What is happening with existing home sales at this time?

A spring thaw? Let's hope so. Sales of existing-home sales rose in March 2011, continuing an uneven recovery that began after sales bottomed last July, according to the National Association of REALTORS®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7% to a seasonally adjusted annual rate of 5.10 million in March from an upwardly revised 4.92 million in February, but are 6.3% below the 5.44 million pace in March 2010. Sales were at elevated levels from March through June of 2010 in response to the home buyer tax credit.
Lawrence Yun, NAR chief economist, expects the improving sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain—primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
NAR’s housing affordability index shows the typical monthly mortgage principal and interest payment for the purchase of a median-priced existing home is only 13% of gross household income, the lowest since records began in 1970.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.84% in March, down from 4.95% in February; the rate was 4.97% in March 2010.
Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago—before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.
“Given that FHA and VA government-backed loan programs turned a modest profit over to the U.S. Treasury last year, and have never required a taxpayer bailout, we believe low-downpayment loans should continue to be available for those consumers who have demonstrated financial responsibility and are willing to stay well within their budget. Raising the downpayment requirement would unnecessarily deny credit to many worthy middle-class families and veterans,” Yun said.
A parallel NAR practitioner survey shows first-time buyers purchased 33% of homes in March, compared with 34% of homes in February; they were 44% in March 2010.
All-cash sales were at a record market share of 35% in March, up from 33% in February; they were 27% in March 2010. Investors accounted for 22% of sales activity in March, up from 19% in February; they were 19% in March 2010. The balance of sales were to repeat buyers.
The national median existing-home price for all housing types was $159,600 in March, down 5.9% from March 2010. Distressed homes—typically sold at discounts in the vicinity of 20%—accounted for a 40% marketshare in March, up from 39% in February and 35% in March 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said some renters are looking to homeownership as a hedge against inflation. “The typical buyer today plans to stay in a home for 10 years, while rents are projected to rise at faster rates over the next few years,” he said. “As buyers gain more financial security, the advantages of homeownership become more obvious. Rents will continue to trend up, especially in comparison with a fixed-rate loan which provides financial stability and gradual accumulation of equity over time.”
Total housing inventory at the end of March rose 1.5% to 3.55 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace, compared with a 8.5-month supply in February.
Single-family home sales rose 4.0% to a seasonally adjusted annual rate of 4.45 million in March from 4.28 million in February, but are 6.5% below the 4.76 million level in March 2010. The median existing single-family home price was $160,500 in March, down 5.3% from a year ago.
Existing condominium and co-op sales increased 1.6% to a seasonally adjusted annual rate of 650,000 in March from 640,000 in February, but are 4.1% below the 678,000-unit pace one year ago. The median existing condo price was $153,100 in March, which is 10.1% below March 2010.

What should buyers watch out for when buying a foreclosed home?

The economy is improving overall and, as a result, some bright spots are showing up in the real-estate market. However, the foreclosure spike, which began around the same time the recession did, isn’t a distant memory just yet. In many areas, foreclosures are still happening; in some areas, those numbers have increased. Surprisingly, foreclosures have even encroached into some key cities that were formerly thought to be unshakable real-estate markets — like San Francisco, where foreclosures actually rose in 2010 (including in luxury neighborhoods like Pacific Heights, where a condo that sold in 2007 for $2.3 million recently sold for $1.44 million as a foreclosure). This “second wave” of foreclosures – combined with the fact that many people’s 401(k)s have bounced back with the stock market, and most economists agree that the bottom of the recession has hit – means that competition for these foreclosed homes is, in many cases, fierce. There’s a renewed, final dash to get in on what some perceive as the best real-estate deals they’ll get in awhile. But how do you know which foreclosure is a good buy, and which to walk by? Here are some tips: Get it checked out by a pro. Perhaps the most essential point: Never go by looks alone as an indicator of whether a foreclosure is a good buy. A $2 million mansion may look gorgeous on the surface but might have toxic mold hiding beneath, which will require extremely pricey, lengthy repairs. On the other hand, a brick bungalow or ranch may look dilapidated but may have excellent bones and can be repaired at reasonable cost. A certified, professional home inspector must be contracted to check out a property, to determine what repairs need to be done — so you can truly assess whether it’s worth it for yourself. Don’t rely solely on previous inspections, even if relatively recent – a vacant home can deteriorate quite a bit in a short time, especially in an area with climate extremes. Don’t abandon common real-estate logic. Too many people, when shopping for a foreclosure, abandon their real-estate sense and focus on price alone. Remember, things like a sub-par location, poor light, terrible view, below-average school district, high local crime rate and other negatives might be part of the reason why a home went into foreclosure in the first place. Don’t assume that financial problems of the previous owner are the main reason for every foreclosure. The last owner may have bought the home ignoring some of the aforementioned problems, and seen value sink because of them. Don’t ignore those problems, especially if you are considering selling in the next 5 to 10 years. Find out how long the home has been empty; the longer it has, the more of a chance this isn’t a good deal. Also, if there are plenty of other foreclosures nearby, that’s also a bad sign. Skip – or, at least, very strongly rethink – the flip. “House-flipping,” i.e., buying at bargain-basement pricing, updating, then selling for much higher – is very 2006… and hasn’t exactly been hot since. Even if a house looks like an incredible flipping opportunity, beware of this temptation unless you are a pro, with incredible contractor connections. I always tell my clients it more than likely will take twice as long and cost twice as much they think they’ll be spending to fix up the home. Buyers should avoid the temptation to make fast money unless they think it through and talk to their real-estate professional, a home inspector, contractors – and possibly even a therapist! Go over your budget. A fixer-upper means nothing if you can’t afford to fix it up – and that’s especially true for foreclosures, where those fixes can cost a pretty penny. Before buying, make sure you have an ample budget to do all the repairs needed, after truly taking stock (with the help of a home inspector) of what those needs are. Make sure you have at least half of that money in cash, and preferably all of it. You don’t want to take more loans than needed, especially private loans, which shouldn’t be taking at all – the interest on them will, little by little, chip away at the initial foreclosure bargain. Do your homework on lenders. Fewer people are getting financing for home-buying than they did before the recession, but good financing is luckily still available to many qualified buyers. Just make sure, as with regular home buying, that you enlist a reputable lender. A good lender will take the time to do a review of your client’s financial life and long- and short-term goals, to truly pick the best solution for you, rather than just spitting out options. Also ask about hidden costs, rate locks, prepayment penalties, origination fees and whether underwriting is done in-house. Make sure everything is explained to you clearly. These are things that many people do during the standard home-buying process, but might gloss over when lured by a low foreclosure price tag.

A Closer Look at February Existing-Home Sales Following Sustained Gains

Existing-home sales fell in February following three straight monthly increases, according to the National Association of Realtors®. Existing-home sales—completed transactions that include single-family, townhomes, condominiums and co-ops—dropped 9.6 percent to a seasonally adjusted annual rate of 4.88 million in February from an upwardly revised 5.40 million in January, and are 2.8 percent below the 5.02 million pace in February 2010. Lawrence Yun, NAR chief economist, expects an uneven recovery. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he says. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.” A parallel NAR practitioner survey shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010. All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010. Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010. The balance of sales were to repeat buyers. The national median existing-home price for all housing types was $156,100 in February, which is 5.2 percent below February 2010. Distressed homes—sold at discount—accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010. “The decline in price corresponds to the record level of all-cash purchases where buyers—largely investors—are snapping up homes at bargain prices,” explains Yun. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.” NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., says buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge—buyers should check their personal credit, and mortgage availability in their area,” says Phipps. “Realtors® are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up-front what a lender might be willing to offer as well as specific programs that might be available in your location,” Phipps explains. Total housing inventory at the end of February rose 3.5 percent to 3.49 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.5-month supply in January. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.95 percent in February from 4.76 percent in January; the rate was 4.99 percent in February 2010. Single-family home sales fell 9.6 percent to a seasonally adjusted annual rate of 4.25 million in February from 4.70 million in January, and are 2.7 percent below the 4.37 million pace in February 2010. The median existing single-family home price was $157,000 in February, which is 4.2 percent below a year ago. Existing condominium and co-op sales dropped 10.0 percent to a seasonally adjusted annual rate of 630,000 in February from 700,000 in January, and are 3.1 percent lower than the 650,000-unit level one year ago. The median existing condo price was $150,400 in February, down 11.1 percent from February 2010. Regionally, existing-home sales in the Northeast fell 7.2 percent to an annual pace of 770,000 in February and are 8.3 percent below February 2010. The median price in the Northeast was $230,200, down 9.5 percent from a year ago. Existing-home sales in the Midwest dropped 12.2 percent in February to a level of 1.01 million and are 9.0 percent lower than a year ago. The median price in the Midwest was $122,000, which is 5.4 percent below February 2010. In the South, existing-home sales fell 10.2 percent to an annual pace of 1.84 million in February but are unchanged from February 2010. The median price in the South was $134,600, down 3.9 percent from a year ago. Existing-home sales in the West declined 8.0 percent to an annual level of 1.26 million in February and are 2.4 percent below a year ago. The median price in the West was $190,000, which is 5.2 percent below January 2010.

What is happening with Denver area home sales at this time?

Is spring here in Denver? It certainly seems like it from these warmer temperatures. We know though that can all change here from week to week and sometimes day to day. This was an informative article from the Denver Post I wanted to share with good statistical information.

As consumer confidence increased in February, so did the number of homes sold in metro Denver, according to data released Wednesday.

The number of homes sold rose 3.4 percent in February to 2,229, compared with 2,156 the previous month, according to an analysis of Metrolist data.
Meanwhile, the Conference Board's Consumer Confidence Index, which had increased in January, improved further in February. The index stands at 70.4, up from 64.8 in January.
The number of homes sold in February was still down 8.5 percent compared with February 2010, when 2,436 sales closed.

The year-over-year decline is largely a result of the first- time-homebuyer tax credit expiring last year. The credit on home purchases drove about 40 percent of sales activity a year ago, said Gary Bauer, an independent real-estate consultant.
"Take that out of there, and look at what we have today, and it's really positive," Bauer said. "I'm very happy with what the numbers show. We've got activity."

The median price for a single-family home declined 2.2 percent, from $225,000 in January to $220,000 last month. In February 2010, the median price was $220,750.
The median price for a condo dipped 0.17 percent to $124,780, compared with $124,995 in January. In February 2010, the median price was $132,500.
"When you look at it as far as pricing goes, 71 percent of the condos closed this month were less than $200,000," Bauer said. "That's very positive."

With 18,685 homes on the market last month, the inventory has remained stable, declining 0.6 percent from January and 3.4 percent from February last year.
"There's always the fear that inventory will rise much faster than the market can handle," Bauer said. "We're about a month away from the start of our prime season, so people are putting their homes on the market at the right time.

How Are Existing Home Sales Doing At This Time?

The National Association of Realtors recently put out new statistics on existing home sales. This is great news and based on new job creation and the recovering economy, I think the uptrend will continue. As always, if you have any questions on what is going on in your particular neighborhood, do not hesitate to ask.

The uptrend in existing-home sales continues, with January 2011 sales rising for the third consecutive month with a pace that is now above year-ago levels, according to the National Association of REALTORS®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 2.7% to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3% above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier.
Lawrence Yun, NAR chief economist, said the improvement is good but could be better. “The uptrend in home sales is consistent with improvements in the economy and jobs, which are helping boost consumer confidence,” said Lawrence Yun, NAR chief economist. “The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit. As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity.”
A parallel NAR practitioner survey shows first-time buyers purchased 29% of homes in January, down from 33% in December and 40% in January 2010 when an extended tax credit was in place.
Investors accounted for 23% of purchases in January, up from 20% in December and 17% in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32% in January from 29% in December and 26% in January 2010.
“Increases in all-cash transactions, the investor market share and distressed home sales all go hand-in-hand. With tight credit standards, it’s not surprising to see so much activity where cash is king and investors are taking advantage of conditions to purchase undervalued homes,” Yun said.
All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15% of the market. The average of all-cash deals was 20% in 2009, rising to 28% last year.
The national median existing-home price for all housing types was $158,800 in January, down 3.7% from January 2010. Distressed homes edged up to a 37% market share in January from 36% in December; it was 38% in January 2010.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the median price is being dampened by unusual market factors.
“Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts, undoubtedly pulls the median price downward,” Phipps said. “Given the levels of inventory we see today, we believe that traditional homes in good condition have held their value.”
Total housing inventory at the end of January fell 5.1% to 3.38 million existing homes available for sale, which represents a 7.6-month supply at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.76% in January from 4.71% in December; the rate was 5.03% in January 2010.
Single-family home sales rose 2.4% to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9% higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7% from a year ago.
Existing condominium and co-op sales increased 4.7% to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9% above the 621,000-unit pace one year ago. The median existing condo price was $154,900 in January, which is 10.2% below January 2010.
Regionally, existing-home sales in the Northeast fell 4.6% to an annual pace of 830,000 in January from a spike in December and are 1.2% below January 2010. The median price in the Northeast was $236,500, which is 4.0% below a year ago.
Existing-home sales in the Midwest rose 1.8% in January to a level of 1.14 million and are 3.6% above a year ago. The median price in the Midwest was $126,300, which is 3.2% below January 2010.
In the South, existing-home sales increased 3.6% to an annual pace of 2.02 million in January and are 8.0% higher than January 2010. The median price in the South was $136,600, down 2.1% from a year ago.
Existing-home sales in the West rose 7.9% to an annual level of 1.37 million in January and are 7.0% above January 2010. The median price in the West was $193,200, down 5.7% from a year ago.

How is the Denver real estate market compared to other metro areas?

The Denver-area housing market ended 2010 as the best-performing housing market between the coasts, shows the closely watched S&P/Case-Shiller Home Price Indices released today.

Denver-area homes on average lost 2.4 percent in December from December 2009, shows the report that tracks 20 major metropolitan statistical areas. The decline was the same as the overall drop for all 20 cities and Denver was the seventh best performing city in the index on a year-over-year basis. Washington, D.C. was No. 1, with homes rising 4.1 percent. San Diego, the only other city in positive territory, showed a 1.7 percent increase. San Francisco, Los Angeles, Boston, and New York also did better than Denver. From November to December, Denver showed a 0.7 percent drop, compared to a 1 percent drop for all 20 cities.

Denver in a good place

“It really sounds like a pretty good win for Denver,” said Peter Niederman, CEO of the Kentwood Co. “It sounds like Denver fared pretty well. I think Denver is in a pretty good spot right now. We’re seeing good traffic and showings, although they are not turning into contracts as much as we had hoped to see. Still, traffic is a leading indicator. And we are seeing traffic at all price points. I still hold to my prediction that when the year is over, we will be up 3 percent to 5 percent from last year. The first quarter and second quarter will be kind of hard to compare to Q1 and Q2 of last year, because we had the tax incentives in the first part of 2010, while we don’t have them anymore.” More than anything, what will help Denver and the nation’s housing market is job growth and a drop in the unemployment rate, he said. “When there is job growth, people will feel like there is more security in their jobs,” Niederman said. “Until then, we will kind of bounce around at the bottom. Sometimes we will drift a little bit lower and sometimes we will drift a bit higher.”

National view weak

From a national perspective, David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, was not very bullish.
“We ended 2010 with a weak report,” Blitzer said. “The National Index (at Case-Shiller) is down 4.1% from the fourth quarter of 2009 and 18 of 20 cities are down over the last 12 months. Both monthly Composites and the National Index are moving closer to their 2009 troughs. The National Index is within a percentage point of the low it set in the first quarter of 2009. Despite improvements in the overall economy, housing continues to drift lower and weaker.

“Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country,” Blitzer continued. “California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco. At the other end is the Sun Belt – Las Vegas, Miami, Phoenix and Tampa. All four made new lows in December. Also seeing renewed weakness are some cities that were among the last to reach their peaks including Atlanta, Charlotte, Portland and Seattle, where news lows were also seen. Dallas, which peaked late, has so far stayed above its low marked in February 2009.”

The report shows that the 10- and 20-City Composite indices remain above their spring 2009 lows; however, 11 markets – Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland, Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007. More markets hit new lows in each of the past three months.

“Looking deeper into the monthly data, 19 MSAs and both Composites were down in December over November,” Blitzer said. “The only one which wasn’t was Washington DC, up 0.3%. With December 2010 index levels of 99.73 and 99.48, respectively, Cleveland and Las Vegas have the dubious distinction of average home prices now below their January 2000 levels. Detroit was the only market that was in that group prior to December.”

Changes in FHA Mortgage Insurance Premium

Many home buyers, especially first time buyers, choose to do FHA financing. I think it is a great choice if you want to conserve upfront cash. FHA financing requires you to only put down a 3.5% down payment and rates are similar to conventional financing. A mortgage expert can go over the different types of loans with you and find which one works best for your own personal situation. FHA has recently announced that a monthly mortgage insurance premium increase will come into play on new loans starting on or after April 18th. The article below explains more.

FHA Announces Monthly Mortgage Insurance (MIP) Increase

Feb 15, 2011 (www.mortgageorb.com)

The Federal Housing Administration (FHA) has announced a new premium structure for FHA-insured mortgage loans that increases its annual mortgage insurance premium (MIP) by a quarter of a percentage point on all 15- and 30-year loans. The up-front MIP will remain unchanged at 1% and will impact new loans insured by the FHA on or after April 18.

According to the FHA, this premium change enables the agency to increase revenues to preserve the stability of its Mutual Mortgage Insurance fund, which had capital reserves of approximately $3.6 billion at the end of fiscal year 2010. The change is estimated to contribute nearly $3 billion annually to the fund, based on current volume projections.
Furthermore, the FHA estimates that on average, new borrowers will pay approximately $30 more per month.

"After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster the FHA's capital reserves and help private capital return to the housing market," says FHA Commissioner David H. Stevens. "This quarter point increase in the annual MIP is a responsible step towards meeting the congressionally mandated two percent reserve threshold, while allowing FHA to remain the most cost-effective mortgage insurance option for borrowers with lower incomes and lower down payments."

Here are the 7 things you need to know about these changes:
These changes are effective April 18th, 2011.

1. The Annual Insurance Premium will increase .25% for standard forward mortgages.

2. The Upfront Mortgage Insurance remains at 1.00%.

3. The Annual Premium is now 1.15% for LTV’s GREATER than 95% on 30 year loans.


4. The Annual Premium is now 1.10% for LTV’s EQUAL to or LESS than 95% on 30 year loans.


5. The Annual Premium is now .50% for LTV’s GREATER than 90% on 15 year loans.

6. The Annual Premium is now .25% for LTV’s EQUAL to or LESS than 90% on 15 year loans.

7. Case numbers with no activity for 6 months will automatically be canceled (includes case numbers pulled prior to April 18th, 2011).