Yesterday on NPR Diane Rehm had a bunch of different economic experts (including Phillip Swagel of the USDOT) to debate the question: Is the worst of our economic suffering over?
Well, I have most definitely been accused of seeing all my glasses as half full, but come on! This is great news! Job data still stinks, but that's a lagging stat anyway. The media, the ever-powerful media, has been real estate's worst enemy in the past 18 months. But not yesterday.
Mark my words, this is the beginning of our recovery. I predicted six months ago that our Cape Cod market would start its rebound in June/July of this year, and it looks like I'm right on target. What does this mean for buyers and sellers? It means buyers better savor their remaining days high on that hog, and sellers--it's time to start sprucing up the joint. Listing season is about to start. I don't think we'll see the la-la land appreciation of a few years ago, thank god. What comes up must always come down. I'd much rather ride a rolling sea than a tsunami. You?

Even in our relatively insulated Cape Cod market we have seen increased foreclosures and declining values. This plus the negative national media has homeowners spooked. They are putting off selling their homes, using the same reasoning they use for the stock market: 'buy low, sell high'.
This is an excellent strategy. Sell when prices are at their peak, then when the market inevitably cools off, move in for the kill. But there is a problem in that reasoning. After you have sold your home for a tidy sum and before you find the real estate bargain of the century, where do you live? Unless you are going to travel the world for a few years or move in with Mom and Dad, you're going to be buying and selling in the same market. So when is it really the right time to sell? Let's do the math.
Suppose you currently live in a home that, in an average market, is valued at $300,000. The house you want is valued at $500,000. In a hot market, with prices up 10%, your home will go for $330,000, but you'll have to pay $550,000 for the one you want. In a cool market, like the one we are currently in, your house will sell for $270,000, but your dream home is only $450,000. In today's market you will save $40,000!
For people who are downgrading to a lesser valued home or condo, it makes sense to hold out until prices come up. But for the vast majority of people, now is the time to make your next real estate move!

...at least for today, because today is MY BIRTHDAY. Go me! I spend a lot of time taking good care of other people: my kids, my husband, my clients. I love it--doing right by the people in my life makes me feel great.
However, there comes a day or two in every year when it really, truly is only all about me, and I just love it! Today my 9-month-old took me out to lunch, my 7- and 10-year-olds took me out for ice cream and then a long hike by the bay, all the kids detailed my car, and my husband and 13-year-old went clothes shopping for me. They served me my favorite garlicky pizza, poured me some red wine and let me eat chocolate cake while they all cleaned up the kitchen.
Aww yeah...

January 25, 2008

Realty Viewpoint: Home Sales Will Jump After First Decline In Decades
by Blanche Evans

The National Association of Realtors has its tally for 2007. While it was the fifth highest sales on record, 2007 also was the first in over 40 years that home prices and sales went down instead of up.

Does that mean housing's in for a rough winter? Maybe not. Sometimes bad news can be good.

Home sales slipped 2.2 percent in December, bringing the total number of transactions in 2007 to 12.8 percent (5,652,000) below 2006 (6,478,000.)

One reason was that mortgage interest rates were much higher for non-conforming loans such as the jumbo market. That impacted homes over $500,000 which dropped to 12.4 percent of all transactions from 14.2 percent in 2006.

What that means is lower-priced markets and homes were better able to hold the line on prices. In fact, for all of 2007, home values went down only 1.4 percent to $218,900 from $221,900 in 2006. That's a difference of $3,000.

But here's an interesting contradiction. Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace. That's down from a 10.1-month supply in November.

How can you have falling sales and reduced inventories at the same time?

Housing sales typically fall in December, but this time, the answer is interest rates. Rates on conventional loans began a significant drop in December. When rates go down there is typically a burst of refinancing activity and purchase applications. Refinancings went up every week in December as interest rates dropped, taking a number of homes for sale or potentially for sale, off the market.

Here are two reasons why Realty Times predicts an active first quarter for housing.

Since conventional rates may not have much further to slide, mortgage activity will increase significantly. Mortgage interest rates have already dropped over 3/4 of a point, which is equivalent to about $150 or more in monthly payments for most conventional homeowners.

Meanwhile, renting is becoming less attractive. According to Realty DataTrust, the average nationwide apartment rent increased 1.9% in 2007 and vacancies decreased.

Higher rents, lower interest rates, and lower housing inventories will convince buyers it's time to act.

Copyright © 2008 Realty Times. All Rights Reserved.

With an award winning staff of writers providing up to the minute real estate news and advice, thousands of REALTORS® in North America reporting daily market conditions, and a nationally broadcast television news program, Realty Times is the one-stop shop for real estate information. That's why over 10,000 real estate professionals have turned to us for their publicity needs.

HOUSING UPDATE
The final score for 2007 is in. December condominium sales in Massachusetts plunged 28 percent compared to December 2006; single-family home sales dropped 20 percent during the same period, according to the Massachusetts Association of Realtors. With homes and condominiums staying on the market longer, residential sales for 2007 declined 4.4 percent, according to the report. Single-family home sales were down 4.3 percent from 43,379 in 2006, to 41,510 in 2007. Condo sales declined 4.4 percent, from 20,747 in 2006, to 19,379 in 2007. The median price for a single-family home declined 1.3 percent to $345,500, while the median price for condos increased 2.5 percent to $282,000. The 2007 median price was down nearly 8 percent from the peak median price of $375,000 in July-August 2005, but up almost 24 percent from 2002.

(from Cape Business Publishing Group's BUSINESS TRENDS NEWSLETTER, 1/30/2008)