Thursday, August 16, 2012

An Improving Real Estate Market...Missing out???

The Market is improving!!!

              The Market is Improving!!!!

                           THE MARKET IS IMPROVING!!

The news continues to be very positive for the housing industry.  Though, not yet robust and completely healthy,
the Real Estate Market is on the uptick.

Lack of inventory in many markets is pressuring prices.  Jim notes below that it is due to investors snatching properties off to convert to rentals thus keeping homes off the market. It may also be due to sellers not yet knowing now is the time 
to act while the competition is low.  In Hampton Roads, we are roughly 30% lower in inventory than we were in 2011.

With buyer activity beginning to tick up(low low interest rates and pent up demand), we could see complaints about no inventory to meet demand.  As each Real Estate market is really a local market, this will vary throughout the country.

I know I have seen my homes selling in less than 30 days in the past three months or so.   Even homes in the higher price ranges are seeing improved activity...could see a couple of contract this week on these homes!!

Read below and it time for you to dive in???

It is an awesome time to buy or sell!!!

Keeping you updated on the market! For the week of 
August 13, 2012

The foreclosure data continue to trend positively. RealtyTrac reports foreclosure filings declined 3 percent month-over-month in July and are down 10% year-over—year.

We are not surprised by the downward trend in foreclosures; it's simply more remunerative for banks to seek other alternatives than taking back a house. RealtyTrac reports that short sales, on average, sell for $25,000 more than an REO property.

Banks are no doubt being helped by the persistent uptrend in prices. On that front, CoreLogic reports national prices rose 2.5 percent year-over-year in June, and 6 percent in the second quarter of 2012 compared to the first quarter.

Supply is a main price driver: there simply isn't enough supply to meet growing demand, particularly in the starter and low-price segments. Investor demand is impacting supply. Given the strong rental demand in many markets, investors are buying homes and turning them into rentals instead of flipping them; thus keeping the properties off the market.

As for new-home supply, builders only recently began to ramp up construction. New-home inventory is at levels unseen in decades. (Keep in mind; decades ago there were also fewer people.) More demand and less supply can only lead to one outcome – higher prices.

At the beginning of the year, few pundits were expecting prices to rise in 2012. Today, many have changed their tune. Zelman & Associates, a real estate research firm, for one, recently revised its forecast, predicting prices will rise 5 percent nationally in 2012. At the beginning of the year, Zelman's forecast a 1-percent decline.

Negative equity remains a problem in many markets, and that's also helping to keep supply low. But as prices move higher, more of these properties will turn positive. An even stronger price trend will, in turn, draw more buyers and more sellers into the market. That means more overall transaction activity, which means rising mortgage purchase demand.

As for rates on current mortgage demand, they moved up this past week. Most products saw a three or four basis-point increase. Given the trend in 10-year Treasury yields, we don't expect to see a pullback. Over the past two weeks, the yield on the 10-year Treasury note has increased nearly 30 basis points.

This suggests that investors are becoming less risk averse, pulling money out of Treasuries and putting that money into riskier investments: Over the same two-week period, the S&P 500 stock index is up over 6 percent.
Yes, the Federal Reserve has stated that it's determined to hold long-term lending rates low for the next two years, but don't assume the Fed can automatically achieve its goal. Markets are dynamic forces, and if more investors sell bonds in favor of other investments, yields on Treasury securities will continue to rise. That means mortgage lending rates will rise too.

Date and Time
Producer Price Index
Tues., Aug. 14,
8:30 am, et
All Goods: 0.2% (Increase)
Core: 0.2% (Increase)
Moderately Important. Lower energy prices are keeping producer price inflation in check.
Mortgage Applications
Wed., Aug. 15,
7:00 am, et
Important. Purchase activity remains flat, which points to flat home sales for the month.
Home Builder Index
Wed., Aug. 15,
8:30 am, et
36 Index
Important. Sentiment is approaching a five-year high, which bodes well for the sector's outlook.
Housing Starts
Thurs., Aug 16,
8:30 am, et
765,000 (Annualized)
Important. Rising residential construction is helping to stimulate economic growth.

Don't Expect Perfection
The problem with vetting national numbers is that local markets rarely reflect the national numbers. This causes problems, mostly due to false or unrealistic expectations if the local numbers don't gel with the national numbers.

The fact is there is never a perfect time to buy or sell a home. Only in hindsight do we realize that our timing was good, or maybe not so good. That said, it's important not to be paralyzed by the fear of not selling at the top or buying at the bottom or financing at rock-bottom rates.

There are still pundits (most notably Fiserv) who think falling home prices are in our future. Unfortunately, that expectation gets reported at the national level and is interpreted to mean prices in most markets will fall. This isn't the case, but it tends to attenuate activity through fear.

We are keen to emphasize that markets are local. But even in local markets that are rising, there will always be concerns about prices backsliding or the economy tanking. The key is to always factor in where we are in a historical context. Looking at the big picture removes some of the worry and places a long-term investment like residential real estate in the proper perspective. It also increases the likelihood of making a profitable purchase or sale.

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