What are real estate professionals saying to homebuyers and sellers about current market conditions? The successful brokers and sales associates are talking about the strengths that exist in the market. Below are positive angles that appeared recently in the media and underscore why it is a good time to buy real estate.
Mortgage Bankers Association: Mortgage Applications Rise 12.8% Last Week
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, spiked 12.8% in the week ending Dec 2. The MBA’s seasonally adjusted index of refinancing applications gained 15.3%, while the gauge of loan requests for home purchases rose 8.3%.
— “Mortgage applications jumped last week: MBA,” Reuters, Dec. 7, 2011.
NAR: Pending Home Sales Rise 10.4% in October, Surpassing Forecasts
The number of Americans signing contracts to buy previously owned homes rose more than forecast in October as buyers took advantage of falling prices and low borrowing costs. The index of pending home sales increased 10.4%, the biggest gain since November 2010, according to the National Association of Realtors. Economists forecast a 2% increase, according to the median estimate in a Bloomberg News survey.
The report showed an index level for pending home sales of 93.3 on a seasonally adjusted basis. A reading of 100 is consistent with the average level of contract activity in 2001 and coincides with “historically healthy” home-buying traffic, according to the NAR.
“There is a pent-up demand from buyers who normally would have entered the market in recent years,” said NAR chief economist Lawrence Yun.
— “Pending Sales of Existing U.S. Homes Exceed Forecasts With 10.4% Increase,” by Alex Kowalski, Bloomberg, Nov. 30, 2011.
Housing Reaching Record Levels for Affordability
“According to a release from The National Association of Realtors, the Housing Affordability Index reached a new all- time record high of 197.8 in October. Based on the hypothetical purchase of the median-priced home of $161,600 in October, financed at the average mortgage rate of 4.32% (with a 20% down payment), the median family income of $60,871 was 197.8% of the $30,768 income required to qualify for the financing and the $641 monthly payments (principal and interest).
“Housing has probably never been more affordable in U.S. history than it is today, and you would think that the record affordability would eventually have to start translating into robust home sales and a strong real estate recovery.”
— “Housing Affordability at Record High in October,” by Mark J. Perry, Carpe Diem blog, Dec. 6, 2011.The Housing Opportunity Index from the National Association of Home Builders/Wells Fargo shows that we’re still in a uniquely affordable phase of the market cycle. One driver is prices that have fallen from 2006 highs. The national median average price has dropped from $248,000 in 2006 to $176,000 in this year’s third quarter. Another factor is continued low interest rates. As a result, families earning the median income of $64,200 could afford 72.9% of the homes sold in the third quarter, in contrast with the way things looked five years ago during the boom, when the number dipped to 40.4%. Housing market bulls read the current high affordability number as a sign that there is buying power to bring the real estate market out of its slump, at least at current prices.
— “Home Affordability Near Highest Level in 20 Years,” by Alison Rodgers, Time, Nov. 28, 2011.
Barclays sees U.S. Housing Recovery in 2012
Barclays Capital, which initiated coverage on the housing sector about two months back, said economic indicators – including job creation, delinquencies, housing starts, homebuyer traffic and consumer sentiment – also showed that the housing industry was stabilizing. “It has become increasingly apparent to us that the pieces for a rebound next year are beginning to fall into place – chief among them being stabilization in prices for non-distressed home transactions,” the brokerage said in a note.
— “Barclays Sees U.S. Housing Recovery in 2012,” Reuters, Dec, 5, 2011.
Regional Update: News from Markets around the Nation
Florida
Florida’s real estate market is entering 2012 on an upward trend, according to three leading U.S. economists. “Our state is in a mini-recovery,” said Florida Realtors Chief Economist Dr. John Tuccillo, at the state association’s 2012 Real Estate and Economic Forecast Conference in Orlando. “Sales are trending up, listing inventories are falling, the supply of lender-related properties has stabilized, and we are seeing multiple offers on homes in some local markets.”
— “Fla.’s Housing Market Bouncing Back,” Marketwatch, Dec. 7, 2011.
Las Vegas
Along with investors and others seeking real estate bargains, first-timers spurred sales of 40,033 existing homes in the Las Vegas Valley from January to October — the highest figure since a record 50,009 resales during the first 10 months of 2005. “In terms of the numbers, it’s a fantastic year for resales. Think of how many sales we’d have if it wasn’t like that,” said Homebuilders Research President Dennis Smith. “Why is demand there? Look at the prices. So long as we have these low prices, we’re going to have demand. We’ve got plenty of investors. Vegas is not dead and blowing away.”
— “Plummeting Home Prices Entice First-Time Homebuyers,” by Dave Berns, Las Vegas Sun, Dec. 6, 2011.
Joyce Rey is one of only two Executive Directors of Previews International, (Estates Division of Coldwell Banker) in the United States and a memeber of the Haute Living Real Estate Network. She also co-founded the first company to exclusively represent properties over 1 million dollars in America. In 2010 she closed the highest sale in the US and the highest sale in West LA ever by an agent. She currently holds one of the highest priced residential listing in the United States. Haute Living selected her as one of the 100 most influential Angelenos for 2009. Visit her website and blog at joycerealestate.com
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