Existing-Home Sales Rise on Home Buyer Tax Credit and Favorable Market Conditions
Washington, April 22, 2010
Buyers responding to the homebuyer tax credit and favorable affordability conditions boosted existing-home sales in March, marking the beginning of an expected spring surge, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million units in March from 5.01 million in February, and are 16.1 percent above the 4.61 million-unit level in March 2009.
Lawrence Yun, NAR chief economist, said it is encouraging to see a broad home sales recovery in nearly every part of the country, with two important underlying trends. “Sales have been above year-ago levels for nine straight months, and inventory has trended down from year-ago levels for 20 months running,” he said. “The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices. This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.”
Total housing inventory at the end of March rose 1.5 percent to 3.58 million existing homes available for sale, which represents an 8.0-month supply2 at the current sales pace, down from an 8.5-month supply in February. Raw unsold inventory is 1.8 percent below a year ago, and is 21.7 percent below the record of 4.58 million in July 2008.
“Foreclosures have been feeding into the inventory pipeline at a fairly steady pace and are being absorbed manageably,” Yun said. “In fact, foreclosures are selling quickly, especially in the lower price ranges that are attractive to first-time home buyers.”
A parallel NAR practitioner survey3 shows first-time buyers purchased 44 percent of homes in March, up from 42 percent in February. Investors accounted for 19 percent of transactions in March, unchanged from February; the remaining sales were to repeat buyers. All-cash sales remain elevated at 27 percent in March, the same as in February.
The national median existing-home price4 for all housing types was $170,700 in March, up 0.4 percent from March 2009. Distressed homes, typically sold at a 15 percent discount, accounted for 35 percent of sales last month – unchanged from February.
“With home values stabilizing, a revival in home buying confidence will likely help the housing market get back on its feet even as the tax credit impact disappears,” Yun said.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said buying conditions are in near-perfect alignment. “Even with tougher loan standards, historically low mortgage interest rates with affordable prices and a sense that the market is turning have created optimal conditions in much of the country,” she said.
“With the fast approaching April 30 deadline to get a contract in place for the tax credit, Realtors® are working harder than ever to negotiate transactions, arrange services and complete paperwork,” Golder said. “Because many repeat buyers need to sell their current home first, many will be purchasing later without the tax credit but now have the benefit of a more buoyant housing market.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.97 percent in March from 4.99 percent in February; the rate was 5.00 percent in March 2009.
Single-family home sales rose 7.3 percent to a seasonally adjusted annual rate of 4.68 million in March from a level of 4.36 million in February, and are 13.3 percent above the 4.13 million level a year ago. The median existing single-family home price was $170,700 in March, up 0.6 percent from March 2009.
Single-family median prices rose in 14 out of 20 metropolitan statistical areas reported in March in comparison with a year earlier. Five metro areas experienced double-digit increases, including San Diego, St. Louis and Boston.
Existing condominium and co-op sales increased 3.1 percent to a seasonally adjusted annual rate of 670,000 in March from 650,000 in February, and are 39.3 percent higher than the 481,000-unit level in March 2009. The median existing condo price5 was $170,600 in March, which is 0.7 percent below a year ago.
Regionally, existing-home sales in the Northeast increased 6.0 percent to an annual level of 890,000 in March and are 25.4 percent higher than a year ago. The median price in the Northeast was $249,800, up 8.9 percent from March 2009.
Existing-home sales in the Midwest rose 7.2 percent in March to a pace of 1.19 million and are 15.5 percent above March 2009. The median price in the Midwest was $139,300, up 0.2 percent from a year ago.
In the South, existing-home sales increased 7.1 percent to an annual level of 1.97 million in March and are 13.9 percent higher than a year ago. The median price in the South was $154,800, up 5.2 percent from March 2009.
Existing-home sales in the West rose 6.6 percent to an annual rate of 1.30 million in March and are 14.0 percent above March 2009. The median price in the West was $209,400, down 7.9 percent from a year ago.
Exterior Remodeling Proves Best Bang for Your Buck, Realtors® Report
Washington, December 17, 2009
Despite a slow market and a slight decrease in the resale value of most remodeling projects, Realtors® report that the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by Realtors® who completed a recent survey.
On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80 percent of project costs upon resale. A steel entry door replacement – a new addition to this year’s list – recouped 128.9 percent of costs, followed by upscale fiber-cement sliding replacements at 83.6 percent. Wood deck additions recouped 80.6 percent of costs.
“Once again, this year’s Remodeling Cost vs. Value Report highlights the importance of a home’s first impression,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “With exterior projects returning a high percent of project costs upon resale, Realtors® can help give your home curb appeal while adding value to the real estate transaction.
The 2009 Remodeling Cost vs. Value Report compares construction costs with resale values for 33 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 12th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.
On a national level, the project with the biggest improvement from 2008 was the attic bedroom addition, recouping 83.1 percent of remodeling costs compared to 73.8 percent in 2008. The only other interior project that landed in the top 10 was a minor kitchen remodel with 78.3 percent costs recouped.
Other exterior projects in the top 10 include midrange vinyl and upscale foam-backed vinyl sliding replacements, which returned more than 79 percent of costs. In addition, several types of window replacements – midrange wood, midrange vinyl, and upscale vinyl – all returned more than 76 percent of costs upon sale.
Similar to last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels and sunroom additions, returning only 48.1 percent and 50.7 percent of project costs.
Regionally, cities in the Pacific states of Alaska, California, Hawaii, Oregon and Washington once again outperformed the rest of the nation in terms of remodeling costs recouped upon resale. The West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia also performed relatively well.
The regions that generally returned the lowest percentage of costs were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and the Middle Atlantic (New York and Pennsylvania).
Golder commented that remodeling projects are just one of many factors that contribute to a home’s overall resale value. “As the first, best source for real estate information, Realtors® are experts in providing insight into what projects and investments will make a difference in your house. It’s important to consult with a Realtor® who can explain the variety of factors that affect a home’s value, such as location, condition of surrounding properties and the regional economic climate,” she said.
Results of the report are summarized in the January issue of REALTOR® Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 80 cities covered by the report, visit www.costvsvalue.com. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.
Hanley Wood, LLC, is the premier media company serving housing and construction. Through four operating divisions, the company produces award-winning magazines and Web sites, marquee trade shows and events, rich data, and custom marketing solutions. The company also is North America’s leading provider of home plans. Founded in 1976, Hanley Wood is a $240 million company owned by JPMorgan Partners, LLC, a private equity affiliate of JPMorgan Chase & Co.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Realtors® Strive to Reduce Stress in Short Sale Transactions
Washington, February 19, 2010
According to the most recent Realtors® Confidence Index, buyers continue to be discouraged with the extended short sale process, resulting in foreclosures that could have been prevented. New resources from the National Association of Realtors® aim to help Realtors® and consumers successfully navigate the short sale process to help more homeowners avoid foreclosure.
“Our members report that short sales are often riddled with delays and red tape,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “As the first, best source for real estate information, Realtors® are dedicated to help streamline and improve the short sale process for both buyers and sellers. NAR has worked tirelessly to provide Realtors® with the resources they need to navigate short sale transactions, as well as provide guidance on helpful government programs designed for homeowners facing the process.”
On April 5, 2010, the U.S. government will implement the Home Affordable Foreclosure Alternatives Program. Part of the Home Affordable Modification Program, HAFA helps homeowners who are unable to retain their home under HAMP by simplifying and streamlining the use of short sales and deeds-in-lieu of foreclosures. Homeowners must meet certain requirements to participate and incentive payments are provided to homeowners and servicers.
To help Realtors® understand HAFA and its guidelines, NAR has released a brochure about the Home Affordable Foreclosure Alternatives Program and additional resources online, including government forms and guidelines, a video explaining the new federal guidelines, and frequently asked questions. Designed to help Realtors® explain the new program to homeowners, NAR’s HAFA resources explain how the program aims to streamline short sales and, in the process, save more families from foreclosure.
“The new guidelines and incentives as part of HAFA are a crucial step towards reducing problems with the short sale process, and Realtors® are ready to help make this new program a success,” said Golder.
In addition to its resources on HAFA, NAR launched a Short Sales and Foreclosures Certification Program in August 2009. The SFR program is offered by the Real Estate Buyer’s Agent Council of NAR and includes training on how to manage short sale, foreclosure and real-estate owned transactions.
The Realtors® Confidence Index is a monthly survey of more than 50,000 Realtors®.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Copyright National Association of REALTORS®. Reprinted with permission.
http://www.cdana4homes.com
Buyers Who Wait May Lose a Lot
Potential home buyers who delay have a lot to lose.
First-time home buyer and move-up tax credits worth $8,000 and $6,500, respectively, expire April 30. Buyers who qualify get a dollar-for-dollar reduction in taxes or a cash payment if they don’t pay enough taxes to cover the credit.
Other factors that should spur buyers:
Low mortgage rates. If the Federal Reserve stops buying mortgage-backed securities at the end of March, 30-year rates will almost certainly rise to more than 6 percent.
Rising prices. About 30 percent of markets are already experiencing price increases. Prices are falling in 12 percent of markets, says Fiserv (but that only helps if you want to live there).
Source: Money Magazine, Beth Braverman (03/02/2010)
http://www.cdana4homes.com
2010 Homebuyer Tax Credit - FAQ's
3/2/10
Here are some of the most frequently asked questions on the changes to the Homebuyer Tax Credit
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who
meet all eligibility requirements will qualify for the $6500 credit.
Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a
new home. I have lived in my current home for more than 5 consecutive years and
am within the new income limits. I will go to settlement on November 20. If
President Obama has signed the bill by the time I go to settlement, will I qualify for
the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment
(when the bill is signed). There is no reference to the date of contract for the new credit. The
provision looks solely to the date of purchase, which is generally the date of settlement.
Question: I am a firsttime
homebuyer but was not within the prior income limits at the time I
entered into my contract to purchase on October 30, 2009. I will be covered,
however, by the new income limits. If the new rules have been signed into law by the
time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill.
The income limit and other eligibility rules will look to your status as of the date of purchase,
which is the settlement date. So if the new rules have been signed when you go to settlement,
you should be eligible for the credit (or a portion of the credit if you're within the phaseout
range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I
have found a home with a nonnegotiable
price of $825,000. Will I be able to use any
of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount
above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an
absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago year and have been renting
since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the
other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you
will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000
and lived there until 2008 when he got a divorce. Whether John has been renting or bought in
the interim, he WOULD INDEED be eligible for the credit because he owned a home and
occupied it as his principal residence for 5 consecutive years out of the last 8 years. The
keyword here is "consecutive." As long as he lived in that house for 5 years straight what he
did since 3 years doesn't impact eligibility.
Question: I am an eligible firsttime
homebuyer. I entered into a contract to purchase on
November 1, 2009. Do I have to go to closing before December 1? How does the
extension date affect me?
Answer: You do not have to close before December 1. Once the legislation has been signed, it will be as
if the Nov 30 date had never existed. Therefore, so long as the contract settles before April 30
(or July 1, worst case), the purchaser will be eligible for the credit.
Denver Active Real Estate Listings Down 14% - Shortage Brewing?
2/24/10
According to Metrolist statistics the number of active
listings is down over 14% from last year at this time. As
the spring market picks up inventory is likely to
decrease even further. We expect the market to pick
up more than usual this spring as buyers will be trying
to get under contract by the April 30th deadline for the
$6,500 and $8,000 tax credits. This will put further
pressure on inventory giving your buyers a much
smaller selection.
January was the 5th consecutive month of a decline in
the number of seller's who reduced their listing price.
Of 27 major markets surveyed Denver experienced the
lowest percentage of price reduced homes at 29.5%
compared to several markets experiencing reductions
in 35-49% of all homes on the market. This may lead to
higher prices this spring
The Basics: Extended Home Buyer Tax Credit 2009/2010 - 2/22/10
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:
- Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
- Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.
Recent news:
IRS Releases Revised Tax Forms, Instructions for Claiming Tax Credit (Jan. 25)
Who Qualifies for the Extended Credit?
- First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
- Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.
Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.
How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.
The maximum allowable credit for current homeowners is $6,500.
How is a Buyer's Credit Amount Determined?
Each home buyer’s tax credit is determined by two additional factors:
- The price of the home.
- The buyer's income.
Price
Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.
Buyer Income
Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.
These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.
If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.
The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.
Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.
Copyright National Association of REALTORS®. Reprinted with permission.
Dana Collins - 303 669-0487 www.cdana4homes.com
Fourth Quarter Existing-Home Sales Surge in Most States, Prices Up in More Areas - Denver Up in Double Digits
WASHINGTON , February 11, 2010
Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the National Association of Realtors ® .
Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.
Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate 1 of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008. Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.
Lawrence Yun , NAR chief economist, said the first-time home buyer tax credit was the dominant factor. “The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 4.92 percent in the fourth quarter from 5.16 percent in the third quarter; it was 5.86 percent in the fourth quarter of 2008.
In the fourth quarter, 67 out of 151 metropolitan statistical areas 2 reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter only 30 MSAs showed annual price increases and 123 areas were down.
The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less. “This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun said.
“Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable,” Yun said.
NAR President Vicki Cox Golder , owner of Vicki L. Cox & Associates in Tucson, Ariz., said near-term market conditions will remain favorable. “Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she said.
“The biggest issue is for repeat buyers, who will have to accelerate their buying plans if they want the expanded tax credit. Since you must have a contract in place by the end of April, the best advice is to consult a Realtor ® now about qualification criteria and options in your area,” Golder said.
Repeat buyers do not have to sell their existing home, but all buyers must occupy the property they purchase as a primary residence to qualify for the tax credit. Buyers who have a contract in place by April 30, 2010, have until June 30, 2010, to finalize the transaction to get a credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.
In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $177,300 in the fourth quarter, down 4.8 percent from the fourth quarter of 2008. Eleven metros showed increases in the median condo price from a year earlier and 43 areas had declines; in the third quarter only four metros experienced annual price gains.
Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.
“In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, are generally showing consistent price gains,” Yun said. “Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, N.Y., and Boston.”
In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.
Yun said markets with high unemployment rates in Ohio and Michigan experienced large price swings. “Big price gains in many Midwestern areas are due to a more normal range of home sales in contrast with predominately foreclosed sales a year ago,” he said.
In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.
“Affordable markets in the South that have relatively better local economies are seeing healthy price gains, such as Houston, Oklahoma City and Shreveport, La.,” Yun said.
Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.
“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun said.
The National Association of Realtors ® , “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
2010 Denver Metro Area Real Estate Market Forecast
“Do You Wish You Would Have Bought More Residential Real Estate in 1988? Don’t wish the same thing for 2010.”
2009-2010 will be the timeframe known as the bottom of the real estate market in Denver, Colorado and many will ask the question in the future, “Do you wish you would have bought more real estate in 2009-2010?” We see the Denver marketplace improving slightly in 2010 over the 2009 and we do see prices starting to appreciate in the 4-6% levels for the entry price points for 2010.
There are Three Key Reasons why 2010 will be a more consistent year in residential real estate because of three major factors starting out the year in 2010 that was not the case the previous three years.
The First Reason 2010 will be improved over past years are inventories are at historical lows in Denver.
Inventory in January of 2010 is the lowest level in 7 years. With single family and condo units that are for sale totaling 16781, makes for a 15.4% decrease in the number of available properties over January of 2009 and a whopping 31.5% over January of 2008
· Single family homes for sale are at a low of 12,637 total number of units
· Condominium homes for sale stands at 4144 units available as of January 4, 2010.
· The decrease in inventory from December of 2009 to January of 2010 represented an 11.15 decrease. Normally you would expect decreases in the 8% range from Dec to Jan.
· Inventories in the 0-$250,000 range will see appreciation in 2010
· Inventories in the $250,000-$500,000 range will outperform 2009 in number of units sold.
· Inventories of homes priced above $1 million dollars have a large inventory, but this price range typically dwindles faster due to staying power of upper end price property homeowners’ financial ability to wait out the market. Even though today there is lot of upper end inventory, we believe this will decrease at a faster pace than 2009.
The Second Reason 2010 will be improved is that the market is moving from a buyers advantage to a sellers advantage in the starter price ranges.
· When inventories dip below 6 months supply normally appreciation occurs.
· Be cautious with a January month supply ratio as a sole determining factor in predicting the future, because historically inventories are lower in January than any other time of the year.
· Different subdivisions will outperform or under perform the numbers below. Real estate is localized to the subarea you are living within. Make sure you know your neighborhood market conditions to predict where the market is going.
· The current supply of Homes in the Denver metro area per price range is as follows:
|
RES Units |
Total Active 1.4.10 |
Total Sold for 2009 |
Months Supply |
|
|
|
|
|
|
0- 250,000 |
4762 |
18182 |
3.143 months |
|
$250,001-$500,000 |
4639 |
9898 |
5.620 months |
|
$500,001-$750,000 |
1472 |
1597 |
11.06 months |
|
$750,001-$1,000,000 |
692 |
470 |
17.66 months |
|
$1,000,001-$1,500,000 |
464 |
217 |
25.66 months |
|
$1,500,001-$2,000,000 |
256 |
68 |
45.17 months |
|
$2,000,001-$2,500,001 |
118 |
28 |
50.57 months |
|
$2,500,001-$3,000,000 |
90 |
16 |
67.52 months |
|
$3,000,001+ |
144 |
16 |
108.0 months |
|
|
|
|
|
|
CONDO Units |
|
|
|
|
|
|
|
|
|
0-$250,000 |
2707 |
7008 |
4.635 months |
|
$250,001-$500,000 |
975 |
914 |
12.80 months |
|
$500,001-$750,000 |
246 |
110 |
26.84 months |
|
$750,001-$1,000,000 |
100 |
26 |
46.15 months |
|
$1,000,001-$1,500,000 |
66 |
12 |
66.00 months |
|
$1,500,001-$2,000,000 |
34 |
4 |
102.0 months |
|
$2,000,001-$$2,500,000 |
10 |
2 |
60.00 months |
|
$2,500,001-$3,000,000 |
1 |
0 |
no sales |
|
$3,000,001+ |
5 |
0 |
no sales |
· Condominiums are lagging behind single family homes in demand for 2009.
· As lower single family inventory continues to be absorbed, condo inventory will start to be absorbed at a faster pace in 2010.
· 2009 has experienced appreciation in the lower price ranges and the extension of the $8000 first time home buyer Tax Credit and the addition of the $6500 Tax Credit for existing home owners should continue to cause the lower price ranges to appreciate.
· 2010 will start to experience the move up buyer enter the market in the $250,000 to $500,000 range.
· Conversely, 2009 also saw homes priced above $1 million struggle with holding their prices and experiencing a price declining market in 2009. Overall the average price dropped 11.2% above 1 million in 2009.
· There are fewer properties to compete with today and serious buyers are buying now, as the Tax Credit has been extended and expanded to include current homeowners.
· Interest rates are 5% for conforming loans today and more than likely will be a little higher in 2010 causing buyers to make a buying decision early in 2010 versus waiting till later in the year.
· We anticipate a slight rise in interest rates in the first half of 2010 to 5.75% to 6%.
The Third Reason 2010 will be improved over previous years is Denver’s economic condition is more stable today than at any time over the last 36 months.
· Job stability is stronger in Denver than other markets
· An increase in employment will start to occur in the second half of 2010, increasing the confidence of the consumers to buy a home.
· 2010 will see more stability in the employment sector providing for more buyers willing to buy.
Sold Data is a Trailing Indicator of the Marketplace.
· Sold data is the trailing indicator of market conditions. We believe 2009 is the low point in number of transactions in 2010 month over month close transactions will be within 1% of 2009 or in some months exceed the previous year.
· The number of total sold units for 2009 was 13.8% less than 2008.
· Condo sales declined 10.2% from 2008.
· Residential sales declined 14.7% from 2008.
Properties under Contract are the Leading Edge of Predicting the Market
· The “Under Contract Homes” indicate we have a better pipeline of existing business to open the year versus the last 4 years. More homes that are set to close is a trend of a market starting to move upwards.
· We anticipate the closing time frame to shorten in 2010 as banks and Realtors are better understanding the financing and short sales processes.
What did 2009 bring to Real Estate in Denver?
· The $8000 Tax Credit did create more sales in the 4th quarter of 2009 and will enhance the sales the first 4 months of 2010.
· The number of properties under contract remained at higher levels which indicated a longer closing period and increased buyer confidence to stay with the elongated process of short sales and financing challenges.
· A reduction of upward of 20% of the number of real estate brokers in the Denver Metro decreased in 2009. Work with a professional to protect your position.
· The average price of a home declined 2.3% in the Denver Metro area. Lower priced properties went up and higher priced properties declined. Know your neighborhood before just assuming the trend affects you and your home.
Overall 2010 will bring compelling reasons to buy real estate in Denver.
· The $8000 tax credit for first time homebuyers and the $6500 dollar tax credit for existing home buyers will increase demand the first half of 2010.
· Interest rates are at historical lows and will rise. Once that occurs, buyers will move more quickly to obtain the home of their choice.
· Continued fewer new home starts will create less competition for resale homes and allow them to be absorbed at a quicker pace than in 2005, 2006, 2007 and 2008.
· Alternative marketing methods will be used to move real estate including short sales, loan modifications, pre-foreclosure programs and property auctions.
· Prices for the upper end market continue to offer extraordinary concessions making for a perfect time to acquire the home of your dreams.
What should buyers do in today’s market?
· Take advantage of your “Move-up Power” by exploring what it would take to rent your existing home and get an exceptional deal on your next home.
· Get qualified before starting your search to become more attractive to sellers.
· Be creative in your offers to add closing costs, HOA dues or points to make the monthly payment more attractive to you short term.
What should sellers do in today’s market?
· Know your individual sub area statistics to best position your home.
· Have your home professionally staged to capture the eye of today’s buyers.
· In the lower price ranges, be the best conditioned to get multiple offers.
· In the upper price ranges, offer extraordinary terms to attract the buyers to your home.
Four out of 10 Recent Buyers Relied on FHA Loans, Says NAR
Washington, December 18, 2009
According to the most recent Realtors® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. Realtors® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.
“FHA helps provide affordable mortgage financing to homeowners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”
The RCI results also indicated that distressed sales increased to 33 percent of all home sales last month, and that both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers’ perceptions of other homes for sale. Realtors® report that many buyers have pricing expectations that treat every property as if it were in foreclosure.
In addition, Realtors® expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available.
“As the first, best source for real estate information, Realtors® have their finger on the pulse of current housing trends, and their knowledge and experience offer valuable insights into today’s real estate market,” said Golder. “We know that an economic recovery is not possible without a housing recovery, and we will continue to work with policymakers at all levels to ensure that this happens.”
The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 Realtors®; in a typical month there are more than 3,000 usable responses. Participants are asked about their expectations for the demand for homes, price of homes, and other economic conditions.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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