Real Estate & Mortgage

Prices Keep Going Up While Demand Down

Treasury price losses lightened Wednesday morning, after the National Association of Realtors reported the weakest existing home sales in almost five years for June, indicating that the housing market slumping may not have stabilized. Typically, weak housing data is good for the Treasury

The existing home sales in the US fell even faster than expected in June, although median existing home prices rose from the prior year for the first time in nearly a year, according to the National Association of Realtors.

A rep from NAR said that the overall decrease in existing home sales is likely caused by rising mortgage rates. 'Mortgage interest rates have risen recently, and tightening lending standards are continuing to hamper sales, but fewer risky loans will put the market on a healthier path,' he said.

House Price Drop

The single biggest year over year price devaluation in 40 years has occured.

Sales of existing homes fell for a 6th month last month. Meanwhile, the median sales price came down annually by the largest amount on record. NAR says that sales of previously owned homes fell by 1.9 percent in September to a seasonally adjusted sales pace of 6.18 million units, the slowest sales rate since January 2004.

Pick a great Realtor

This page has great advice and commentary on picking a great Realtor, finding the best interest rates, and are we really going into a deep recession?

Heavy stuff.

Real Estate Bubble Burst?

28 states and the District of Columbia report housing sales declines. Boom areas of Arizona, Florida and California have recessed while other areas have actually increased in real estate sales.

Nationally, sales were down 7 percent in the April-June quarter this year compared with the same period in 2005, the National Association of Realtors said Tuesday in its latest state-by-state look at housing conditions around the country.

The Realtors survey showed that the biggest declines occurred in states that had been enjoying red-hot sales during the five-year housing boom.

Conflicting Real Estate News

From Fox News within a day of each other:

Good News:

New Home Sales Rise Unexpectedly in April 

Sales of new homes rose unexpectedly in April to the fastest pace this year as the housing sector showed resilience in the face of rising mortgage rates. But the price of homes sold last month fell and the level of unsold homes rose to a record high.

The Commerce Department reported that sales of new single-family homes increased by 4.9 percent last month to a seasonally adjusted annual rate of 1.198 million units, the highest rate since last December.

Bad News:

Rock Bottom 50 50

The housing market peaked in August, said David Lereah, chief economist for the NAR. "This may be the bottom. It appears May is a little better." Meanwhile existing home sales have dropped by 2% and home for sale inventories are at 8 year high mark.

Inventories rose by 5.8% to 3.38 million homes for sale, a 6-month supply at the April sales pace. It's the largest supply relative to sales since January 1998. Sales of existing homes are down 5.7% year-over-year.

The median sales price rose 4.2% in the past year to $223,000, the lowest price gain since September 2001.

However, the good news is that  Commerce Department said sales of new homes rose unexpectedly to 1.20 million in April.

"Half of the country is cooling and half is heating up, Lereah said. Florida, California and Arizona are cooling, with inventories building up and prices beginning to fall. On the other hand, markets in Texas, the Carolinas, Ohio, Utah and New Mexico are gaining momentum.

Affordable Homes

This from BankRate.com. Housing is still affordable in the right spots

The article says that Coastal metropolises like Los Angeles, New York, Boston and San Francisco all might be ranked among the most desirable places to live, but they are expensive! Thus home prices make it tuff to find affordable housing.

The article refeences Lawrence Yun an Econmist from NAR. He says high home prices in popular coastal cities appear to be driving a wave of migration to less costly locales, according to , economist at the National Association of Realtors, or NAR. "Californians are buying up properties in cheaper neighboring states. On the East Coast,  prospective homeowners are seeking out property in Virginia and the Carolinas."

It appears  United Van Lines reported that California had a higher number of outbound moves relative to inbound ones for the first time since 1995. For every 44 moves into the state last year, the company handled 56 outbound moves.States with a much higher number of people moving in rather than out included Oregon, Idaho, Arizona and North Carolina.

Overall, housing affordability nationwide is at its lowest point in 15 years, according to the NAR. In December, the percentage of households in California able to afford a median-priced home stood at 14 percent, according to the California Association of Realtors. New York City, Boston, Washington, D.C., and increasingly, South Florida homes, , according to Yun, are also progressively unaffordable. The most affordable markets, by contrast, tend to be in the Midwest.

4th Quarter Homes Sales stay blistering

David Lereah, NAR’s chief economist, said rising interest rates dampened the sales pace in the closing quarter of last year. “Mortgage interest rates were at the highest level since the third quarter of 2003,” he said. “At the same time, we’ve seen strong double-digit appreciation in home prices, so a modest slowing from record sales was to be expected. The good news is that home sales are being sustained at historically high levels.”

The latest report on total existing-home sales shows that nationwide the seasonally adjusted annual rate* was 6.90 million units in the fourth quarter, up 0.3 percent from the 6.88 million-unit level in the fourth quarter of 2004 but 4.7 percent below the record pace of 7.24 million units in the third quarter of last year. The second highest sales rate was 7.22 million in the second quarter of 2005.

The strongest performance was in Arkansas, where the fourth-quarter resale pace jumped 29.8 percent compared with the fourth quarter of 2004. Alaska existing-home sales rose 28.4 percent from a year earlier, while Louisiana posted the third highest increase, up 28.1 percent. Six other states also recorded double-digit sales gains from a year ago. Twenty-three states and the Wahington DC Real Estate posted declines, although 39 states set records for all of 2005.

Total existing-home sales, including single-family and condo, were at the third-highest pace on record in the fourth quarter of 2005. In addition, 24 states showed increases in sales activity over the same period in 2004, according to the National Association of Realtors®.

The Bubble is Bursting...or Not

Residential real estate in California may be overvalued by as much as 26% but the anticipated market correction won't bring a sharp price decline, according to a research report by Orange-based Advanced Data Mining & Research Inc. The conclusion is that there is a cooldown, more than a bubble bursting.
The report concludes homes are overvalued by as much as 16% in Southern California and by as much as 27% in the Bay Area.

Nima Nattagh, a principal at ADMARI, said that an overvalued market does not necessarily foreshadow trouble. "We're not saying that the values are going to come down or that a major correction of the market is in the offing," he said.

Comment: I have never been able to figure out why something is over valued when people are willing to pay a price. If it is 27% over priced wouldn't the buyers be paying 27% less? So I take it that it is these guys with the report are offering 27% les son their offers to buy property. Which of course is turned down for those offers that are at or around asking price.And he notes that prices in California did fall in the early part of the 1990s and many of the same market conditions are in place. The big difference now is that the state, especially Southern California, is not facing huge job losses and the overall economy is much more diversified.