condition
of the properties. Although some foreclsosures are in reasonably good
shape, many have had maintenance and repairs neglected, largely due to
lack of funds with the previous owner. Also, it is not unusual to
see foreclosures that have had many items (such as stoves, diswashers,
and lighting and plumbing fixtures) removed from the property. This
obviously puts a burden on the home buyer since replacements will need
to be purchased before the house becomes habitable.
It is important to also be aware that in virtually all cases, the seller
of a foreclosure will do absolutely nothing in the way of repairs. A
buyer may attempt to protect themselves by securing a whole home
inspection, but if the report is negative, the costs would need to
be wholly borne by the buyer. This can turn what appears to be a
reasonable price to one that is wholly unacceptable.
Can a great deal be made on a foreclosure? Absolutely. Is it a
slam-dunk proposal? Absolutely not. If you think you may have an
interest in purchasing one, it is very important that you educate
yourself on the following:
1) The state and health of the market in your area
2) The state and number of foreclosures in that area
3) The foreclosure sales process
4) Any legal aspects of buying a foreclosure (e.g., deeds)
Working with an Agent who has experience in foreclosure purchases
(rather than sales) can be an invaluable asset in the process.
Next Month's Tip: Using All the Resources Available
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The Home Buying Checklist
Many of our visitors have said that one of the most valuable
aspects of the Home Buyer's Information Center is the
Buying Checklist, where they can make sure that all
the bases have been touched. You can find the checklist
here: <A HREF="http://www.ourfamilyplace.com/homebuyer/checklist.html">Home Buyer's Checklist</A>
As always, if you have suggestions for improving the
site, or topics you would like to see addressed in
this newsletter (or, if you have used the Home Buyer's
Information Center to successfully purchase a home),
drop us a quick line here:
<A HREF="http://www.ourfamilyplace.com/homebuyer/feedback.html">Home Buyer's Information Center Feedback</A>
A special thanks to all those who have written to let us know
that they have found the Home Buyer's Information Center a
helpful resource in their buying process.
Have a great month and good luck in all your endeavors!
The Team at the Home Buyer's Information Center
_____________________________
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