Minneapolis Area Association of Reltors released their monthly stats news release last week. Here’s what they said:
The Twin Cities housing market’s oversupply of homes for sale is being reigned in at an accelerated pace. The number of new listings in February was 6,648, down 19.4 percent from February 2008. That’s the 14th month of the last 15 to feature fewer new listings than the same month one year prior.
Alongside the jump in sales seen over the last nine months, this decline in new listings has brought the total inventory of homes for sale down to 25,825-a drop of 13.5 percent and 4,017 units from this time last year. Given the current rate of sales, this amounts to 7.8 months of supply, down from 9.2 months a year ago.
This is all good news for what has been an oversupplied market.
There were 3,314 pending sales in February, up 7.4 percent from last year. That’s the ninth consecutive month of year-over-year increase. Of these newly signed purchase agreements, 60.5 percent were lender-mediated foreclosures or short sales. Closed sales finished at 2,070, up 3.0 percent.
The overall February median sales price of $150,000 is 23.1 percent lower than last February. Traditional properties, which exclude foreclosures and short sales, had a February median sales price of $205,875, down 5.2 percent from last year. For the same year-over-year comparison, lender-mediated homes had a median sales price of $125,000, down 20.6 percent.
With mortgage rates still down in the low 5 percent range, improved affordability and the recent announcement of a $8,000 tax credit for first-time home buyers who purchase a home in 2009, the stage is set for continued absorption of Twin Cities housing inventory in 2009.
Mortgage Rated Lowest in 50 Years!
What this means for you:
Buyers –
Lower rates boost your
buying power
When rates drop 1%, you can buy
almost 10% more home in price.
Sellers
Lower rates boost home
affordability, bringing more home buyers
into the market
Home affordability is at its highest in the
Twin Cities since 1990, according to the
Minneapolis Area Association of Realtors®.
Owners
Lower rates could mean
lower monthly payments
Consider refinancing into an FHA mortgage,
which can be assumable to a buyer when
you sell your home.
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Mortgage Rates |
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5.125% |
5.251% |
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Conventional |
APR |
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5.375% |
5.450% |
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FHA |
APR |
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Rates fluctuate daily. |
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Rates as of 1/28/09 | Assumptions 3:44:00 PM CST |
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Existing-Home Sales Show Surprising Gain
Existing-home sales rose unexpectedly while inventory declined, led by a surge of sales in the West, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December. The number compares to a downwardly revised pace of 4.45 million units in November, but 3.5 percent below the 4.91 million-unit pace in December 2007.
For all of 2008, there were about 4.9 million existing-home sales — 13.1 percent below the 5.65 million transactions recorded in 2007. This is the lowest volume since 1997 when there were 4,371,000 sales.
Lawrence Yun, NAR chief economist, said home prices continue to fall significantly.
“It appears some buyers are taking advantage of much lower home prices,” he said. “The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future.”
Total housing inventory at the end of December fell 11.7 percent to 3.68 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, down from a 11.2-month supply in November.
Yun said the market is underperforming and hurting the broader economy.
“We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected,” he said. “Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery.”
Housing Stats
National median existing-home price: (for all housing types) was $175,400 in December, which is 15.3 percent below December 2007 when the median was $207,000. There remains a significant downward distortion in the current median from a large number of distress sales at discounted prices, currently 45 percent of transactions; the median is where half of the homes sold for more and half sold for less. For all of 2008, the median price was $198,600, down 9.3 percent from $219,000 in 2007.
Single-family home sales: rose 7 percent to a seasonally adjusted annual rate of 4.26 million in December from a level of 3.98 million in November, but are 1.4 percent below a 4.32 million-unit pace in December 2007. For all of 2008, single-family sales fell 11.9 percent to 4,349,000.
Median existing single-family home price: dropped to $174,700 in December, down 14.8 percent from a year ago. For all of 2008, the single-family median was $197,100, which is 9.5 percent below 2007.
Existing condominium and co-op sales: increased 2.1 percent to a seasonally adjusted annual rate of 480,000 units in December from 470,000 in November, but are 18.4 percent below the 588,000-unit level a year ago. For all of 2008, condo sales dropped 21.0 percent to 563,000 units.
Median existing condo price: slipped to $181,400 in December, down 18.3 percent from December 2007. For all of 2008, the median condo price was $210,000, which is 7.2 percent below 2007.
Existing-Home Sales By Region
Northeast: slipped 1.4 percent to an annual pace of 720,000 in December, and are 14.3 percent below December 2007. The median price in the Northeast was $235,000, which is 7.8 percent lower than a year ago.
Midwest: increased 4.0 percent in December to a level of 1.04 million but are 10.3 percent below a year ago. The median price in the Midwest was $140,800, down 11.4 percent from December 2007.
South: rose 7.4 percent to an annual pace of 1.74 million in December, but are 11.2 percent lower than December 2007. The median price in the South was $158,600, which is down 8 percent from a year ago.
West: jumped 13.6 percent to an annual rate of 1.25 million in December and are 31.6 percent higher than a year ago. The median price in the West was $213,100, down 31.5 percent from December 2007.
A Good Time to Buy
NAR President Charles McMillan said it’s an excellent time for first-time home buyers with good jobs.
“The typical buyer plans to stay in their home for 10 years, which is the correct approach in today’s market,” he said. “With historically low mortgage interest rates, flexible sellers, a large inventory, and homes that are selling for less than replacement construction costs in much of the country, buyers who’ve been on the fence should take a closer look at today’s market.”
McMillan added that first-time buyers may want to consider an FHA loan, which offers downpayments of 3.5 percent on a safe 30-year fixed-rate mortgage.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.29 percent in December from 6.09 percent in November; the rate was 6.10 percent in December 2007. Last week, Freddie Mac reported the 30-year rate was 5.12 percent.
HOPE for Homeowners
On Friday, November 21, 2008, the U.S. Housing and Urban Development Secretary Steve Preston announced that the HOPE for Homeowners approved changes to the program to help more distressed borrowers refinance into affordable, government-backed mortgages. The changes will reduce the program costs for consumers and lenders alike while also expanding eligibility by driving down the borrower’s monthly mortgage payments.Modifications to HOPE for Homeowners include:
- Increasing the loan to value ratio (LTV) to 96.5 percent for some H4H loans;
- Simplifying the process to remove subordinate liens by permitting upfront payments to lienholders; and
- Allowing lenders to extend mortgage terms from 30 to 40 years.
HOPE for Homeowners will continue to only offer affordable, government-insured fixed rate mortgages. Further, this program will maintain FHA’s long-standing requirement that new loans be based on a family’s long-term ability to repay the mortgage. Only owner-occupants are eligible for FHA-insured mortgages.
You can learn more on the HUD web site.
January Housing Supply Outlook
From Minneapolis Association of Realtors hee are a few highlight from the January housing supply outlook:
The January Months Supply of Inventory dropped to 7.6-9.3 percent below the same time last year. The lowest months supply can be found in single-family detached properties, which currently sits at 7.0. The highest can be found in condominiums-a hearty 11.4 months of supply is available in that segment.
The lower price ranges continue to see a growing share of market activity. Home sales below $150,000 have more than doubled in the last year, jumping 133.1 percent. The lion’s share of homes being sold in these price ranges are lender-mediated foreclosures and short sales.
As a result of this growing phenomenon, prices continue to soften. The Average Price Per Square Foot over the last twelve months is 14.5 percent lower than the twelve months before that. The largest declines can be seen in single-family detached properties.
Mortgage rates dropped to their 11th straight weekly decline
Daily Real Estate News | January 16, 2009 |
30-Year Rates Fall Below 5 Percent
Mortgage rates dropped to their 11th straight weekly decline, reaching new record lows, according to Freddie Mac.
Interest rates on 30-year, fixed rate mortgages averaged 4.96 percent this week, down from a previous week’s 5.01 percent.
The low rates have caused a spike in home refinancing loans and a welcome relief to cash-strapped home owners facing a slowing economy and rising unemployment rates.
“The fact that interest rates have dropped to a record low is an important development since more affordable home financing could help bring buyers back to the market and prevent some of these foreclosures,” says Lawrence White, professor of economics at New York University’s Stern School of Business.
Other rates were mixed for the week:
15 year fixed rates: averaged 4.65 percent, up from 4.62 percent.
1-year adjustable rate mortgages: fell slightly averaging 4.89 percent from 4.95 percent last week.
5/1 ARMs: averaged 5.25 percent compared with 5.49 percent last week.
Mortgage rates have continued to drop ever since the Federal Reserve announced a plan in December to buy up $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae—the government-sponsored enterprises.
Freddie Mac started recording mortgages in 1971.
Source: Reuters, Julie Haviv (1/15/09)
Tax Credit Changes Could Unleash Home Sales
Tax Credit Changes Could Unleash Home Sales :
If all home buyers become eligible for a tax credit without a repayment feature, it could result in an additional 555,000 home sales, enough to meaningfully draw down excess housing inventory, the NATIONAL ASSOCIATION OF REALTORS® says.
An evaluation of options for a home buyer tax credit by NAR shows wide ranging implications and benefits. A full credit to all buyers means an additional 2.22 million households would meet the income requirements for purchasing a home, but only one in four of those households would actually make a purchase.
Under the current $7,500 first-time home buyer tax credit, which must be repaid over 15 years, 264,000 households meet the purchase requirements. Using the same assumptions, with plans to hold their home for a median 10 years, it would mean only 66,000 additional sales.
Lawrence Yun, NAR chief economist, said NAR is advocating a tax credit for any home purchase meeting qualifying underwriting standards. A home buyer incentive is critical to help reduce housing inventory and stabilize home prices,he said. The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus.
Analysis of other options shows that if only first-time buyers are eligible and the repayment feature is dropped, it could mean an additional 202,000 home sales. If extended to all home buyers but the repayment feature is retained, the gain would be 181,000 home sales.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said a flexible approach to the tax credit would have added benefits. A home buyer tax credit also should be allowed to be used as a part of downpayment. This would instantly add an equity cushion for homeowners” a vested financial interest provides the foundation for sustainable homeownership, which helps improve economic stability, he said.
NAR estimates only 25 percent of newly eligible households would become homeowners, and does not capture the effect of increased trade-up buying activity. As such, these projections may understate the full impact of a home buyer tax credit.
Source: NAR
Get off the couch and buy now…
Hello Kristin here your friendly Lister Sister.
Here is my question to you. What are you waiting for?
Buy if you can! Interest rates are incredible and the market is flooded with great homes! Name your price and go. If you are new to the market realize interest rates are historically low. This may be some of the lowest interests rates we will ever see in our life time. Are you hedging because you think they may go lower? Well, don’t. Use a buy down technique to get the seller to contribute funding to “buy down” the mortgage to the percentage you are hoping for. I will post future articles (soon) about buy downs-what they are and how they work. For the mean time if you can’t wait just talk to a friendly mortgage broker who can fill your head with tons of information on buy downs and other funding techniques. Don’t hedge, don’t wait. Take advantage and get the home you want before someone else does. Things are starting to shake…
CASA program and affordable housing
I stand corrected. Fellow blogger and Edina Realty agent Aaron Dickinson caught an error in a previous post I made about the CASA program. Thanks Aaron!
Here is the correct info:
If you are interested in information on loan program that helps low to moderate income Minnesotans buy affordable housing check out www.mnhousing.gov now. Of particular interest is the Community Activity Set Aside (CASA) program for first time homebuyer. The CASA program offers affordable, low, fixed interest rates to eligible homebuyers through lenders participating in initiatives in several communities around the state. Edina Realty Mortgage is a participating lender.
For further information contact:
Robyn Kellogg
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Edina Realty Mortgage – Eden Prairie |
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1800 Singletree Ln Ste 401 – Eden Prairie , MN 55344 |
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Phone: (952) 947-036 |
Tighter Lending Standards ARE NOT the Problem with Housing
Tighter Lending Standards ARE NOT the Problem with Housing
While the media has focused on declining sales, lower median sales prices, and elevated listing inventories, there is a sliver lining of good news. Predictably, the national news media has charged that tighter lending standards are the culprit and that the difficulty in obtaining a mortgage has increased over the past couple of months making it more challenging for creditworthy borrowers to find financing. As we all know, this is utter bunk. The idea that “obtaining a mortgage right now is all but impossible” seems to be seeping into the national consciousness, aided and abetted by mainstream media. Mortgage lending standards remain very reasonable, and that the problem is not “overly tight” standards, but that we are reaping the whirlwind caused by lending standards that were far too loose for far too long. The loose lending era stimulated a lot of artificial, unsustainable demand, which drove prices way out of line from reasonable market fundamentals. It is the aftermath of this era – too much supply and not enough legitimate demand – that’s driving prices down and putting many homeowners behind on their mortgage, not tighter lending. No amount of yearning for those ridiculous lending standards of three years ago will fix that. Those days are thankfully gone, they aren’t coming back, and we’ll be lucky if we escape the whole mess with an intact financial system. Getting a mortgage today is not as tough as they may have been led to believe.
The Mi Casa Program through Edina Realty is available to all and is an excellent opportunity for first time buyers to obtain the home of their dreams with gifted down payment assistance.
Call me to learn more!
Kristin Rial 952-210-3121
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