Existing-Home Sales Resume Uptrend with Stable Prices

RISMEDIA, December 23, 2010—Existing-home sales got back on an upward path in November 2010, resuming a growth trend since bottoming in July, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 5.6% to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9% below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit.

Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” he said.

Yun added that home buyers are responding to improved affordability conditions.

“The relationship recently between mortgage interest rates, home prices and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”

The national median existing-home price for all housing types was $170,600 in November, up 0.4% from November 2009. Distressed homes have been a fairly stable market share, accounting for 33% of sales in November; they were 34% in October and 33% in November 2009.

Foreclosures, which accounted for two-thirds of the distressed sales share, sold at a median discount of 15% in November, while short sales were discounted 10% in comparison with traditional home sales.

Total housing inventory at the end of November fell 4.0% to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said good buying opportunities will continue. “Traditionally there are far fewer buyers competing for properties at this time of the year, so serious buyers have a lot of opportunities during the winter months,” he said. “Buyers will enjoy favorable affordability conditions into the new year, although mortgage rates are expected to gradually rise as 2011 progresses.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.30% in November from a record low 4.23% in October; the rate was 4.88% in November 2009.

“In the short term, mortgage interest rates should hover just above recent record lows, while home prices have generally stabilized following declines from 2007 through 2009,” Yun said. “Although mortgage interest rates have ticked up in recent weeks, overall conditions remain extremely favorable for buyers who can obtain credit.”

A parallel NAR practitioner survey shows first-time buyers purchased 32% of homes in November, the same as in October, but are below a 51% share in November 2009 from the surge to beat the initial deadline for the first-time buyer tax credit.

Investors accounted for 19% of transactions in November, also unchanged from October, but are up from 12% in November 2009; the balance of sales were to repeat buyers. All-cash sales were at 31% in November, up from 29% in October and 19% a year ago. “The elevated level of all-cash transactions continues to reflect tight credit market conditions,” Yun said.

Single-family home sales rose 6.7% to a seasonally adjusted annual rate of 4.15 million in November from 3.89 million in October, but are 27.3% below a surge to a 5.71 million cyclical peak in November 2009. The median existing single-family home price was $171,300 in November, which is 1.2% above a year ago.

Existing condominium and co-op sales declined 1.9% to a seasonally adjusted annual rate of 530,000 in November from 540,000 in October, and are 32.2% below the 782,000-unit tax credit rush one year ago. The median existing condo price was $165,300 in November, down 5.5% from November 2009. “At the current stage of the housing cycle, condos are offering better deals for bargain hunters,” Yun said.

Regionally, existing-home sales in the Northeast rose 2.7% to an annual pace of 770,000 in November but are 33.0% below the cyclical peak in November 2009. The median price in the Northeast was $242,500, which is 9.2% higher than a year ago.

Existing-home sales in the Midwest increased 6.4% in November to a level of 1.00 million but are 35.1% below the year-ago surge. The median price in the Midwest was $138,900, down 1.1% from November 2009.

In the South, existing-home sales rose 2.9% to an annual pace of 1.76 million in November but are 26.1% below the tax credit surge in November 2009. The median price in the South was $148,000, down 2.6% from a year ago.

Existing-home sales in the West jumped 11.7% to an annual level of 1.15 million in November but are 19.0% below the sales peak in November 2009. The median price in the West was $212,500, up 0.4% from a year ago.

For more information, visit www.realtor.org.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

December 2010 Market Snapshot

The end is near. Another year is about to hike over the horizon and a new year will magically make its presence known. The years seem to slip by more quickly these days as we try to keep pace with the newest cell phone, computer or television. Technology has made things smaller, more efficient and quicker. We would die of boredom waiting for an old IBM 286 to boot up; all fifty pounds of it.

Despite all the changes in technology over the past couple of decades, the purchase and sale of real estate has remained pretty much the same. It is still a hands-on business. Ultimately, all the final decisions are made by humans, not computers.

The pace of a real estate market isn’t defined by the human element, though. Statistics rule here. How many homes have sold this week, this month, and this year? How does that compare with last year or the year before that? Are home values going up or down? How many homes are on the market for sale? All questions requiring statistical answers.

Here are some statistics compliments of Metrolist (the Denver Metro MLS). The year 2005 is used as a benchmark, since that has been the most active year for sales activity for the past six years throughout the Denver Metro and Northern Colorado real estate markets.

Through November/2005, there were 13,841 single family sales and 6,212 attached unit sales in Metro Denver. That compares to 9,944 single family sales and 4,006 attached unit sales through November/2010; approximately a 30% reduction in the number of sales. When looking at 2009 figures, single family home sales for 2010 are down about 13% (9,944 vs. 11,452); attached unit sales are down about 10% (4,006 vs. 4,450).

The number of Metro Denver active listings in November/2010 (4,956 single family; 2,737 attached units) vs. November/2005 (6,110 single family homes; 4,336 attached units) is down approximately 26%. November/2009 active listings were down compared to November/2010 figures (4,325 single family; 2,762 attached units).

Statistics can be confusing at times. They can be manipulated to represent a specific position or point of view. If looked at solely from the perspective of what the numbers are, they don’t lie. So, what do the numbers above tell us?

• Sales are down noticeably from 2005. They have trended down every year since 2005 for the Metro Denver market area.

• The number of active listings has vacillated when comparing the three years noted above. Over the course of the past few years, the number of active listings in the market collectively as a whole has decreased. Sellers have decided to (a) stay where they are and not move; (b) wait for the market to improve and then move; or (c) rent their home and move.

Real estate market values haven’t improved since 2005. The upper end of the market has experienced the greatest negative impact from the economy. The lower end of the market has been able to sustain itself. The government’s foray into assisting the housing market through tax benefits created some short-lived positive energy. Historic lows for home mortgage interest rates have helped people to refinance out of adjustable rate and interest only mortgages, but haven’t provided a noticeable shot-in-the-arm for home sales.

"What the improving economy means to home shoppers…"

"What the improving economy means to home shoppers…"

By Cynthia M. Parker, ABR®, SFR®, CDPE®

One plausible scenario….

Interest rates will increase…it’s not a matter of if, it’s a matter of when.  Property values will rebound…again, not a matter of if, it’s when.  Now, while a 3% uptick over the term of a year, (which historically, is the national average) may not seem like much an increase, this combined with an increase in interest rates, will certainly make a significant difference in your buying power…and here’s how.

Say that your current interest rate (rate that you have been approved for, at least) is 4.75% on a 30 year fixed loan.  Right now, you would be able to purchase and your monthly payment, with interest, would be about $1,044.00 per month on a home with a loan amount of about $200,000.  A modest increase to 5.75% , (which is quite plausible for a year of recovery) would mean an increase to $1,168.00 per month, as reflected below.

So what does this mean?

Well, for one, if you are approved for a loan today at $200,000, but believe that you will save more for a down payment or wait for better market conditions, you may actually be losing vital ground.  An increase of merely 1.0% over one year could necessitate an additional $12,500.00 of down payment to offset the increase in interest rates, if you were not able to be approved for more.  So, you would have to reduce your buying power by 12k…and if you add in a modest 3% increase in home prices over the course of that same year, it could mean nearly $20,000.00 …in less sales price of your new home! 

In the Denver Metro area market, $20,000.00, give or take, makes a HUGE difference in the inventory available to you. 

Example...

 $                          150,000           200,000            250,000

4.75 %             $783.00           $1044.00         $1305.00                       

5.25 %             $828.00           $1104.00         $1380.00

5.75 %             $876.00           $1168.00         $1460.00

6.25 %             $924.00           $1232.00         $1540.00

6.75 %             $973.00           $1298.00         $1622.00

* The table above displays current interest rates that are anecdotal for several common loan types for the purchase of a single family primary residence amortized for 30 years and only show principal plus interest, NOT CURRENT RATES.  Many products are available. Refinance rates may vary from purchase rates. For additional information, please seek counsel from a licensed mortgage broker/banker, or call Cynthia: 303-300-8989 or email: Cynthia.Parker@remax.net for a list of top lending professionals, who will advise you accordingly. 

If you or anyone you know has further questions or would like more info on taking advantage of the current market now, call me: 303-300-8989.  I’d be more than happy to help!

Don't Blow Off Some Steam: 5 Steam Heating Maintenance Tips to Keep Your System in Good Shape

RISMEDIA, December 7, 2010—You’re doing yet another Saturday open house tour, and, it seems, you’ve finally stumbled upon your dream house. The living room is perfect, the ceiling moldings have character, the kitchen practically begs you to bake an apple pie. Then, you look down, noticing something horrifying in the corner, making a subtle hissing sound. No, it’s not a rattlesnake—it’s a radiator.

Don’t walk out the door just yet: The radiator doesn’t have to be your enemy. While they’re typically found in older homes, and generally possess more service issues than modern heating systems, steam heating systems are perfectly easy to live with if you put in a little work and trust a qualified professional for regular maintenance.

In steam-heating systems, water is heated to its boiling point (212º Fahrenheit), and steam rises by convection through pipes to radiators located throughout the house. The steam releases heat into the air, then condenses; gravity sends the water back to the boiler for reheating. In a one-pipe system, the same pipe distributes steam to various radiators and carries the condensate back to the boiler. In a two-pipe system, one pipe supplies the steam, and the other returns the condensate to the boiler.

No matter what type of system, the boiler is the star of the show—a steam-heating system is only as good as its boiler. Luckily, a boiler can last 50 years—even longer given regular maintenance and care. Below are a list of key monthly and yearly maintenance issues—some you should call in a professional for, and others you can do yourself (depending, of course, on your level of comfort with the task). If your home has steam heat, chances are many others in the neighborhood do too, so if you’ve just moved to the area, ask your neighbors about the best boiler service people in town—then keep these five maintenance guidelines in mind:

1. Test the pressure-relief valve every month during the heating season by depressing the handle (located on top of the boiler, this valve allows steam to escape if the pressure in the boiler exceeds a preset safe level). If no steam comes out or the valve does not completely close, call a professional to have the valve replaced. It’s critical that this valve always be functioning properly.

2. Have a professional drain the boiler once a year. (To drain the boiler, a hose is typically attached to the boiler when it’s cold, and water is led into a floor drain, while the boiler’s interior is flushed with fresh water. This is best left to a professional).

3. Make sure the pressure of the boiler is always between two-10 psi. If the steam-pressure gauge indicator on the boiler is not in this range, call for service.

4. Open the boiler’s blowoff valve (at the bottom of the low-water cutoff) once a month when the system is off, to drain out all the sludgy water that could clog the whole system.

5. Open the valves at each end of the boiler’s steam-pressure gauge once a month. The water level should be in the middle of the valve. If water is not visible, shut off the boiler, let it cool, open the fill valve on the water inlet pipe and add water. If your system has an automatic water fill valve, call a service professional.

Finally: While the boiler needs the most maintenance and care, it’s important to keep the radiators in good shape too. In order to retain heat and operate efficiently, most steam pipes are covered with insulation (used as a heat shield, around and under the radiator cover).

Never tamper with this insulation. Visually check the condition of what you can see; if it looks excessively cracked, dry or crumbling, have it serviced or replaced. Never add, remove or change existing insulation yourself, as doing it wrong can present a severe fire hazard; always call a professional. If you’re in the home-buying process: when it’s time for the home-inspection, choose an experienced, professionally trained home inspector who is familiar with steam-heating systems and can accurately evaluate the condition of the existing boiler and radiators.

Charles Furlough is vice president, Pillar To Post Professional Home Inspections.

For more information, visit www.pillartopost.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.