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Released: January 2012
Commentary 2012 shows signs of an improving housing market as the U.S. economy continues its forward-moving yet slow road to recovery. Although there are economists projecting housing prices will decline further, aided by distressed property sales that sell at a greater discount, these prices are expected to rebound considerably later in the year and continue into 2013. Factors that continue to impede a speedier recovery in the housing are consumer confidence, job-growth uncertainty, and tough lending standards that keep many otherwise qualified buyers from financing a home purchase. However, consumer confidence may be showing signs of improvement according to a report released by Fannie Mae on December 7, which revealed that consumer sentiment toward home prices is stabilizing and that, for the first time in six months, more people believe that prices will soon begin to rise. This is an encouraging development, as much of our economic vitality depends upon the overall confidence of the consumer, and could trigger even stronger home sales as more people feel confident that prices will go up. As the new year begins, many consumers appear to be in a holding pattern, waiting to see how the economy reacts to the different demands both here and abroad. Yet with steadily increasing sales and record-breaking affordability, now is the time to take advantage of these opportunities to buy or sell a home. Sources: Fiserv, Fannie Mae
Home SalesIn Millions Sales among existing homes rose in November by a seasonally adjusted 4%, to 4.42 million units up from 4.25 million in October, and are 12.2 percent above last year at this time. Lawrence Yun, chief economist for NAR said, “Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010 – a genuine sustained sales recovery appears to be developing.” Original Tax Credit Scheduled to Expire November ’09-’10 November ’10-’11 Expanded Tax Credit Expired Latest Data Release: December 21, 2011. Source: National Association of Realtors “Home Sales” refer to transactions that include single-family, townhomes, condominiums, and co-ops. “Contract Failures” refer to those caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including home inspections and employment losses.
Home PriceIn Thousands While median home prices in November rose to $164,200 from $162,500 in October, they are down 3.5% from a year ago. David Stiff, chief economist at Fiserv, stated, “Housing affordability has improved dramatically because of declines in both prices and mortgage interest rates. The monthly mortgage payment for a median-priced single-family home is now $700, compared to $1,140 in 2006—a decline of nearly 40%.” (Based on 2011 Q2 figures) *Sales for the past several years were rebenchmarked and revised down to account for a smaller for sale by owner (FSBO) percentage and more homes being listed in multiple local market MLS systems. The overall trend remains unchanged, only the actual numbers are impacted. For more details: http://speakingofrealestate.blogs.realtor.org/2011/12/15/ehs-rebenchmarking-whats-it-all-about/ November’09-’10 November ’10-’11 Latest Data Release: December 21, 2011 Source: National Association of Realtors
Supply of InventoryIn Months With increased levels of sales, the inventory of homes on the market continued to decrease, falling by 5.8% in November to 2.58 million homes available for sale, or an equivalent of a seven month supply at the current sales pace. This positive sign of increasing sales and lower inventories are keeping the housing market on track for stabilizing home prices and a stronger housing sector. Tax Credit Expired November’10-’11 More than 6 months = Buyer’s Market November ’09-’10 Less than 6 months = Seller’s Market Latest Data Release: December 21, 2011 Source: National Association of Realtors
Mortgage Rates30-Year Fixed Mortgage rates continued to push historic lows in November, dropping another .08 points, to 3.99% for a 30-year fixed mortgage. "Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's homebuyers are paying over $1,200 less per year on a $200,000 loan,” said Frank Nothaft, Vice President of Freddie Mac. Source: Freddie Mac; December 31, 2011
This Month in Washington The U.S. economy continues to show signs of recovery as home sales increased by 4% from October to November, and the U.S. GDP grew by 1.8% in the third quarter of 2011. However, in order to sustain this growth and even move toward a more rapid recovery, there are still many things that beg attention, one of which is the mortgage-finance system. With banks refusing to lend, the supporting of the housing finance system still relies heavily upon the quasi-government agencies Freddie Mac and Fannie Mae. As the lack of available credit continues, the pent-up demand demonstrated over the last few months by increasing mortgage contract activity, will continue to build as many would-be-home buyers are unable to qualify for loans. If these people were able to purchase a home, this would help decrease the high inventory of homes on the market, spur the appreciation of home prices, and equip the housing market to better handle the supply of distressed properties still being held by banks. What are banks waiting for? In a word - guidance. As a result of recent litigation and changing regulations, many banks are uncertain how to deal with the non-performing loans and REOs that they are holding on their books. This uncertainty means that banks are unwilling or unable to sell or remove these bad assets from their books. With elections looming and a prevailing atmosphere of bipartisanship in Washington, both Congress and the White House have deferred, at least for the time being, giving even minimal guidance to the heavily regulated banks. Meaning that for now, a slow recovery is the pace that has been set for 2012. Sources: U.S. Department of Commerce, Wall Street Journal, National Association of Realtors, Bloomberg
Time To Sell If one of your New Year’s resolutions is to sell your home, here are a few things to keep in mind: Although the traditional home-buying season starts in the spring, here are some reasons why listing your home now, rather than waiting, could prove to be a smart decision. On average, the number of home sales in January drops almost by half from the previous year’s peak. A house that is priced right and staged well will stand out even more with less competition. Lenders, home inspectors, movers, and other vendors also see a seasonal dip in transactions. This could mean a quicker, easier, and possibly cheaper time to buy, sell, and move. Even if you’re not ready quite yet, now is a great time to start the conversation with your local real estate agent. He or she can give you pointers on which repairs and preparations to tackle first, and which ones may not be necessary, saving you time and money. Starting now can help you capture the most buyers by busy season. Source: KW Market Navigator and KW Research
Your Local Market Although it is important to stay informed about what is going on in the national economy and housing market, many different factors impact your real estate market. Talk to your KW associate for assistance interpreting the conditions in your local market. KW associates are equipped with the knowledge and information to help you navigate the home-buying or selling process in this challenging market.
About Keller Williams Realty • Keller Williams Realty Inc. is the second-largest real estate franchise operation in the United States, with 700 offices and more than 80,000 associates in the United States and Canada. The company has grown exponentially since the opening of the first Keller Williams Realty office in 1983, and continues to cultivate its agent-centric culture that emphasizes access to leading-edge education and promotes an economic model that rewards associates as stakeholders. The company also provides specialized agents in luxury homes and commercial real estate properties. For more information, or to search for homes for sale contact Lesli Fritts303.263.0558. www.frittsteam.com
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.
