Pending home sales up

Article taken from Realtor.org. The National Association Of Realtors Website.

Pending Home Sales up Strongly

WASHINGTON, October 08, 2008

Pending home sales activity surged as buyers took advantage of low home prices and affordable interest rates, according to the National Association of Realtors^®.

The Pending Home Sales Index,1 a forward-looking indicator based on contracts signed in August, jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July, and is 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4.

Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability. “What we’re seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region,” he said. "It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales.”

The PHSI in the West surged 18.4 percent to 109.5 in August and remains 37.8 percent above a year ago. In the Northeast the index jumped 8.4 percent to 79.8 and is 2.0 percent higher than August 2007. The index in the Midwest rose 3.6 percent to 84.5 in August and is 6.6 percent above a year ago. In the South, the index increased 2.3 percent to 96.0 but is 2.1 percent below August 2007.

Yun notes the unusual timing of contract activity in August. “Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie,” he said. “August shows some unleashing of pent-up demand before the credit crisis accelerated in September.”

He cautioned that the sampling size for pending home sales is smaller than the track on existing-home sales, so there is more volatility in the forward-looking series. “We need to see just how much of this gain holds up,” Yun said.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said despite all the turmoil in world financial markets, home mortgages are available. “Mortgages have been harder to find, and availability and terms vary depending on credit score and location, but Realtors^® can help buyers find reputable lenders while helping them navigate the transaction process,” he said. “The recently enacted economic stimulus package should help housing by gradually freeing the flow of credit.”

Yun now expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.

Looking at middle-ground assumptions, existing-home sales are forecast at 5.04 million this year and 5.41 million in 2009. Following national declines of 5 to 8 percent in 2008, home prices are projected to increase 2 to 3 percent next year.

New-home sales should total around 503,000 this year and 471,000 in 2009. Housing starts, including multifamily units, are likely to fall 28.2 percent to 973,000 units this year, and come in around 843,000 in 2009 as builders continue to clear the accumulation in inventory.

The 30-year fixed-rate mortgage will probably average 6.1 percent in the fourth quarter and rise gradually to 6.6 percent by the end of 2009. NAR’s housing affordability index is expected to average 18 percentage points higher this year than in 2007.

The unemployment rate is projected to average 6.4 percent in the fourth quarter and then average 6.6 percent in 2009. Inflation, as measured by the Consumer Price Index, is estimated at 4.0 percent for 2008 and 2.0 percent next year. Inflation-adjusted disposable personal income is forecast to grow 1.7 percent this year and 1.0 percent in 2009.

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¹The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity from 2001 through 2004 parallels the level of closed existing-home sales in the following two months. There is a closer relationship between annual index changes (from the same month a year earlier) and year-ago changes in sales performance than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

²Market information is from unpublished snapshot data; please contact your local association of Realtors^® for more information.

Existing-home sales for September will be released October 24; the next Pending Home Sales Index / Forecast will be released at 11:30 a.m. EST on November 7 at NAR’s annual convention in Orlando, Fla.

Loans

Hey everybody. Sorry I haven't updated the blog in so long. I have been busy selling real estate. Just wanted to make a quick post and let everyone know that you can still get a loan for a house. The media has been saying some crazy things lately, but there are plenty of mortgage brokers out there who are still giving loans. Contact me if you need a name of a good one.

June Stats

These are June stats from the Central Arkansas MLS (CARMLS). All of this info is deemed reliable, but should not be used in any buying or selling decisions. It is just for your information.


Year/ Month/ Sales /Median Price/ Average Price /Price/SF /Average DOM
Pulaski County
2007 June 599 $153,500 $184,278 $96.00 97.77% 69
2008 June 416 $155,000 $188,287 $95.00 95.44% 78


Faulkner County
2007 June 152 $134,000 $147,956 $82.00 98.28% 88
2008 June 147 $142,000 $159,501 $82.00 96.96% 72

Lonoke County
2007 June 137 $126,000 $137,541 $82.00 98.49% 98
2008 June 95 $136,000 $143,964 $79.00 97.59% 80

Saline County
2007 June 190 $153,450 $176,261 $91.00 98.15% 75
2008 June 122 $147,200 $167,387 $87.00 97.53% 99

Forclosures

As I am searching for houses for my clients, more and more of the houses that pop up are foreclosures. This makes me really sad. When you go and look at the houses they are usually houses that children have lived in and I just wonder where they are going to live now. Anyway, enough of my sadness. The good news is...Buyers can get houses that are under market value if they are willing to put in a little time and money to fix them up. Typically with foreclosures the condition of the property is not that great. There are appliances to be updated, carpets to be replaced, but most of the stuff is usually cosmetic. If you are willing to do the work you can have yourself a great house for a lot cheaper than the house next door to you. The down sides of buying foreclosures are also present. Most of them are corporate owned and they are not willing to do any repairs. You are allowed to get an inspection done, but none of the items on the inspection list will be repaired. You normally have to have a preapproval letter or proof of funds with any offer. They take longer to respond to the offer than the typical seller does. Buying foreclosures is not for everyone, but it can be a great deal for some people. Email me or call if you interested in foreclosures.

Gas prices and real estate

I was recently reading an article that stated that the housing bubble was popped by spike in fuel costs. When most people think of the housing bubble being popped, they think about the sub prime mortgages or economy and not the price of gasoline. A new analysis shows cities and neighborhoods that require lengthy commutes and provide few transportation alternatives to the automobile are falling in real estate value more quickly than cities and neighborhoods that do offer these things. People also have less money today than they did a few years ago to buy houses because their disposable income is being eaten up by high gas prices. This is just an FYI: Average gas prices in '02 were $1.10 and today they are well over $3 a gallon. I think this is one of the reasons that Little Rock has not seen the big drop in housing prices that other parts of the country have. You can live in West Little Rock and be just a few miles from Downtown and you can live in North Little Rock and be just a few miles from downtown. I have noticed in my business a desire for buyers to stay close to the city where they work because they can't afford the price of gas that a lengthy commute would give them. There are also sellers in Chenal, for instance, who want to move in closer to the heart of West Little Rock or Downtown because the drive is getting to be too much on their wallet. I think we have fared pretty well here in Little Rock, but all of this does make sense. We are just lucky to have a relatively small city with all of the great conveniences of a large city with a lot less driving.

My broker is a TV star

Check out this link. http://www.todaysthv.com/video/default.aspx?mid=747563547

My broker was on the news talking about the growth in Little Rock. It is a short clip, but pretty informative.

Down Market?

Central Arkansas has not experienced the "down market" that other parts of the country have. It is still a great time to buy real estate and interest rates are still very low. Almost everyday I am asked by someone how business is going. When I tell them that I am really busy they seem surprised. They usually say, "Really, you are busy, but the market is so bad". What the public has to understand is that the media likes to see the bad in most things. They focus on the worst markets such as California or Florida and run news stories on those areas. They don't run numbers on Arkansas because there wouldn't be any shock factors. Yes, we are not at our best year ever, but we are not at our worst either. Sellers are still selling their houses and buyers are always buying. The difference in todays market is pricing. You can no longer price your home a little higher than what you want to get for it in hopes that when someone gives you an offer you have a little more wiggle room. You are not going to get higher than market value for your home anymore. Buyers have the mindset that it's a buyer's market and they are not going to buy unless they get a good deal or at least a fair deal. Just know that Arkansas is not one of the bad markets and it is still a good idea to buy and sell. Let me know any thoughts you all have on this subject. If you agree or disagree.

Haircut

Is it time for a haircut?

By: Paul Pastore

Recently, I attended a 2008 economic update by the Southeast Valley Women's Council of Realtors. The speaker was Wayne Stutzer. He told the audience how their clients could obtain a fantastic real estate bargain by simply getting a 'haircut.'

The crowd was mesmerized as he shared his secret. He explained that the problem was that most buyers need to sell first before buying. The deeply discounted deals were waiting for the savvy sellers. His solution was for the sellers to take a 10% 'haircut.' In other words, cut their price so they would receive an offer and become buyers.

When the sellers entered escrow and became buyers, the idea was to then ask for a deeper discount than they offered their buyers. Imagine that! Get a 10% 'haircut' and then obtain a 20% discount when you buy. Most sellers today are reluctant to 'prime the pump' with the proper price. And, that's why their for sale sign is gathering cobwebs.

Many expired listings find themselves admitting they have been 'chasing the market' as it drifted downward. This practice is as rewarding as rushing to the airport at the last minute only to find that the plane has left the tarmac. The old Turkish proverb says, "No matter how long you have been going down the wrong road, when you figure it out, turn around."

My friend, Bob, has a teenage son Adam. He is a very stubborn boy. That young man needs his hair trimmed. But, Adam is reluctant to listen to his Realtor father, mother, or relatives. Some day Adam won't be able to find a job because of his long locks and argumentative attitude.

Periodically it's a good idea to cut your hair, cut your losses, and cut your price.

The only thing standing between most sellers and a sold sign is a pricing 'haircut.'

Housing Market

Is the housing market really that bad?

By Ethan C. Nobles
Arkansas Realtors® Association ● Ethan@ArkansasRealtors.com

There’s been no shortage of news about how the housing market underperformed last year.
Reports of falling markets last year made both buyers and sellers fairly nervous about the housing market. However, 2007 stacked up very well against 2004 – the third best year on record for the real estate industry in Arkansas.
However, 2007 paled in comparison to 2006, which was the second best year on record for real estate here in the Natural State. Seeing how a sense of perspective is often important when discussing all things economic, let’s take a look at how the real estate market fared last year as compared with 2004.
Since July 2005, the Arkansas Realtors® Association (ARA) has released monthly housing market reports which cover the bulk of homes sales in the state. Prior to 2006, Baxter, Marion and Mississippi counties weren’t included in those reports. So, those three counties must be removed from current housing market reports to get an “apples to apples” comparison against 2004.
The most recent housing market report available from the ARA covers November 2007. When the aforementioned three counties are removed from that report and compared against 2004, the results are encouraging.
Through November, there were 27,085 homes sold in Arkansas – up 1.36 percent over 26,722 homes sold through the first 11 months of 2004. The statewide average price of a home through November was $155,458, up 14.42 percent over an average of $135,868 through the first 11 months of 2004.
While 2007’s numbers fall short of those set in 2006 and 2005, it’s an exaggeration to say the housing market is performing poorly as a whole in Arkansas. Housing markets in 2006 and 2005 were quite abnormal in Arkansas where both average prices and numbers of units sold have gained slowly every year.
In 2007, we saw average prices still gaining a bit over both 2006 and 2005, meaning homeowners are still building equity in their homes. However, the growth in prices has been relatively flat and the number of units sold returned to what can be considered a typical level in Arkansas.
What we’re left with, then, is a situation in which buyers are in very good shape. They’ve got more homes to choose from and interest rates are the lowest they’ve been in a long time. On January 28, the interest rate for a 30 year, fixed mortgage was 5.47 percent – down a percentage point from about a year ago.
It’s certainly true that Realtors® and homeowners would love to see record gains in the housing market every year, but that can’t happen forever. Regardless, 2007 wasn’t a bad year for the real estate market in Arkansas and the National Association of Realtors® has predicted that more improvements are in store this year.
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House to House is distributed weekly by the Arkansas Realtors® Association