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+++++++++++ February 1, 2011 +++++++++++++++++++
CONTENTS:
Introduction: Both Existing and New Home Sales Increase
Mortgage Rate Update: Rates Take a Bit of a Breather
This Month's Tip: Offers and Contracts
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Introduction: Both Existing and New Home Sales Increase
Welcome to the February edition of the Home Buyer's Newsletter.
We are beginning to see some signs of life in the Real Estate market--
not everywhere and not with significant price changes, but activity
nonetheless. The traditionally strong spring period should bring us a
much clearer indication of the trend for the year.
Existing-home sales rose sharply in December, when sales increased for
the fifth time in the past six months, according to the National
Association of REALTORS®.
Existing-home sales, which are completed transactions that include
single-family, townhomes, condominiums and co-ops, rose 12.3 percent
to a seasonally adjusted annual rate of 5.28 million in December
from an upwardly revised 4.70 million in November, but remain 2.9
percent below the 5.44 million pace in December 2009.
Lawrence Yun, NAR chief economist, said sales are on an uptrend.
"December was a good finish to 2010, when sales fluctuate more
than normal. The pattern over the past six months is clearly
showing a recovery," he said. "The December pace is near the
volume we're expecting for 2011, so the market is getting much
closer to an adequate, sustainable level. The recovery will
likely continue as job growth gains momentum and rising rents
encourage more renters into ownership while exceptional
affordability conditions remain."
The national median existing-home price2 for all housing types
was $168,800 in December, which is 1.0 percent below December
2009. Distressed homes3 rose to a 36 percent market share in
December from 33 percent in November, and 32 percent in December
2009.
"The modest rise in distressed sales, which typically are
discounted 10 to 15 percent relative to traditional homes,
dampened the median price in December, but the flat price trend
continues," Yun explained.
Total housing inventory at the end of December fell 4.2 percent
to 3.56 million existing homes available for sale, which
represents an 8.1-month supply4 at the current sales pace,
down from a 9.5-month supply in November.
On the new home side, sales of new single-family houses in December
2010 were at a seasonally adjusted annual rate of 329,000, according
to estimates released jointly January 26th by the U.S. Census Bureau
and the Department of Housing and Urban Development. This is 17.5 percent
(±17.7%) above the revised November rate of 280,000, but is 7.6 percent
(±17.0%) below the December 2009 estimate of 356,000.
The median sales price of new houses sold in December 2010 was $241,500;
the average sales price was $291,400. The seasonally adjusted estimate
of new houses for sale at the end of December was 190,000. This represents
a supply of 6.9 months at the current sales rate.
An estimated 321,000 new homes were sold in 2010. This is 14.2 percent
(±4.2%) below the 2009 figure of 375,000.
Probably the most important numbers in these statistics is the current supply
numbers: 8,1 months in existing homes and 6.9 months in new homes. These
inventory levels are definitely moving in the right direction--down.
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Mortgage Rate Update: Rates Take a Bit of a Breather
Long-term mortgage rates took a bit of a breather in the month of January
after pretty consistent increases in the previous 45 days or so. According
to mortgage company Freddie Mac, 30-year long-term rates averaged 4.80% in
the period that ended on January after beginning the month at an average
of 4.77%. Rates decreased a bit in the middle of the month before rising
again at its conclusion. 15-year fixed-rate mortgages showed a different
trend, ending the month at an average of 4.09%, a decrease from the period
at the beginning of January where the average was 4.13%.
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: Offers and Contracts
Buying a home is usually the largest purchase of a lifetime, so it is
crucial that you understand the legal workings of the transaction before you
begin to negotiate a purchase. The most basic (and important) legal
document involved in buying a home is the Contract for Sale. This
document may go b different names, for example "Agreement to Purchase"
or "Real Property Purchase Agreement" but the intent is the same: A legal
(and binding on both seller and buyer) agreement for the sale of a
specific home.
It is important to understand that the process of making an offer on a particular
property and contracting to purchase it are 2 sides of the same coin. Buyers
will occasionally have the misconception that they can "make an offer" on a
home to see what the seller would be willing to accept without making a final
committment to purchase the home. This can lead to a nasty surprise for the
buyers since their offer, if accepted by the seller usually becomes a legally
enforcable Contract for Sale. It is to the buyer's best interest, then, to be
keenly aware of any and all possible consequences BEFORE they embark
on an offer.
Some of the questions buyers should ask themselves prior to an offer:
1) Is this the right home for us? Since we may become the owner of
this particular home, are we completely happy with its location, condition,
style, etc. If it is not precisely what we are looking for in a home, can we
make modifications in the future that will make it acceptable?
2) Are our interests protected? Does the offer contain a contingency
for a whole-house inspection (and a report) that is acceptable to us?
Is there a contingency for a mortgage approval that is acceptable (and
affordable) to us? Are both we and the sellers completely clear on what
is, and is not, included in the sale. Is everyone--buyers, sellers and
Agents--completely clear on who is representing buyer and seller.
As mentioned above, since an offer becomes a contract upon acceptance
of the seller, before you make any offer, it is a good idea to familiarize
yourself with the proper components, including:
* An exact description of what you are buying, both in street
address and legal description.
* The selling price that you are offering
* Exactly what is to be included in your offer, including,
for example, refrigerators, air conditioners, etc. Do not
assume that if an item is IN the house it will be included
in the price.
* Any concessions--such as closing costs--that you want the
seller to make.
* Any contingencies to the contract. Examples would be
"subject to a whole house inspection acceptable to the
purchaser" (as well as who will pay if defects are found)
and "subject to purchaser obtaining a mortgage in the amount
of $XXXXX with an interest rate of no more than X.XX%"
* Exact date and place where the buyer's settlement
(closing) is to take place.
* Any other item or contingency that is of importance to
the purchaser and would affect the desirability of the
property.
* Clear definitions of representation by any and all Real
Estate Agents involved in the transaction.
Next Month's Tip: Keeping it Under Control
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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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