at the end of the newsletter.
+++++++++++ December 1, 2011 +++++++++++++++++++
CONTENTS:
Introduction: Both Existing and New Home Sales Rise
Mortgage Rate Update: 30-year Rates Sub 4%
This Month's Tip: Compare First, Then Commit
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Introduction: Both Existing and New Home Sales Rise
Welcome to the December edition of the Home Buyer's Newsletter. Let's
start off with wishes for a Happy Holiday Season to all of our readers.
Existing-home sales improved in October while the number of homes on the market
continued to decline, according to the National Association of Realtors®.
Total existing-home sales, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, rose 1.4 percent to a
seasonally adjusted annual rate of 4.97 million in October from a downwardly
revised 4.90 million in September, and are 13.5 percent above the 4.38 million
unit level in October 2010.
Lawrence Yun, NAR chief economist, said the market has been fairly steady
but at a lower than desired level. "Home sales have been stuck in a narrow
range despite several improving factors that generally lead to higher home
sales such as job creation, rising rents and high affordability conditions.
Many people who are attempting to buy homes are thwarted in the process,"
he said.
On the new home side, sales of new single-family houses in October 2011
were at a seasonally adjusted annual rate of 307,000, according to estimates
released jointly on November 28th by the U.S. Census Bureau and the Department
of Housing and Urban Development. This is 1.3 percent (±19.7%) above the revised
September rate of 303,000 and is 8.9 percent (±17.2%) above the October 2010
estimate of 282,000.
The median sales price of new houses sold in October 2011 was $212,300; the
average sales price was $242,300. The seasonally adjusted estimate of new
houses for sale at the end of October was 162,000. This represents a supply of
6.3 months at the current sales rate.
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Mortgage Rate Update: 30-year Rates Sub 4%
Long-term mortgage rates continued to spend most of the month in historic
low ranges with 30-year fixed-rate mortgages averaging 3.98% in the period that
ended November 23rd, according to mortgage company Freddie Mac. This was a decline
from an average of 4.10% at the beginning of the month. Similarly, 15-year fixed-
rate mortgages declined from an average of 3.38% at the beginning of the month to
an average of 3.30% at the end.
Is a turn on the horizon? Price declines may be easing, inventory levels are getting
closer to normal, consumer confidence rose nicely in the last month. If you are in
the market, or thinking about entering it, now is the time to stay tuned!
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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The most important part of your team for buying a home should be
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much more at HomeGain.com.
<A href="http://www.homegain.com/sp/ae_intro.html?entryid=2267&ht=houseclicksAE">Compare Agents</A>
++++++++++++++++++++++++++++++++++++++++++++++
This Month's Tip: Compare First, Then Commit
This month's tip is one we touched on not too long ago, but as we
look at the Real Estate market as it exists late in 2011, it is
one that is important to revisit. Looking at some of the sale
transfers locally and nationally, and some of the prices that are
being paid, we often ask ourselves "what were they thinking?"
Unfortunately, in a lot of cases, they simply weren't thinking.
As we approach 2012, it is crucially important to have a clear picture
of housing values as they exist now. The continuing upheaval in Real
Estate, with falling prices, massive numbers of foreclosures and short
sales makes it imperative that a buyer is at the top of their game plan
when it comes to pricing.
If you don't want to run the risk of paying too much for a home,
and be sure that you aren't paying more than market value for your
home purchase then a CMA is a critical part of the process.
A CMA--Comparative (or Comparable) Market Analysis--is the
strongest tool in your home buying arsenal to give assurance
that you are not overpaying.
A CMA is a recap of housing activity in the area in which you are
interested, focusing on 3-10 properties that are similar in size and
amenities located in the same neighborhood or nearby. The CMA
will list specific details (number of bedrooms, number of baths,
total room count, square footage, age, etc.) for similar properties
that are currently on the market (active listings), those that are under
contract but not yet closed (pending listings), have closed and transferred
ownership (sold listings) as well as those listings that have either
expired without selling or have been withdrawn by the seller (taken off
the market). Because a CMA compares similar properties it can
give a buyer a pretty clear snapshot of current housing values in a
specific housing market. Although the CMA is very important, it
cannot be used as an absolute determination of value, since it generally
does not put a lot of weight on condition, an obviously important
factor.
While the CMA will list homes that are currently on the market as well
as those that are pending or have expired, it is those properties that
have sold and closed that give the most information. Sold and closed
information is important, since these detail specifically what buyers
are willing to pay (and lenders are willing to lend) for specific properties.
Don't make the mistake of putting too much weight on the prices
of properties currently on the market. These homes could be wildly
overpriced compared to the price for which they eventually sell for.
Likewise, one of the biggest reasons that a property listing will
expire without selling is because it is overpriced, so the prices of these
expired listings should be taken with a grain of salt.
What does a CMA include? You will find at least the following information
on the "subject property" (the one you want to buy) and anywhere from
3 to 10 additional properties:
+ Street address
+ Square footage
+ Number of bedrooms, number of baths, number of total rooms
+ Age
+ Listing price and sold price if closed
To see an example of a CMA, visit that page on the Home Buyer's
Information Center site: CMA
Where can you get a CMA? If you are being represented by a Buyer's
Agent, they should be able to develop a CMA for you in a short amount of
time. Since virtually all Multiple Listing organizations are computerized,
the Buyer's Agent can pull a CMA up on their home or office computer
and have it available to you. If you are dealing with an Agent who is
representing the seller (the home in which you are interested is their
listing) it may be that the Agent cannot develop a CMA for you, since
their representation of (and loyalty to) the seller may preclude releasing
any information that could compromise the seller's position. For example,
if a CMA showed that the average property in the neighborhood was
selling for $147,000 and the home was listed for $165,000, it is highly
unlikely that the seller's Agent would give that information to a buyer.
This is one of the many reasons that a home buyer should always
strongly consider using a Buyer's Agent, if one is available. See a
discussion on the site:Buyer Agency
Summing Up
A CMA can be your most important tool in negotiation, since it will detail
exactly where, price-wise, the house in which you are interested is positioned.
Is it underpriced (a bargain), priced "on the money" (a fair price for both buyer
and seller) or overpriced (time to either negotiate hard or walk away). As
we have mentioned many times in the past, if you overpay for a home in a strongly
appreciating market, the market will eventually cover your mistake. If, however,
you overpay in a flat or declining market, you will end up holding the financial
bag.
Next Month's Tip: Be Budget Wise
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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>
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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