Existing Home Sales Rise For Second Straight Month

The National Association of Realtors released its existing home sales report which noted that existing home sales rose for the second straight month in May, signaling low prices and incentives are attracting buyers.

NAR says existing home sales, including single family homes, condos and coops rose 2.4 percent in May. It was the first back-to-back monthly gain in existing home sales since September 2005.

Sales of existing homes rose for the second straight month in May, signaling low prices and incentives are attracting buyers.
NAR chief economist Lawrence Yun had this to say, “Historically low mortgage rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates. First time buyers are also being drawn off the sidelines by the $8,000 tax credit which is helping to absorb inventory.”

The numbers could be even better if it weren’t for poor appraisals. While pending sales of existing homes—those with signed contracts but not closed—indicate stronger activity, some contracts are falling through from faulty valuations that keep buyers from getting a loan, said Yun.

And with that great news in tow, let’s take a look at this week in real estate:

• Davis County—Sales were slow in both the Bountiful and North Davis offices last week, but our Agents remain busy working. Many are working to hold deals together that are under contract. I’m consistently hearing that transactions are increasingly difficult to keep together for various reasons. Many Agents are feeling that for some reasons the buyers that they are working with are back to the “wait and see what happens” attitude, but we are not really able to pin why they are feeling like that at this point, since April and early May reported such tremendous sales activity relative to where we had been for the last 18 months or so. Markets above 400k remain difficult and we are seeing seller’s who really need to sell continuing to lower prices to attract buyers.
• Salt Lake County North—Our Salt Lake office reported buyers are reluctant to purchase because they think more housing stimulus and lower interest rates will be coming soon. Many of the under contracts are having problems with low appraisals which are being pulled lower by REO properties and short sales. Consumer confidence is good but they have been spoiled over the past few months with artificially low interest rates, creating unrealistic expectations. Many buyers will miss the opportunity of buying homes at these prices while waiting for rates to decline. The "smart money" is buying now, knowing that the market has bottomed and the only place for home prices and interest rates to go is up. The Union Heights office reported the market in general is starting to pick up in all price ranges but mostly below $350K. It remains to be seen if this is a seasonal adjustment or will continue with a upswing.
• Salt Lake County South—The Draper/Sandy office has seen some short sales approved, which is good news. The interest rate hike has actually been good. It has made many buyers fence sitters get moving. The upper end is still a buyer's market due to the excessive inventory. Our Jordan Commons office reports this: I'm finding that my first time buyers have debt and/or credit issues to clear up before they can buy. I'm not sure that will occur in time for me to meet the $8,000 tax credit deadline. One of my key clients' situation looks like a close call. If they go under contract by November 1 for a 30 day funding, and there is an extension requested by their lender because of an appraiser delay, my buyer could be out of luck.
• Salt Lake County West—Our West Jordan office reports Agents are reporting seeing more bank owned properties hitting the market within the past 2 weeks. We are experiencing somewhat longer delays in regard to the short sale approval process within the past month. Our ratified sales have remained about the same as last month.
• Tooele County—Our Tooele office reports listings keep slowly rising, out pacing solds. A slight decrease in closed activity and an even bigger decrease in ratified. A lot of showings..
• Utah County—The market is definitely changed for the better. Agents that I have not seen with business for a long while are doing business. Experienced Agents are doing significantly more business.
• Weber County—Business has been steady but still a little sluggish. We have averaged only about 10 under contracts per week for the past three weeks in both offices in Weber County. Sales in the lower and mid-priced ranges are indicative of where business is now.

Commentary from Axiom Mortgage President Melissa Wright:

“With recent economic and market changes, there are a number of bank-owned (REO) homes available for purchase. Fannie Mae is offering special buyer benefits for their REO properties listed for purchase on their HomePath website. These are well-priced properties of varying value with unique financing for easy purchase. With down payments as little as 3% for owner-occupied homes and 10% for second and investment properties, it’s a great opportunity for buyers. No mortgage insurance is required and no appraisal fees. The seller (Fannie Mae) will also contribute towards buyer’s closing costs.

All these benefits combine into a great opportunity for people considering purchase and trying to find great properties for a great price. Not every mortgage company can offer HomePath financing, but Axiom Financial (found under parent company PHH in the lender list) is a qualified lender for this program. Talk to your Axiom Mortgage Consultant to pre-qualify, then visit your real estate professional to begin the purchase process. Look for the HomePath Logo to find the homes eligible for this special program.”

http://reosearch.fanniemae.com/reosearch/

One potential challenge that may begin affecting our market is the rise in interest rates. I came across this CNNMoney.com article which explains why interest rates are on the rise: http://money.cnn.com/2009/06/19/news/economy/higher_inflation.fortune/index.htm. At this point, what we are seeing is the recent uptick is causing many fence sitting buyers to get off the fence and get in the market and in all likelihood that is a very good idea. We probably won’t see interest rates as low as they have been for at least another 20-30 years.

I also recently sat down with our friends at Axiom Financial to discuss interest rates, the future and what we can expect and based on that conversation, I will be focusing my July edition of Reality Check on this very subject.

Watch for it after the 4th of July holiday.

Until then, make it a great week.

Dan Christensen
Coldwell Banker Residential Brokerage Utah

Reinvigorating the Housing Market

This week there were some exciting change of events going on with the government. Realogy (Coldwell Banker Residential Brokerage’s parent company) President Richard Smith met with legislators regarding a positive development for the real estate industry. Specifically, the Business Roundtable (an association of chief executive officers of leading U.S. corporations)— of which Richard is the chair—issued a set of recommendations for the White House and Congress that are aimed at jump starting the housing market in order to stimulate a broader economic recovery.

The Business Roundtable’s recommendations are as follows:

· Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year;
· Expand the current First-Time Homebuyer Tax Credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000 to a higher limit of either 10 percent or $15,000 for all homebuyers, remove the income restrictions and include all primary residence purchases for one full year;
· Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates;
· Make permanent the current temporary conforming loan limits; and
· Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices.

We believe targeted, demand-side solutions—such as the ones Business Roundtable is recommending—will provide a critical next step for a housing recovery that will help create jobs and boost the economy as a whole. To obtain a copy of the Business Roundtable press release and its Housing Working Group’s detailed recommendations, click here. To read an article that appeared in today’s online edition of The Wall Street Journal containing an interview about the Business Roundtable’s recommendations and why they are crucial to jumpstarting the housing market, click here.

Please understand that the legislative process is often a long and winding road that is hard to predict, but at some point in the future, we expect to call on you to make your voices heard in support of any new legislation in Congress that would advance these recommendations. We will communicate with you as these legislative opportunities occur—but for now, just know that we appreciate your support and are proud to be part of this initiative.

In other news this week, RealtyTrac released its foreclosure findings with positive news that foreclosure filings dipped 6% in May compared with April. But the news wasn’t all positive as the number is still 18% above this time last year. Essentially one in ever 398 homes received a foreclosure filing last month.

Here in Utah, the picture continues to be a bit more bleak. We are ranked No. 5 out of 50 states in foreclosure filings with 2,927 total filings or one in ever 316 households. Our numbers, however, are on the decline with a decline from April 2009 to May 2009 earning a 1.4% drop but from May 2008 to May 2009 earning a 115% increase. For a complete look at the USA Today story that ran on the figures, click here: http://www.usatoday.com/money/economy/housing/2009-06-10-may-home-foreclosures_N.htm#chart.

Now let’s take a look at this week in real estate:

• Davis County—The Bountiful office reports it must have been a full moon last week (full moon's make people a little goofy you know!) as both the Bountiful and North Davis offices had their share of transactional challenges. Funding problems, delayed underwriting, inspection problems, etc., seemed to be more prevalent than usual as Agents battled to hold transactions together. It seems that both buyers and sellers are a little more on edge and uncertain as transactions unfold. On the upside, we did see another decent sales week from both offices’ previous weeks’ sales had slowed significantly. I've had a few Agents comment that some of the buyers they are working with have been motivated by the recent uptick in rates, which seems to indicate that the attitude of "wait and see what happens" may be lessoning with consumers.
• Salt Lake County North—Our Salt Lake office reported that buyers had become accustomed to 4% interest rates and buyers were shocked to see the rates jump a full percent in one day. Many buyers returned to "fence sitting" hoping the rates will go back down. Once they realize they are not going down and that 5% is still a great rate, they will return to the market because consumer confidence is still strong. Many Buyers are taking advantage of both the $8K Federal First time Buyer tax credit and the Utah $6K Home Run grant but these grants are almost gone. There is lots of traffic at open houses and Internet leads which should convert to sales over the coming weeks! The Union Heights office reported the week was relatively stable form the previous week. We had several closings. The biggest factor is school is out which is driving new energy into the market.
• Salt Lake County South—Our Jordan Commons office reports working with mortgage brokers is becoming increasingly more difficult when adding the appraisal pool to the mix. Timeframes for appraisals are lengthening. Watch the dates! Working with Axiom gives buyers a better chance of closing on time. The issue I have been dealing with this past week has to do with lenders and appraisals. The particular lender that is being used is demanding that the loan be 100% approved before ordering the appraisal. The other requirement is that the buyer pay for the appraisal prior to the appraisal being ordered.
• Salt Lake County West—Our West Jordan office reports no real changes from last week.
• Tooele County—Our Tooele office reports listing inventory is identical to the last three weeks. Sales are up, but not robust and ratifies are consistent at about 16 per week. A lot of short sales are waiting third party blessing.
• Utah County—The market is definitely changed for the better. Agents that I have not seen with business for a long while are doing business. Experienced Agents are doing significantly more business.
• Weber County—The Ogden office reported new listings have decreased slightly. However, buyers are out and writing offers. Homes that are selling are ones that are accurately priced and competitive. Business was up this week slightly over the past weeks. Agents are reporting increased activity up to $342,000.

Commentary from Axiom Mortgage President Melissa Wright:

“Mortgage Rates have shot up over the past several weeks to levels not seen since last November. Homebuyers who have sat on the fence are now faced with rates up to a full point higher than they were just 3 weeks ago. Rates are still at historically low levels, but they can move upward very quickly. So why the sudden increase in rates after several months of extremely low and relatively stable rates? Simply put its supply and demand.

All the refinance activity that has occurred over the past several months is now hitting Wall Street as Mortgage Backed Securities (MBS). In addition, the U.S. Treasury has been auctioning off huge amounts of debt. The added supply, along with stronger than expected economic reports, mixed with inflation fears has forced Mortgage Rates up very quickly.

There is talk that the Fed may expand their MBS purchasing program when they meet later this month, but there is only so much the Fed can do when there is so much supply on the market. These elevated rates have slowed the flow of new refinance activity, which will eventually lead to less supply in the market and greater stability. Until then, volatile conditions will likely continue and rates could change very quickly. But remember: even with the recent uptick, we are still looking at incredibly low Mortgage Rates and it’s still a great time to buy.”

Visit our website to request your free weekly Market Watch Report at www.axiomfinancial.com.

I did want to let you all know that I will take a brief hiatus from Weekly Market Watch next week but will return the following week with another robust edition.

Until next week,
Make it a great one,

Dan Christensen
Coldwell Banker Residential Brokerage Utah

Showing Activity In the Entry Level and Mid-Level Markets Continues to Rise

Now that school is almost out, we’re finding many families are starting to look at homes in anticipation of getting settled prior to next school year. Showing activity, in many markets, has increased considerably.

Sellers are now getting their homes on the market and, in general, seem to be quite knowledgeable regarding staging and pricing. The homes in the entry-level market, for the most part, are moving well if they are in good condition and fairly and competitively priced. Several Agents whose clients’ listings are in the entry level market are reporting that they have had buyers lose out on homes in bidding wars. Could they be back? The competition for well priced homes in good condition is heating up and we are seeing multiple offer situations in most of our first time home buyer markets.

Though we have seen sporadic increases in the upper end market, it is still relatively slow on showings and closings but we do anticipate that that sector will loosen somewhat if the economic news continues to show some stabilization and an upswing.

Before I get into the week’s top news, what I would like to share is that LORE Magazine and The Wall Street Journal this week released their Top 400 list. You may view it online at http://online.wsj.com/ad/top400-articlecontinued.html. Many of our own Coldwell Banker Residential Brokerage colleagues we’re recognized within this coveted ranking and for that—along with all of their hard work and dedication—I salute them.

The most notable news this week was The Mortgage Bankers Association’s (MBA) release of is Weekly Mortgage Applications Survey for the week ending May 29, 2009. The Market Composite Index, a measure of mortgage loan application volume, was 658.7, a decrease of 16.2 percent on a seasonally adjusted basis from 786.0 one week earlier but was 14.4% higher than the same week a year ago. This increase is due, largely in part to the first time home buyer market which, as we know, has been vastly stimulated by a triple threat combination of low interest rates, the $8,000 first time home buyer tax credit and increased affordability. Together these incentives are finally getting buyers in the first time home buyer market off the fence and into the market which—once we get through the large number of REOs on the market—we should finally start to see some price stabilization.

But for those of you who are waiting for your homes to come back to their pre-recession values, be prepared to wait. A recent study that I read notes that real estate is now as affordable as its has been in the past 38 years (this of course relates to median homes when compared to median mortgage rates and incomes).

The fact is, the peak of unaffordability was in 2006, when an average family in the United States needed to spend 44% of their income to purchase an average single family home. Today, housing affordability in the United States is up to 73%. This means 73% of all new and existing homes sold in the first quarter of 2009 were affordable to families earning the national median income of $64,000.

A couple of other interesting articles of note this week:

- RISMedia’s First Time Home Buyers Grabbing Houses and Tax Credit (http://rismedia.com/2009-06-03/first-time-home-buyers-grabbing-houses-and-tax-credit/)
- Realty Times Multifamily Builder Confidence Up From Record Lows; Interest From Prospective Renters and Buyers Rises (http://realtytimes.com/rtpages/20090603_confidenceup.htm)
- Realtor.org Pending Home Sales Up For Three Months in a Row (http://www.realtor.org/press_room/news_releases/2009/06/phs_up)

Now, let’s take a look at this week in real estate:

• Davis County—Sales were slow in both the Bountiful and North Davis offices last week, but our agents remain busy working. Many are working to hold deals together that are under contract. I’m consistently hearing that transactions are increasingly difficult to keep together for various reasons. Many Agents are feeling that for some reasons the buyers that they are working with are back to the “wait and see what happens” attitude, but we are not really able to pin why they are feeling like that at this point, since April and early May reported such tremendous sales activity relative to where we had been for the last 18 months or so. Markets above $400,000 remain difficult and we are seeing seller’s who really need to sell continuing to lower prices to attract buyers.
• Salt Lake County North—Our Salt Lake office reports market activity is strong but has slowed in the past couple of days with increasing interest rates. Buyers are spoiled with the 4% rates of the past few months. We may see a week or so pause in activity as buyer's adjust to 5% rates. Demand is good so I would expect improvement in the market to continue. Our Union Heights office reports the market in general is starting to pick up in all price ranges but mostly below $350K. It remains to be seen if this is a seasonal adjustment or will continue with a upswing. Our Sugar House office reports we have been very busy the past week. Open houses are receiving good activity.
• Salt Lake County South—Our Jordan Commons office reports that we are still hearing lower priced listings are selling. My Spurrier Rd listing, $164,900, now has had 3 back up offers about $154,000. We had one multiple offer situation, buyers did not want to revise their offer. Sellers seem to be more willing to improve the condition of their homes versus negotiating on the price.
• Salt Lake County West—One Agent reports the following in regard to South Jordan: “Seller in South Jordan had their home on the market April 2008 for 188 days with no sale or offer. When I did comps of "solds" of like homes, there were 6 sales in the past 90 days and 3 of them were short sales with 23 like homes "active" and 2 under contract. There are a few buyers in the price range, but absorption rate is 8 months. Sellers will list their home aggressively at $30,000 lower than the listing a year ago. There continues to be a correction in South Jordan market.” Another reports: “I have had 3 offers written, called the other agent to send over, and they were under contract.” A third agent reports: “My thoughts are that the market is moving especially in the price range under $300K. I have 3 recent contracts and agree that the buyers are still looking for the BEST deal and sellers are aware that if they take less for their own property that they will most likely pay less as well when they select another property. Value is only a mind set. When the seller sets their mind to sell, it will happen!”
• Tooele County—Our Tooele office reports listing inventory is stable. Sales activity remains slow. The fall rate has to be increasing because under contracts are not translating to closings. Also, it's taking a lot longer to close transactions.
• Utah County—No major changes week to week.
• Weber County—We have seen a noticeable increase in showing requests. We had a marked increase for about two weeks which was good. Listings which are priced accurately are seeing good offers. Down payment still seems to be the major issue. However, business just remains steady. High end listings $350K and above are seeing a huge increase in showings and several are now pending. Month end for May included 50 new listings, 41 under contracts and 40 closed. Compared to 2008 we had 39 new listings, 42 under contracts, and 36 closed transactions. Agents are reporting increased activity on their listings. One Agent reports multiple offers and has accepted a backup offer on one of their listings. Another Agent reports the sale of a home that had been on the market for 11 months with no activity. Business has picked up for the third week in a row.

I am also pleased to provide you with this commentary from Axiom Mortgage President Melissa Wright:

The Facts about the $8000 Homebuyer Tax Credit Program:

Most people have heard about this First Time Homebuyer program by now, but this information may help to clarify some of details of the program. You’re a “first time homebuyer” if neither you, nor your spouse, have had ownership interest in a property for at least 3 years. When using the tax credit, you must occupy the home for 3 years from purchase, or you will be required to repay the credit.

If you’re married and filing separately, the tax credit is cut to a maximum of $4000. If you make over the $75K/$150K AGI limit for individuals/married couples, you may also see a reduction in the credit you qualify for but still see a significant benefit. One interesting fact is that the tax credit may be applied to either your 2008 or 2009 tax liability, and it is refundable – meaning that you can receive the difference between what you owe in income taxes and the tax credit refunded to you.

This program is a solid stepping stone to those considering buying their first home, but is limited to purchasing your home by November 30, 2009. For full details on this program, contact your Axiom Financial Mortgage Consultant today at www.axiomfinancial.com or 1.888.656.LEND.

Conditions apply. Programs and rates are subject to change without notice. Consult a tax advisor before choosing this program. Not an offer to lend. Axiom Financial is an Equal Housing Lender providing mortgage services.

I’d like to leave you with this. It is an excerpt of an article I found online that I think really should get us all thinking. As I visit our offices, what I hear from most is that things are changing and I think many of us agree—at least as far as the housing market is concerned—it seems we are on the path to recovery. Having said that, there are some buyers and sellers out there who continue to wait. For those of you (and you know who you are), please read on:

“…If you're a buyer, buy because you love what you're buying. Buy because the lifestyle you're looking to live can more easily be accomplished with the purchase than without. If you're selling, sell because you want to sell. Sell because you need to sell. Sell because your neighbor is driving you crazy. Sell because the house you've always had your eye on just hit the market. Sell to move up in the market. Sell to downsize. Sell to liquidate, but if you really want to sell, just sell already. If you're waiting to sell until markets rebound, please realize that doesn't mean to list in October. That means you'll be listing several years down the road, and the reason you were planning on selling in the first place might not exist at that magical time in the future. None of us are promised today, let alone tomorrow. Let alone 6 years from now when you can possibly sell your home for 15% more money.

If you're in no hurry to sell, do your neighbors a favor and take your home off the open market. If you're wanting to sell, be realistic in your asking price and aggressive in your hunt for a buyer. If you're a buyer, John Burns seems to be telling you that it's a pretty good time to buy. I'm telling you it's a good time to buy, and my reasons are not the same as Mr. Burns'. Buy because you want to. Buy because you can. Buy because you know the purchase will make you look like a real estate savant 15 years from now. Welcome to 2009 and the new rules of real estate. Sell low, hopefully buy lower.”

And with that, I’ll bid you adieux.

Until next week,
Make it a great one,


Dan Christensen
Coldwell Banker Residential Brokerage Utah