Middlesex County – NJ Real Estate Blog

March 2011   Market Update

Gradual progress in the housing market continues at a steady pace without government support. The market has shown remarkable improvement from the initial drop after the expiration of the home buyer tax credit this past July. Although higher-than-normal distressed sales skew the overall picture of home prices downward, inventory continues to shrink and sales continue to rise. The rock-bottom interest rates of 2010 are likely to trend upward. As economists anticipate rates at or above 6% by the end of 2012, buyers are moving off the sidelines and into the market.  

A good sign for long-term market stability is that the median down payment on conventional mortgages has risen to 22%, up from 4% in 2006 and slightly above the 20% standard in the 1990s.   This may keep buyers looking in slightly lower price ranges, but it is a good sign of future sustainability for homeowners and banks alike.   There are still ample opportunities for those who would like down payments below 20%, including some conventional mortgages and those backed by the Federal Housing Administration, Veterans Affairs, and   the Department of Agriculture™s Rural Development loans.

As the economy improves, stimulus efforts by the government and the Federal Reserve Board will gradually wind down, which typically means rising interest rates. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers are encouraged by increased market stability.

Home Sales

in millions

The increasing trend in existing home sales activity continued through January, and for the first time rose above year-ago levels when the home buyer tax credit was in effect. This marks the sixth monthly increase since July when the tax credit expired, and indicates a recovery that™s gaining a firmer footing without government support.  

Home Price

in thousands

Home prices softened in January with median home prices decreasing slightly to $158,800 – 3.7% below the year-ago level. Contributing to this is a larger share of distressed homes sales, which accounted for 37% of sales in January compared to 30%-35% throughout much of 2010. Prices and mortgage rates remain favorable for buyers.

Inventory- Month’s Supply

in months

The uptick in home sales and a shrinking inventory pared down the month™s supply to 7.6 months, a decrease of 7.3% from December and 1% from year-ago levels. This is the lowest level in more than a year and marks the first time since July that the month™s supply is below where it was the previous year. Months of inventory has declined steadily (64%) from its peak of 12.5 months in July and is now back to pre-tax credit expiration levels. The supply of inventory is not far from a seller™s market, which is less than 6 month™s supply.

Source: National Association of Realtors – housing data released Feb 23.

Interest Rates

Mortgage rates jumped above 5% for the first time since April 2009 in January. While rates dipped back to just below 5%, they are expected to continue an upward trend throughout the year. As overall economic recovery remains on track, rates will likely rise to keep inflation in check. Buyers wanting to capture the savings in monthly payments that a historically low interest rate affords are expected to take advantage of excellent buying conditions.

Source: Freddie Mac, Rates as of  Mar 3.

This Month’s Video

Topics For Home Owners, Buyers & Sellers

Preparing your home for sale in a buyer™s market can seem daunting, but these five tips will help you get the best price in the least amount of time.

• Organizing and cleaning is crucial when prepping a home for sale. Potential home buyers have a more positive reaction to homes that are clutter-free and give them the feeling that the home is œmove-in ready.
• Presale home inspection can inform you of any trouble areas within your home that can stand out to potential buyers. An inspection can also help you make any repairs necessary before future open houses.
• Determine replacement estimates before listing your home, even if you are not planning on making the replacements yourself. This information can help buyers to make informed decisions.
• Have your warranties ready “ especially for all those home appliances that will stay within the home after the sale.
• Curb appeal is a crucial factor because it determines first impressions. A negative first impression can cloud their entire opinion about the home.

Contact me,

your local real estate expert,

for information about what’s going on in our area.  

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report.  

The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.   You should not treat any opinion expressed  in This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.   Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.   All information presented herein is intended and should be used for educational purposes only.   Nothing herein should be construed as investment advice.   You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.   All investments involve some degree of risk.   Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in  This Month in Real Estate.

February 2011   Market Update

Gradual improvement in the housing market continues at a steady pace without government support. Six months after two consecutive years of tax incentives for buyers; starting in July 2008 with a $7,500 repayable first-time buyer tax credit, extending to a $8,000 nonrepayable first-time buyer tax credit in January 2009, and ending in June 2010 with the expanded credit to repeat buyers; the market has shown remarkable improvement from the initial drop this past July. With mortgage rates remaining near historic lows and home prices having generally stabilized, economists are expecting further strength in 2011.

Consumers are showing some signs that they™re feeling better: a significant boost in the food and services industry implies they are eating out more, vacations are back on the rise as spending on travel and tourism increased 8% in the third quarter, and household net worth has risen notably thanks to a strong stock market even as they continue to shrink their debt.

As the economy improves, current stimulus efforts by the government and the Federal Reserve Board are expected to gradually wind down, which typically means rising interest rates. Meanwhile, buyers continue to benefit from historically favorable buying conditions and sellers enjoy increased stability in the market.

Home Sales

in millions

The uptrend in existing home sales activity continued through December, increasing by a substantial 12.3% from a month ago. This marks the fifth monthly increase in the past six months and indicates a recovery that™s gaining a firmer footing. While home sales remained 2.9% below the level seen last year, the market™s upward momentum, despite the absence of the tax credit, is a welcoming sign.

Home Price

in thousands

Home prices softened in December: median home prices edged down slightly to $168,800, 1% below the year-ago level. Contributing to this is a larger share of distressed homes sales which accounted for 36% of sales in December. This is compared to 33% in November 2010 and 32% in December 2009. Prices continue to hold steady and mortgage rates remain historically low, offering favorable buying opportunities.

Inventory- Month’s Supply

in months

The surge in home sales and a shrinking inventory pared down the month™s supply to 8.1 months. This is down 1.4 months from November but remains 0.9 months above last year at this time. While still at a relatively high level historically, months of inventory has declined steadily from its peak of 12.5 months in July and is now back to pre-tax credit expiration levels.

Source: National Association of Realtors – December housing data released Janurary 20.

Interest Rates

Mortgage rates are inching up but remain historically low. This trend continues to support home buying, as it translates to significant savings for buyers. As overall economic recovery remains on track, rates are expected to rise to keep inflation in check.

Source: Freddie Mac, Rates as of  Feb 7 .

This Month’s Video

Topics For Home Owners, Buyers & Sellers

  ˜Anti-Flipping™ Waiver Extension

In 2003 the Federal Housing Administration (FHA) feared that flipping homes was the cause of the skyrocketing home prices throughout individual neighborhoods. Because of this, the FHA no longer approved property loans that were resold within 90 days of the original purchase, with the exception of foreclosures owned by government sponsored enterprises (GSEs) such as FHA, Fannie Mae, and Freddie Mac. The anti-flipping rule is designed to help protect the FHA™s mortgage insurance program and federally chartered financial institutions from losses.

In February 2010, the FHA initiated a one-year suspension on the regulation that prevented œflippers from purchasing single-family homes and releasing them into the market within 90 days. Since then, the FHA says it has insured 21,000 loans that had exchanged hands within the previous 90 days. The loans are worth more than $3.6 billion and would not have qualified for financing before suspension. An analysis of these loans suggest they do not present a greater credit risk than other loans, which lent support to the suspension™s extension.  

The government sent a notice to banks in mid-January of 2011 in which it announced the extension of the waiver through the end of the year. According to FHA Commissioner David Stevens, the purpose of the extension was to accelerate the resale of REO properties in neighborhoods where there is a high rate of foreclosure. This will facilitate the purchase of homes that have recently been œflipped. As a result, foreclosed properties will be moved off the market faster, reducing the amount of vacant homes in neighborhoods throughout the United States.

Limitations considered by the FHA consist of the following:

1. 20% Rule. If resale is higher than 20% of the original price, one must show proof of justified price. For example, if a $200,000 house is purchased and the resell price is $245,000, the house must undergo additional underwriting guidelines, which is considered a double appraisal.
2. Title Hold. No simultaneous closings are allowed when the seller holds a property. In other words, back-to-back, same-day closings to an FHA end-buyer is prohibited.
3. Short-term Funding. Investors must come up with short-term funding of the 30-to-60-day variety if their desire is to buy/fund and in order to sell to an FHA end-buyer.
4. Previous Flips. A property cannot show signs of prior flipping activity. If so, the FHA has the right to object.
5. Transactions at Arm™s Length. Transactions must show no identity of interest between the buyer and the seller or other parties that participate in the sale of a property.

Overall, this will help lower holding costs for investors/flippers allowing them to continue flipping more properties. In return, this will help bring more desirable homes to the market for first-time home buyers.

Source: Inman News, ReatlyTimes.com

Contact me,

your local real estate expert,

for information about what’s going on in our area.  

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report.  

The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.   You should not treat any opinion expressed  in This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.   Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.   All information presented herein is intended and should be used for educational purposes only.   Nothing herein should be construed as investment advice.   You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.   All investments involve some degree of risk.   Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in  This Month in Real Estate.

January 2011   Market Update

The housing market is recovering. As more home buyers are taking advantage of the improved affordability conditions. With mortgage rates hovering around recent record lows and home prices having generally stabilized, economists are expecting an upward trend to a healthy and sustainable level in 2011.

Encouraging signs are showing up across the economy. Retail sales recently hit their highest level since before the recession. Key measures of small and big businesses™ optimism marched back up to prerecession levels and new claims for jobless benefits are trending lower. Together they bode well for steady job creation and improved consumer confidence which is generally manifested in more spending.

As the economy improves, current stimulus efforts by the government and the Federal Reserve Board are expected to gradually wind down. Meanwhile, serious buyers stand to benefit from historically favorable buying conditions.

Home Sales

Existing home sales resumed on an upward trend since bottoming in July. Sales activity rose to a seasonally adjusted annual rate of 4.68 million in November. This was up 22% from July and 5.6% above the 4.43 million level in October, but remained 27.9% below the 6.49 million tax credit rush a year ago. As steady job creation is expected to continue, industry experts are hopeful for 2011.

Home Price

Home prices continued to stabilize. Median home prices edged up slightly to $170,600, 0.4% above year-ago levels. Distressed homes have accounted for a fairly stable market share, representing 33% of sales in November. This is on par with the 34% in October and 33% in November 2009. Historically favorable interest rates, coupled with stable home prices, continue to offer advantageous buying opportunities .

Inventory

The number of homes on the market continued to decline. Total inventory fell to 3.71 million in November from 3.86 million in October. This reflects the increasing response from buyers to improved affordability conditions. As lending standards return to historical norms and consumers become more confident about their financial situation, more people will be able to buy their first home, move up, or invest.

Affordability

Housing affordability set a new record in November. The relationship between mortgage rates, home prices, and family income is the most favorable on record for buying. The home price-to-income ratio, currently at 13.5%, continues to remain well below the historical standard. Stabilizing home prices and rising interest rates are expected to begin drawing affordability back up toward more normal levels.

Source: National Association of Realtors – October housing data released December 22.

Interest Rates

Mortgage rates are inching up but remain historically low. This trend continues to support home buying as it translates to significant savings for buyers. As overall economic recovery remains on track, rates are expected to rise to keep inflation in check.

Source: Freddie Mac, Rates as of  Jan 7.

This Month’s Video

Topics For Home Owners, Buyers & Sellers

Use the Season to Your Home-Selling Advantage

While summer is generally known as the peak season for home sales activity, the winter can also offer great advantages for sellers “ such as less competition from other sellers. With a little effort, you can use the season to your home-selling advantage.

Let™s put these ideas to work, so your home shows at its best.

Keep snow and ice at bay.If the buyer can’t get in easily, the house won’t sell. That means keeping walkways and driveways free of the frozen stuff. You want to make the home look well maintained.

Warm it up. Think warm, cozy, and homey. Before a buyer comes through, adjust the thermostat to a warmer temperature to make it welcoming. If you have a fireplace, turning it on right before the tour can create a more welcoming ambience.

Emphasize winter positives.Is your home on a bus route or some other vital service that means it’s plowed or deiced regularly in bad weather? Be sure to mention that to the buyers.

Make it festive. Even if you’re not actually going to be present, greet your buyers as if they were going to be guests at a party. Set up the dinner table with the good china and silver. Have a plate of cookies for your guests, some warm cider, or even chilled bottles of water.

Use the season to your advantage.   When the holidays are over, you can still use winter wreaths and dried arrangements around the door to  spark interest. In the winter, with the leaves off the trees, you might also have a nice view that isn’t as apparent in the spring and summer months.

Source: msn.com

Contact Cathy Chaudemanche,

your local real estate expert,

for information about what’s going on in our area.

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report.

The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.   You should not treat any opinion expressed  on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.   Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.   All information presented herein is intended and should be used for educational purposes only.   Nothing herein should be construed as investment advice.   You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.   All investments involve some degree of risk.   Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in  This Month in Real Estate.

December 2010

Market Update

The housing market continues its uneven and gradual recovery without the aid of the tax credit. Experts believe this will be the trend moving forward. Interest rates hit another record low but have started moving back up as the overall economy improves.  

Despite a less-than-expected employment report, consumers seem to be feeling brighter about the future. While the Consumer Confidence Index about the Present Situation rose only slightly, the Expectation Index showed substantial improvement. As we enter into the holiday gift-buying season, consumers are expected to be out shopping and buying more gifts for under the tree this year. Reports indicate a 13-24% increase in retail sales from last year. Consumer spending accounts for about half of all economic activity in the US; as long as consumers are spending and using debt responsibly, this is a positive indicator for economic growth.

This march back up continues to provide excellent opportunities: an ample selection of homes, affordable prices, and historically low interest rates. Experts anticipate both the economy and the housing market will continue on a path to a complete recovery.

Home Sales

Home sales dropped slightly in October, compared with the previous month, despite a temporary moratorium on foreclosures, which have recently represented more than one third of sales activity. Sales were up 15% from July when the tax credit expiration caused a drop-off in sales. The most significant indicator of a market rebound, however, appears to be the October pending sales report. A 10.4% increase in pending sales, which measures homes under contract, signals stronger home sales activity in the coming months as the homes under contract close.

Home Price

Home prices have shown considerable stability when compared with the previous several years. October™s median home price declined slightly, down less than 1% from the previous month and year. A recent study shows an increased interest in smaller homes. Smaller homes often mean smaller price tags, depending on location. While the market currently provides many opportunities for buyers, sellers look forward to the general trending upward of home price as the market™s stability without government support grows deeper roots.

Inventory

There are fewer homes on the market. Total inventory fell to 3.86 million in October from 4 million in September. The month™s supply* of homes on the market fell to 10.5 months.   While still at a relatively high level, months of inventory has shrunken substantially since July™s 12.5 months. As lending standards continue to loosen and return to historical norms, more people will be able to buy their first home, move up, or invest and take advantage of the abundant opportunities in the current market “ including   historically low interest rates, highly affordable prices, and an ample but shrinking selection of homes.

* Month™s supply of inventory measures how many months it will take to sell all the homes that are for sale, if no new homes come on the market and buyers continue to buy at the same pace or rate.  

Affordability

Housing is at record affordability levels. Prospective home buyers stand to benefit from the lowest mortgage rates in decades, as well as advantageous home prices. The home price-to-income ratio, 13.5% in October, continues to remain well below the historical standard. Stabilizing home prices and rising interest rates are anticipated to begin drawing affordability back up toward more normal levels.

Source: National Association of Realtors – October housing data released November 23.

Interest Rates

Mortgage rates hit another record low of 4.17% on November 11 after which they rose to close to 4.4% for the remainder of the month. Historically low rates have contributed to real savings for buyers who will continue to realize those savings for as long as they own the home. As overall economic recovery gains traction, rates must rise to keep inflation in check. Industry economist Lawrence Yun anticipates rates to be between 5.4% and 6% by the end of 2011.

Source: Freddie Mac, Rates as of  December 2.

This Month’s Video

Topics For Home Owners, Buyers & Sellers

Prime Time to Buy

Homes Have Never Been More Affordable

For most individual home buyers, there are only a few factors that really matter:

        ¢     Can I afford this home?

        ¢     Is it a good investment?

        ¢     Does it meet my family™s needs?

So it™s a bit surprising that the most important housing statistic has gone largely unreported: homes have never been more affordable.   Affordability, measured by the median mortgage payment on the current median-priced home ($171,000) as a percentage of the median household income ($62,141), is lower than it™s been in a generation.   The chart below shows affordability at a record level, having significantly improved since the height of the recent housing boom in 2006.

For more detail, check out Keller Williams Realty™s 7 Reasons Why Now Is a Great Time to Buy a Home!

Sources: National Association of Realtors, KW Research

Contact me,

your local real estate expert,

for information about what’s going on in our area.  

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report.  

The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.   You should not treat any opinion expressed  on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.   Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.   All information presented herein is intended and should be used for educational purposes only.   Nothing herein should be construed as investment advice.   You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.   All investments involve some degree of risk.   Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in  This Month in Real Estate.