at the end of the newsletter.
+++++++++++ July 1, 2011 +++++++++++++++++++
CONTENTS:
Introduction: Both Existing and New Home Sales Dip
Mortgage Rate Update: Rates Show Slight Decline
This Month's Tip: Dealing With a Challenging Market
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Introduction: Both Existing and New Home Sales Dip
Welcome to the July edition of the Home Buyer's Newsletter.
It appears that it was difficult for home sales to find any
traction during the month of May as both existing home and new
home sales slipped month-to-month.
Existing-home sales were down in May as temporary factors and financing
problems weighed on the market, according to the National Association of
Realtors®.
Existing-home sales, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, fell 3.8 percent
to a seasonally adjusted annual rate of 4.81 million in May from a
downwardly revised 5.00 million in April, and are 15.3 percent below
a 5.68 million pace in May 2010 when sales were surging to beat the
deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said temporary factors held back
the market in May, as implied from prior data on contract signings.
"Spiking gasoline prices along with widespread severe weather hurt
house shopping in April, leading to soft figures for actual closings
in May," he said. "Current housing market activity indicates a very
slow pace of broader economic activity, but recent reversals in oil
prices are likely to mitigate the impact going forward. The pace of
sales activity in the second half of the year is expected to be
stronger than the first half, and will be much stronger than the
second half of last year."
Sales of new single-family houses in May 2011 were at a seasonally
adjusted annual rate of 319,000, according to estimates released
jointly on June 23rd by the U.S. Census Bureau and the Department
of Housing and Urban Development. This is 2.1 percent (±10.7%)
below the revised April rate of 326,000, but is 13.5 percent (±13.6%)
above the May 2010 estimate of 281,000.
The median sales price of new houses sold in May 2011 was $222,600;
the average sales price was $266,400. The seasonally adjusted estimate
of new houses for sale at the end of May was 166,000. This represents
a supply of 6.2 months at the current sales rate.
It is very possible that the May monthly figures were a one-month blip
or it could indicate the start of a trend. If you are a buyer in (or
entering) the market, it would be wise to keep a close eye on the sales
figures going forward.
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Mortgage Rate Update: Rates Show Slight Decline
30-year fixed-rate mortgages averaged 4.55% at the beginning of the month
and 4.51% in the period that ended June 30th, according to mortgage company
Freddie Mac. 15-year fixed-rate mortgages saw averages of 3.74% at the
onset of the month and 3.69% at the end of June. Although they have stayed
in a fairly narrow range in the last couple of months, 30-year averages have
been under 5.00% since February of this year.
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: Dealing With a Challenging Market
Just about any way you cut it, the Real Estate market in July 2011
is a challenging one. For prospective buyers there are a number of
positive aspects, including prices considerably lower than several
years ago as well as extensive inventories in almost all areas, but
there are some negative aspects as well, notably a mortgage market
that can be quite difficult.
On the positive side, pricing is probably more advantageous for
buyers than it has been in over a decade. Not only have prices
decreased significantly in many areas, affordability ratios are
higher than they have been in years, meaning that housing is
simply more affordable than it has been in the past.
This is tempered with what needs to be most buyer's first concern--securing
a mortgage--this is where some of the most striking and pervasive changes
have occurred recently. Everyone has seen the news stories regarding
purchasers who have lost their homes to foreclosure, largely due to being
unable to afford their mortgage payments. Many of these problems are the
result of mortgage products that attracted buyers who simply were not
qualified to purchase the house they mortgaged. These types of loans--
"liar loans" where there was no documentation of income, loans for well
over the purchase price and "negative amortization" loans where the
unpaid balance went UP every month instead of down, have largely (and
rightfully) disappeared. A home buyer in todays real estate market
will need to be aware that, in general, they will need to show that
they can afford the loan--and the home. In the short term this may
make the mortgage process a bit more difficult (the lender can, and
most likely will, request a good deal of documentation). In the long
run, however, effective qualification will be better for all involved.
Almost as important as the mortgage picture in the new reality is the
pricing piece of the puzzle. It has become obvious that home prices
are not static and they do not only go in one direction. The constant
drumbeat of "real estate values always go up" that we heard just a few
short years ago has been silenced. Yes, in the long run (meaning 20+
years) house prices do trend upwards. In the short run (meaning 5
years or less) they can fluctuate, as is very clear in most areas in
the last few years.
What this means for a buyer in today's market is that they will need
to get a clear focus on property values as they exist presently. The
worst financial mistake a buyer could make would be to be swayed by
home values from a year or more ago in the area in which they are
interested. Those values may have change drastically in that time
frame. Your Buyer's Agent can easily develop a CMA (Comparative
Market Analysis) for you that will show precisely what properties
are currently selling for, information you will definitely need when
formulating an offer or contract on the home you want.
For a home buyer just entering the market, it is extremely important
to understand that this is a unique market when seen in the last
decade or more and that it is imperative to have as much preparation
at hand as is possible. This means spending time researching the market
(including pricing issues and availability) as well as preparing for
the mortgage process before going house hunting. The more aware a
buyer is on exactly what they can afford the more time they will be
able to spend productively looking for properties that fit their
wants, needs and budget.
More information on the site:
<A href="http://www.ourfamilyplace.com/homebuyer/mortgage.html">Mortgages</A>
<A href="http://ourfamilyplace.com/homebuyer/budget.html">Budgets</A>
<A href="http://ourfamilyplace.com/homebuyer/negotiation.html">Pricing and Negotiation</A>
Next Month's Tip: Utilize a Pro
++++++++++++++++++++++++++++++++++++++++++++++
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>
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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