November 28, 2007Existing Home-Sales in October Show Mixed Results

 Single-family existing-home sales were stable in October while the condo sector was down, says the NATIONAL ASSOCIATION of REALTORS®. Lingering effects of the credit crunch were a drag on sales, but the mortgage situation has improved significantly.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — eased by 1.2 percent to a seasonally adjusted annual rate of 4.97 million units in October from a downwardly revised level of 5.03 million in September. Existing-home sales are 20.7 percent below the 6.27 million-unit pace in September 2006.

Lawrence Yun, NAR chief economist, expected the sluggish performance.

“As noted last month, temporary mortgage problems were peaking back in August when many of the sales closed in October were being negotiated,” he says. “We continue to see the biggest impact in high-cost markets that rely on jumbo loans.”

Mortgage availability has improved with much lower mortgage interest rates and a sharp jump in FHA endorsements for home purchases, Yun adds.

“A trend away from subprime mortgages to FHA loans, which often carry much lower interest rates, is a positive development for consumers and the housing market going forward,” Yun notes. “Still, it will take some time for the change to yield a measurably higher closed sales volume in the aftermath of the subprime collapse. In the near term, we expect home sales to remain fairly stable.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.38 percent in October, unchanged from September; the rate was 6.36 percent in October 2006. Last week, Freddie Mac reported the 30-year fixed rate fell to 6.2 percent.

Median Price Falls Over the Year

The national median existing-home price for all housing types was $207,800 in October, down 5.1 percent from October 2006 when the median was $218,900. But there is a downward distortion from the temporary problems with jumbo loans that slowed sales in high-price markets, and that dragged down the national median.

NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., emphasized that all real estate is local.

“Keep in mind that home prices are up in 93 out of 150 metro areas, and there is a lot of confusion in the market from reports about national data,” he says. “Broadly speaking, home prices in most areas are up modestly or fairly stable. Areas with population or job growth are seeing the strongest home price gains.”

Healthy Price Gains in Some Markets

Among the many metro areas showing healthy price gains are Charlotte, N.C.; San Francisco; Albuquerque, N.M.; and Green Bay, Wis.

Other NAR housing statistics include:

• Total housing inventory: rose 1.9 percent at the end of October to 4.45 million existing homes available for sale, which represents a 10.8-month supply at the current sales pace. That’s up from a downwardly revised 10.4-month supply in September.

• Single-family home sales: unchanged from September at the seasonally adjusted annual rate of 4.37 million in October, and are 20.8 percent below 5.52 million-unit level in October 2006. The median existing single-family home price was $205,700 in October, down 6.3 percent from a year ago.

• Existing condominium and co-op sales: fell 9.1 percent to a seasonally adjusted annual rate of 600,000 units in October from 660,000 in September, but are 20.2 percent below the 752,000-unit pace in October 2006. The median existing condo price was $223,500 in October, up 4.9 percent from a year ago.

Regional Sales

Here’s how existing-home sales across the country fared:

• Northeast: unchanged at an annual pace of 900,000 in October, and are 12.6 percent below October 2006. Median price: $258,700, up 1.3 percent from a year ago.

• South: unchanged in October, at an annual rate of 2.03 million, but are 19.4 percent below a year ago. Median price: $171,400, down 6.7 percent from October 2006.

• Midwest: slipped 1.7 percent to an annual rate of 1.18 million in October, and are 16.9 percent below October 2006. Median price: $164,000, down 1.6 percent from a year ago.

• West: fell 4.4 percent in October to a level of 870,000, and are 33.1 percent below a year ago. Median price: $318,200, which is 6.9 percent lower than October 2006.

Selling During the Holiday’s

November and December is when Real Estate is serious! Buyers aren’t playing games if they’re seeing your home in the winter months. They need to buy. Typically, the real estate peak season is spring and the non-serious buyer will be perusing homes at that time of year. But during the holidays, if they’re looking, they are more serious. They usually have a different motivation and are sacrificing precious vacation time to scout for properties. They’re doing that because they have to buy, rather than want to buy.  Corporations usually transfer employees during summertime, but if time has passed and the employee needs to work at a new location, wintertime is second best because kids are out of school and employees have more vacation days. The holidays are a time when these people can scout and move. If you only have 8 days to find a property and make an offer, it’s intense. A common misconception is that trying to sell a home during the holidays is a bad idea. If you are serious about selling, it can be an excellent time to list.Things sellers should remember….

1. November and December buyers are usually serious
2. Job transferees use the holidays to house hunt
3. Investors usually want to close escrow by year-end for tax purposes.
4. Nearly half of homebuyers don’t have children living at home; there’s no need to wait for school to let out.
5. Remodeling, decorating, appliance installation and other services are more available and at less of a premium.
6. There is plenty of mortgage money available for buyers.
7. Lenders aren’t as busy and can process loans faster.
8. Homes show well when decorated for the holidays, but don’t overdo it
9. Showings will be fewer and less intrusive, but more likely to be fruitful with motivated, qualified buyers.

Some experts recommend not putting up oversized Christmas trees and very large decorations that take up too much space. Remember that homebuyers are attracted to a spacious and well-organized place to live in.When you have scheduled visits, it’s best that you turn off Christmas lights and other lighted decors so potential buyers can focus well on the property. Before that, ensure that you clean your front yard, porches and all rooms in the house by removing snow, leaves, trash bins and all types of clutter.Hope this helps!Nick Patterson

Foreclosure Info and Illinois

RealtyTrac released its quarterly report on Foreclosure Activity today.  Below is a link to the RealtyTrac release:

Click here for release

According to the release, IL was ranked 15th in the nation in terms of foreclosure rate filing for the third quarter. That is down 4.2% from the second quarter 2007 and up only 3.4% from the third quarter 2006. Other states like Florida are up 115.4% from a year ago, California up 297% from a year ago; and Colorado up 30% from a year ago. Michigan is up 110.7% from a year ago. So there are other states where the foreclosure rates are significantly higher than Illinois. Nevada is up 202.4% from last year at this time.

National foreclosure rate is one foreclosure filing for every 196 U.S. households for the quarter. Illinois foreclosure rate is one foreclosure filing for every 257 households. Illinois’ rate is not as high as the national rate. Illinois’ rate is down from last quarter and only up slightly from 3Q06.

Most foreclosures are the result of job loss while a larger percentage now are from adjustable rate mortgage resets and a smaller portion to fraudulent loans. (source: survey of Chicago area default counselors,2007). The new FHA Secure program can help families who have been making their mortgage payments at the starter rate but were unable to keep them up after the loan reset to refinance through the FHA and keep their home. (www.fha.gov)