Daily Real Estate News | December 14, 2007
Interest Rates Climb for the Week
Freddie Mac reports that 30-year fixed mortgages averaged 6.11 percent, an increase from the week-ago rate of 5.96 percent.
Until this week, interest on 30-year loans had either been holding steady or declining each week since mid-October.
The increase to 6.11 percent comes as prospective homebuyers nationwide continue to struggle amid an ongoing credit crisis, prompting Freddie Mac chief economist Frank Nothaft to remark: "The housing segment of the economy still has a way to go before bottoming out."
Rates on 15-year fixed mortgages, meanwhile, climbed to 5.78 percent from 5.65 percent a week earlier; while five-year adjustable-rate mortgages jumped to 5.89 percent from 5.75 percent, and one-year ARMs bumped up to 5.5 percent from 5.46 percent.
Source: Philadelphia Inquirer (12/14/07)
Daily Real Estate News | December 10, 20073
Places to Find Money for a Down Payment
Buyers who don’t have a 20 percent down payment are finding it harder and harder to buy a home. Here are some sources of money that are still available and the pluses and minuses of using them.
- Borrowing from a 401(k). Only some companies allow this. The maximum available is $50,000 ($100,00 if both spouses have 401(k)s) and the loan must be repaid within five years. Failure to do so and the loan will be considered a withdrawal, leaving the borrower liable for penalties and federal income tax.
- Withdrawing up to $10,000 from an IRA for a purchase of a first home. Spouses who both have IRAs can withdrawal a total of $20,000. A potential borrower who hasn’t owned a home in the past three years is considered a "first-time buyer" for this specific purpose and can make a withdrawal. Federal taxes must be paid on the withdrawal at the borrower’s current marginal tax rate.
- A gift. If buyers are comfortable asking for money, their parents, friends, and relatives can give a gift toward the down payment. But for the lender to approve it, the giver must sign a gift letter stating that the money doesn’t need to be repaid.
Source: ThinkGlink.com, Ilyce Glink (12/07/07)
Daily Real Estate News | December 14, 20077
Tips for Selling a Home Faster and for More
Online real estate firm Redfin offers seven recommendations for selling a home faster and for more money.The seven tips come from an analysis of academic research, multiple listings service data, and from information posted on Redfin’s various Web sites. 1. Don't overprice your property. According to a 2002 academic study of 3,490 California listings, homes without a price reduction sold for 97 percent of the initial list price, whereas homes with a price reduction sold for 88 percent of the initial list price.2. Set your price to show up in Web searches. A September 2007 Redfin study analyzed how online search filters affect traffic to a listing. Because real estate sites filter on price in $25,000 or $50,000 increments, listings priced at or below these thresholds — $250,000 rather than $251,000, or $325,000 rather than $326,000 — get as much as 7.1 percent more online visits.3. Debut on Friday. A December 2007 Redfin analysis of its online traffic for 119,079 listings across seven markets found that listings that debut on Friday get on average 7.7 percent more visitors in their first seven days than those that debut on the worst day, Thursday.4. Get sellers engaged with your agent. According to several academic studies, motivated, active sellers are able to sell their property as much as 30 percent faster.5. Market the property online. Promoting a listing on Web sites beyond the local Multiple Listing Service can drive a significant number of new online visits to a property. A December 2007 analysis of 121 Redfin listings found that promoting the listings on Craigslist resulted in an average of 6.8 online visits to the property for each Craigslist promotion.6. Have sellers stay put. The study of 3,490 California listings, cited earlier, found that vacant homes were 9.5 percent more likely to undergo a price reduction.7. Wait to list your property until neighboring foreclosures are off the market. According to a November 2007 report from the Center for Responsible Lending, a foreclosure costs neighboring home owners an average of $5,000 when listing their property.Source: Redfin (12/14/07)
Daily Real Estate News | December 10, 2007
NAR: Another Monthly Gain for Pending Home Sales
The Pending Home Sales Index, a forward-looking indicator based on contracts signed, increased 0.6 percent in October, marking the second consecutive monthly gain, according to the NATIONAL ASSOCIATION OF REALTORS®.
The index rose to 87.2 from an upwardly revised reading of 86.7 in September. However, the October index still was 18.4 percent below year-earlier reading of 106.8.
“The broad trend over the coming year will be a gradual rise in existing-home sales,” says Lawrence Yun, NAR’s chief economist. “But because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007.” A recovery for new-home sales is unlikely before 2009, he adds.
Yun says the worst part of the credit crunch has already worked its way through the data: “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”
Existing-home sales in 2007 are likely to total 5.67 million this year, the fifth highest on record, and then rise to 5.70 million in 2008. By comparison, home sales in 2006 totaled 6.48 million.
Regional Pending Home Sales Data
Pending home sales in the Northeast jumped 16.0 percent in October to 80.6 but is 11.1 percent below a year ago. In the West, the index rose 8.4 percent to 87.3 but is 16.9 percent lower than October 2006. The index in the Midwest slipped 1.4 percent in October to 85.5 and is 11.7 percent below a year ago. In the South, the index dropped 7.8 percent in October to 91.6 and is 25.3 percent below October 2006.
“The improvement in the Northeast reaffirms a trend apparent for some months now that shows signs of recovery, noteworthy because that was the first region to slump, and the gain in the West indicates some easing of interest rates for jumbo loans,” Yun says.
He says that raising the loan limits on FHA and GSE-backed conventional loans will markedly improve mortgage availability.
A Look at Prices: Slight Growth Expected
Prices for existing homes should be down 1.9 percent to a median of $217,600 for all of 2007, and then rise 0.3 percent to $218,300 in 2008.
“Home price growth in the vast affordable midsection of America will help raise the national median existing-home price slightly in 2008. I then expect price appreciation to return to more normal patterns in 2009, perhaps rising one or two percentage points above the rate of inflation,” Yun said.
Even with a modest decline in the national aggregate price this year, it’s important to keep in mind that nearly two-thirds of the metro areas in the U.S. are showing price increases, Yun says.
“The apparent disparity results from fewer sales in high-cost markets, so a change in the mix of sales is dragging down the national median home price.”
Areas showing healthy price gains include disparate markets such as Gary-Hammond, Ind.; Binghamton, N.Y.; Corpus Christi, Texas; and Spokane, Wash. “We can’t emphasis enough how much local conditions vary, even within a given area, so it’s important for consumers to make decisions based on local market conditions.”
Forecast for New Home Sales
New-home sales are forecast at 788,000 this year and 693,000 in 2008, down from 1.05 million 2006; no sustained improvement is seen for new homes until 2009.
Because builders have correctly adjusted production, housing starts, including multifamily units, will probably total 1.36 million this year and 1.16 million in 2008, down from 1.80 million last year.
The median new-home price is projected to drop 3.0 percent to $239,100 for 2007, and then decline another 0.2 percent to $236,600 in 2008.
Economic Outlook: Mortgage, GDP, Employment
The 30-year fixed-rate mortgage is estimated to rise slowly to the 6.4 percent range by the end of 2008, with additional cuts in the Fed funds rate lowering short-term interest rates.
Growth in the U.S. gross domestic product (GDP) should be 2.1 percent in 2007, down from a 2.9 percent growth rate last year; GDP growth is forecast to improve to 2.4 percent in 2008.
The unemployment rate is likely to average 4.6 percent for 2007, unchanged from last year, but rise to 5.0 percent in 2008. Inflation, as measured by the Consumer Price Index, will probably be 2.8 percent this year and 2.7 percent in 2008, down from 3.2 percent in 2006. Inflation-adjusted disposable personal income is estimated to grow 3.1 percent this year, the same as in 2006, and then grow 2.2 percent next year.
— REALTOR® Magazine Online
Daily Real Estate News | November 30, 2007
Mortgage Rates Drop to Two-Year Lows
The 30-year fixed mortgage rate fell to a more than two-year low in the week ended Nov. 29, slipping to 6.1 percent from 6.2 percent the prior week.
Freddie Mac also reported that the 15-year fixed loan rate fell to 5.73 percent from 5.83 percent over that same time span, and that interest on five-year adjustable-rate mortgages dipped to 5.86 percent from 5.88 percent.
Meanwhile, the one-year ARM bumped up to 5.43 percent from 5.42 percent.
Freddie Mac chief economist Frank Nothaft attributed the decline in mortgage rates to worries about an economic downturn tied to the weak housing and credit markets, which has pushed down interest rates on U.S. Treasuries.
Source: Baltimore Sun (11/30/07)
© Copyright 2007
Daily Real Estate News | November 14, 2007
Absorption Rate Key to Successful Pricing
Telling sellers the price they want to hear may get you the listing, but it won’t sell the home, Zan Monroe, ABR®, CRB, CRS®, said during a presentation at the 2007 REALTORS® Conference & Expo on Tuesday.
Only pricing the listing right will do that, said Monroe, whose comic presentation style had the audience in stitches. And the right price depends in large part on the current absorption rate in your market. Here’s how you find that:
- First, determine the number of homes closed in your market over a specific period — say, 12 months. You can get this data from the MLS.
- Next, divide the number of homes by the number of months in the period — in this case, 12. This calculation gives a per month absorption rate.
- Last, divide the rate into the number of current listings. This yields the months’ supply of homes.
Six months’ supply is considered a balanced market — when the number of listings roughly equals the number of buyers, says Monroe. Numbers over six represent a buyers’ market and those below a sellers’ market.
To assess sales trends, you can also calculate supply over shorter six- and three-month periods. “Price in real estate is mostly a matter of supply and demand, just like in every other industry,” said Monroe.
Once you have these basic calculations down pat, you can focus on absorption in particular neighborhoods or price ranges, says Monroe. Showing clients local absorption rates will give sellers the information they need to price their homes to sell. “Once they’ve arrived at a price, you can decide whether you want to spend your marketing dollars selling it,” says Monroe. If they don’t price it realistically, he concluded, then seriously consider taking a pass on the listing.
Monroe also explained how to calculate the odds of selling any one home. “Even in a hot market, it’s rare for more than 50 percent of homes to sell,” he said. To make this calculation:
- Search the MLS to determine how many transactions have closed in the last six months.
- Divide that number by the number of new listing that came onto the market during the same six months. (Don’t include listings that expired and then were relisted.)
This equation gives you the percentage of homes entering the market that actually sold. For example, if 100 homes sold and 200 were listed, the odds of selling are 50 percent.
— REALTOR® Magazine Online
Daily Real Estate News | November 14, 2007
Know When to Walk Away From Unrealistic Sellers
Real estate practitioners need to be realistic with sellers about current market conditions and be prepared to walk away from potential listings if sellers don’t want to price for sale, agree speakers at Success in the New Normal, part of CRS® Day at the NAR Conference.
“I used to be afraid to let a listing go. But in today’s market, if it isn’t priced right, it isn’t going to sell,” says Bob Wolff, CRS®, GRI, with RE/MAX Real Estate Services in Monarch Beach, Calif. He points to press coverage of the challenging housing situation in his Southern California market when discussing pricing with potential sellers.
Allan Domb, CRS®, CIPS, with Allan Domb Real Estate in Philadelphia agrees such coverage can be useful for any seller out there who doesn’t think the market’s changing. “The press coverage is a great wake-up call,” he says.
Communicate the Market Data
Speakers also suggested acquainting sellers with local market sales absorption rates and financial analyses that show the cost of an improperly priced home, which can languish on the market for several months.
“Some people are still two years ago,” when thinking about what price they can get for their house, says John Riggins, CRS®, CRB, John Riggins Real Estate in Honolulu.
Grow Your Investor Business
On the buying side, experts said you should expand the pool of investors you work with, noting this is a good time for those interested in investing in residential real estate. Domb says he tells associates that any past buyer could potentially be a future investor.
Even those buying homes to live in themselves should be reminded that “there has never been a better time to buy than right now,” says Riggins.
The six panelists agree that market conditions, and their jobs, have changed dramatically. “From 1995 to 2005, we were order takers. Now, we have to be real sales people,” says Domb. But all say they maintain a positive attitude. “We’re needed now, which really helps make me positive,” says Riggins. Agrees Domb: “this is our time, our time to be professionals. We can do this job.”
— REALTOR® Magazine Online
Daily Real Estate News | November 6, 2007
Could Mortgage Rates Drop to 5 Percent?
The manager of the world’s largest bond fund predicted Monday that the Federal Reserve “cannot afford” to let U.S. housing prices fall and will have to cut interest rates aggressively to prevent it from happening.
"A Fed cannot afford to let homes go down by 10 to 15 percent like we saw in Japan," Bill Gross, chief investment officer of Pacific Investment Management Co., said on CNBC Television. "We've only begun to see the pain from the standpoint of the home owner in terms of those monthly payments. Defaults and delinquencies will increase as we extend throughout 2007 and then into 2008."
Gross expects the Fed to cut the federal funds short-term rate to 3.5 percent, which implies that the 30-year mortgage rates will come down to 5 percent to 5.5 percent.
Source: Reuters News (11/05/07)
Slow Sales? Think Global, Not Local
Tuesday, October 13, 2007 - By Staff Writer, National Realty News |
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STUART, FL - Getting prospects is no problem - there never seems to be a shortage of those. Potential buyers line up to look and think about it while they consider the dozen or so other properties that are similar to your listing. But prospects and "looki-loos" waste your time and don't earn you a commission. Buyers do.
You spend so much time trying to turn prospects into buyers. Wouldn't it be great if you could just skip that step entirely and secure a client while they are at the buyer phase? You can if you know where to find them..and you target your advertising budget appropriately.
Stop and look at where you're spending your advertising budget right now and ask yourself if these avenues gain the interest of prospects or buyers.
It is estimated that over 90% of a real estate agent's advertising budget goes to traditional print advertising in newspapers and homebook ads. This must mean that these ads are successful, right? This is what most agents assume, so let's look at some hard data from the National Association of Realtors (NAR).
According to the NAR® 2006 Profile of Home Buyers and Sellers report, only 5% of buyers found their home from a print ad, and only 2% of buyers found their agent from a print ad. Instead, buyers are utilizing the internet. Over 80% of home buyers today actually start their home search online. And they aren't just looking, they are taking action. Buyers are five times more likely to purchase a home they found on the internet than in a print ad.
"Print advertising still makes up a large portion of an agents' advertising budget and I understand that logic - it's worked for them in the past and it's something that their clients expect", said Shawn Pringle, president of TopNet Solutions.
"But the fact of the matter is that people that are using the internet are better prospects and more likely to pull the trigger. Online listings are where the buyers are," added Pringle. "If you showed your clients these statistics, do you think they would object if you re-allocate your advertising budget to focus more on a channel that is proven to produce better results?"
The California Association of Realtors further enforces NAR's data with their own numbers. C.A.R. reports that internet homebuyers spend nearly three times as much time investigating real estate markets before contacting an agent, indicating they've done their homework and are ready to get down to business. C.A.R. data also shows that internet homebuyers on average purchased a more expensive home than traditional homebuyers - a whopping $81,802 more.
"Yes, we're in a market slump but there's no reason why agents can't grow their business right now", said Pringle. "Other markets, such as Canada, are booming and it's because agents are adapting and profiting from new buyer attitudes and tendencies."
"Buyers are looking online to make their purchases, not in the local newspaper. Not only is the internet more convenient for home buyers - they can browse at their work desks or at home in the evening - but it also extends your sales outreach to everyone that is online, not just those in your area who subscribe to the newspaper or pick up a homebook at the local grocery store. The web gives you a worldwide audience. If agents want to get ahead right now they need to think global, not local." |
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