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.
Optimism for the Housing Market
Falling interest rates, an improving economy and a last bit of economic stimulus are helping the housing market stage a revival. In April alone, sales of existing homes jumped 23% from a year ago, according to the trade organization National Association of Realtors. Sales of new homes rose even faster, up 48% from a year ago. What's more, a growing number of economists believe the three-year plunge in housing prices is at an end.
"Units, volume and sales price are up on all fronts," said real estate broker Todd Hetherington, based in Alexandria, Va. "Houses that are priced well are getting multiple offers in the first week."
A recent study of 92 economists by financial-products firm MacroMarkets found that on average housing prices are expected to drop slightly in 2010 and begin rising again next year.
"Low interest rates will be a powerful incentive," says William Hummer, chief economist for Wayne Hummer Investments. "People who want to be home owners will get back into the market."
-- "Is the Housing Market on the Rebound?," by Stephen Gandel, Time Magazine, May 26, 2010.
Zandi: "It's the Best Time in Our Generation to Buy"
Thanks to the European debt crisis, U.S. mortgage rates are at historic lows. The current average rate for a 30-year fixed loan is 4.87%, according to Bankrate.com. That's the lowest rate for the 30 years since Bankrate started keeping track 25 years ago. Even jumbo loan rates - loans for more than $417,000 - have fallen. The 30-year fixed jumbo loan is at an average rate of 4.5%, down from nearly 6% at this time last year.
"It's the best time in our generation to buy," said Mark Zandi, chief economist at Moody's. "It may be the best time in any generation. Mortgage rates are so low and with homes prices down and lots of inventory, you couldn't pick a better time to buy or re-finance."
-- "Mortgage Rates at New Lows, Thanks to Europe's Debt Crisis," CNBC, Mark Koba, May 24, 2010.
Existing Home Sales Jump in April
Sales of existing homes increased in April for the second month in a row, as buyers took advantage of the government's home-buyer tax credit. Sales rose 7.6% to a seasonally adjusted annual rate of 5.77 million units, according to the National Association of Realtors. Year-over-year, existing-home sales were up 22.8% in April. Prices also increased, with the median price for an existing home at $173,100 in April, up 4% from a year ago.
"Although inventory levels remain above normal and much of the gain last month was seasonal, the housing price correction appears to be essentially over," NAR economist Lawrence Yun said.
-- "Existing Home Sales Buoyed by Tax Credit," Wall Street Journal, by Jeff Bater and Darrell A. Hughes,
May 24, 2010.
Largest Year-to-Year Gain in Case-Shiller Since 2006
The Case-Shiller Home Price Indices for March were reported by S&P as showing "renewed weakness" for housing prices. The accompanying chart (click to enlarge) shows year-to-year percentage increases in the seasonally-adjusted Case-Shiller indices, with the following highlights (which seem to indicate more renewed strength than renewed weakness):
•· Two consecutive monthly home price increases in February and March, following 37 consecutive monthly declines in the home price index.
•· The February and March increases were the first two back-to-back monthly gains in home prices since November and December 2006.
•· The March gain of 2.42% was the largest monthly increase in the Composite-20 index since October 2006.
-- "Largest Year-to-Year Gain in Case-Shiller Since '06," by Mark J. Perry, CarpeDiem.com, May 25, 2010.
Regional Update: Good News from Markets around the Nation
New York Metropolitan Area
While the winds of the housing recovery continue to blow at a moderate pace across the country, in the New York metropolitan area, it's a nor'easter. Earlier this week, the National Association of Realtors reported sales of existing homes jumped 7.6% in April from the same month a year earlier. A large share of the jump was attributed to a handful of especially strong markets in the Northwest and the Northeast, including New York. Sales of existing homes in New York City and its surrounding suburbs posted a 39.6% gain, the fourth-largest rise in sales activities in the country, after Portland, Ore., (49.2%), Pittsburgh (42.2%) and Boston (41.8%).
-- "Strong Markets Pump Up Home Sales," by Robbie Whelan, Wall Street Journal, May 26, 2010.
Pittsburgh
The rush to meet an end-of-April deadline to qualify for a federal tax credit helped boost average home prices in the Pittsburgh region last month by 7.7% compared with a year ago. The average sale price in April jumped to $146,049 from $134,756 last year, according to figures released by RealStats, a South Side company that provides real estate information. "The market here is still good. I have three offers coming in on one of my properties, and that may be because mortgage rates have dropped even lower," George Hackett, president of a Pittsburgh real estate company.
-- "Pittsburgh Home Prices Surge," by Sam Spatter, Pittsburgh Tribune-Review, May 26, 2010.
Massachusetts
Massachusetts home sales continued to surge in April as buyers rushed to take advantage of low interest rates, affordable prices and the final days of the home-buyer tax credit.
•· Last month, 3,357 single-family homes were sold in Massachusetts, compared with 2,351 for the same month last year - a stunning 43% hike and the 10th consecutive month of increased sales, according to the MLS Property Information Network.
•· Prices also rose. The median price of a single-family dwelling increased by 7% to $291,180, marking the fifth straight month that home prices have risen year-over-year.
•· Condominium sales were also up dramatically from a year ago, according to MLS data. A total of 1,546 condos changed hands in April, a 62% hike for the same period last year.
"Confidence is building," said William Dermody, a regional vice president for the Massachusetts Association of Realtors.
-- "Mass. Home Sales Soar in April," by Thomas Grillo, Boston Herald, May 25, 2010.
Michigan
April home sales in Michigan rose by 9.46% in April from 10,042 in April 2009 to 10,992, according to the Michigan Association of Realtors. The average sales price in Michigan for existing home sales in April rose nearly 15% from $88,171 in April 2009 to $101,282.
-- "Michigan Existing Home Sales Up," by Greta Guest, Detroit Free Press, May 24, 2010.
California
•· An estimated 37,481 new and resale houses and condos were sold statewide last month. That was up 0.5% from 37,295 in March, and down 1.3% from 37,967 for April 2009.
•· The median price paid for a home last month was $255,000, unchanged from March, and up 15.4% from April 2009. The year-over-year increase was the sixth in a row, following 27 months of year-over-year decline.
•· Of the existing homes sold last month, 38.1% were properties that had been foreclosed on during the past year. That was down from a revised 40.3% in March and down from 54.6% in April 2009.
-- "California Statewide April Home Sales," by DQNews.com, May 20, 2010.
Las Vegas
The price of existing homes in April in Las Vegas rose to its highest level in more than a year, according to figures released Tuesday by SalesTraq. The median price of existing homes closed in April was $126,000, the highest median price since it was $134,000 in March 2009, the firm reported. The price is $6,000 higher than March 2010. Prices had been expected to increase since foreclosure sales have declined in recent months.
-- "Report: Home Prices at Highest Level Since March 2009," by Buck Wargo, Las Vegas Sun, May 18, 2010.
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