Existing Home Sales Up For Third Straight Month...The Question of the Day: Have We Bottomed Out?

Some are calling it the sign that we have hit bottom and are on our way back up. Others are calling it a blip on the screen. Whatever your take, NAR released Thursday its existing home sales report which showed three key, positive indicators regarding the housing sector:

• For the third consecutive month, existing home sales rose
• Inventory is easing
• Home prices declined less sharply in June

The report noted, “Existing home sales…increased 3.6 percent to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2 percent lower than the 4.9 million-unit level in June 2008.

The report also revealed, “Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4 month supply at the current sales pace, down from a 9.8 month supply in May. Raw inventory totals are 14.9 percent below a year ago.”

The Wall Street Journal reported Thursday a look at 28 major real estate markets and where they are headed. The results (http://online.wsj.com/public/resources/documents/retro-HAGERTY.html) were interesting.

What all of this leads us to believe is despite some of the challenges we continue to face nationally and globally, the domestic housing market continues to demonstrate signs of recovery. The temporary first-time home buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact.

Are we out of the woods yet? It’s tough to say but the signs are encouraging and three months of continued increases in home sales are a positive sign that we may be on the road to recovery.

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

• Davis County—The Bountiful office reports Davis County is still experiencing problems around property's having appraisal issues. Pricing properties right and doing some research on what offers should be prior to making them has never been more important. We have seen a couple of cases where banks who have properties in inventory were not willing to pay selling Agent commissions. The number of open contracts has been increasing through the month of June which is encouraging. The few open houses that are being done are reporting good traffic and any agent who needs some more leads needs to get out and hold some houses open..
• Salt Lake County North—The Sugar House office reports the market is still steady. Activity has slowed a little from last month. The Salt Lake office reported lower interest rates over the past week have really stimulated sales under $300K, but we are starting to see more activity in the $400-500K price ranges as buyer confidence increases with good economic news. This is one of the strongest Julys we've seen as July is typically a slow month due to vacations and holidays. Union Heights reports the best week they’ve had in a long time with 50 opens.
• Salt Lake County South—Our Jordan Commons office reports I still have two couples working towards saving for their down and planning to use the $8,000 tax credit. If properties are priced right we are seeing multiple offers. There is a sense of urgency when the home is priced right that wasn't there before. The Draper office reports there are plenty of people wanting to buy/sell during the holidays and if you choose to work, you can get great business.
• Salt Lake County West—Our West Jordan office reports our listings and ratified sales really jumped up this week. Interestingly we have not taken a listing over $349,000 so far in the month of July. Also, we have not had a sale over $399,000 in the past 60 days. The majority of the sales have been under $200,000. Our average sales price for the past 12 months is $315,000. It feels like the market is moving quite well under $200,000 for us.
• Tooele County—Our Tooele office reports listing inventory exactly what its been for 4-5 months. Closings are unbelievable slow, BUT ratified are quite high compared to last quarter.
• Utah County—
  Active Sellers in Utah County
  June - 2009 4442
  July - 2009 4378
  Down by 1%
  
  Active Buyer's in Utah County
  June - 2009 883
  July - 2009 1055
  8.4% increase in # of active Buyers in one month
  
  Multiple offers, in number of issues with short sales and banks (2nds) not
  cooperating & placing home into foreclosure.
  
• Weber County— Not much has changed with regards to the market. However, there is some concern around the potential for failed transactions with the new Mortgage Disclosure Improvement Act that will become effective on July 30th. We are seeing steady sales in the lower price ranges, with a few sales above $350,000. Listing inventories are down for 2008.

Commentary from Axiom Mortgage President Melissa Wright:

“Buyers have a number of options available to them when considering purchasing a home. A wide selection of homes on the market and financing programs may help qualified buyers purchasing with little down payment and still get great interest rate. For instances, HUD has a program allowing buyers to purchase one of their HUD-owned properties for as little as $100 down when obtaining FHA insured financing. the program features flexible credit qualifications , includes the Good Neighbor Next Door Program (for public service officials such as police, fire fighters and teachers), and HUD's contribution of 3% towards closing costs. Qualifying homes are listed as available for FHA financing and buyers must make a full price offer to qualify. Coldwell Banker and your Real Estate Agent can show you the available properties for sale which qualify under this program. Your Axiom Mortgage Consult can help with the details of this unique program, and will qualify buyers for this special financing of $100 down; (program is subject to change without notice, OAC).”

This week I’ll end with a few words of wisdom to our clients:

Pricing and presentation is vital in today’s market. Buyers are paying attention to new inventory and current price reductions so if you want your home to remain competitive in today’s market, you need to consider this fact. I urge you not to test the waters when you place your home on the market. You will prevail if you price your home competitively from the beginning and present it in its best light possible. Listen to your Agent! Once you do this, great opportunities abound.

Until next week,

Dan Christensen
Coldwell Banker Residential Brokerage Utah

A Rebounding Market

This week a Realty Times article provided some insight into a rebounding market. Here are the highlights:

• Pending home sales rose sharply, by nearly 7 percent, in the last month measured by the National Association of Realtors.
• Pending sales were up in all four major regions of the country—and that caught the attention of some key industry economists.
• Orawin Velz, economic forecaster for the Mortgage Bankers Association, said in a commentary that "the steady improvements in pending home sales are encouraging," and confirm the view that existing home sales hit their cyclical bottom in January and are likely to continue to rise in the coming months.
• Since the January low point, she noted, the Realtors' pending sale index is up by 13 percent.
• Mortgage rates continue to be favorable, an average of 5.3 percent last week for 30 year fixed rate loans, 4. 8 percent for 15 year fixed, and those rates are pulling in growing numbers of home purchase loan applications.
• According to the Mortgage Bankers Association's weekly survey, new applications to buy houses increased by nearly 7 percent in the week ending July 3rd.

My overall assessment of the market is that while we are still seeing challenges out there, the market continues to show some encouraging signs. The fact is, we’ve seen the low-end of the market doing well for a while, but its starting to cascade to other segments of the market. We’re starting to see more activity and interest in the move-up market and luxury market.

There appears to be growing consumer confidence from buyers, perhaps as the stock market has stabilized and real estate is showing improvement. Also, buyers in our offices are telling us that they believe that the market overall is starting to recover and they don’t want to miss out on the buyer’s market.

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

• Davis County—The Bountiful office reports we have 2 or 3 Agents this last week report that they had been contacted by investors who are looking to move their money out of other markets and into real estate investments. Seems that they are looking for a safe place to park their cast and real estate is making more sense for them than many other investments. the good thing about this is that they are investors not looking to flip or make some quick cash, but are investors with long range plans for their property. Could we be turning back to some good old fundamentals? Short sales continue to be challenging and plentiful. With every transaction being a bit different than the next, it feels like we are shooting at a moving target. Several of our agents have a bunch of time invested in transactions that seem to drag on forever. It is also interesting to observe the many different ways that listing agents are handling short sales, which makes it difficult for buyer's agents to educate a buyer about the process; since it can be different depending on how a listing agent handles it. Our short sale package and new UAR short sale addendum have been helpful in attempting to standardize the process.
• Salt Lake County North—The Sugar House office reported we have been very busy the past week. Open houses are receiving good activity. The Union Heights office reported the holiday week slowed production with shorter time period, but momentum remains strong. The Salt Lake office reported total activity was off this week as we begin July with a holiday. Consumers are either just all away for summer vacations or they are losing confidence as there are more signs of weakness in the U.S. economy. Dismal job reports strike fear into potential buyers who decide to wait till the economy improves for fear of taking on payments they can't afford if they lose their jobs. Rates are still good, but not enough to overcome the fear of a weak economy.
• Salt Lake County South—Our Jordan Commons office reports short sales are going under contract. Price ranges in the high $300K are coming into the low 300's. Multiple offers are occurring under $200K. I had an offer accepted on a bank owned property over the weekend. There were four offers on it. We feel fortunate to get the offer accepted. While making appointments for this client, a lot of short sales and bank owned have multiple offers. There are buyers out there. In the Draper office what is fascinating is the people who choose to work July 3-5 did business. There are plenty of people wanting to buy/sell during the holidays and if you choose to work, you can get great business.
• Salt Lake County West—Our West Jordan office reports we are noticing an increase in multiple offers in the under $200,000 price range. We have recently taken listings under $200,000 that have gone under contract very quickly. Additionally, one Agent reports that in this same price range, when pulling five properties to show, by the time they call the Agents to make appointments 2 of the 5 are under contact. That's good news!
• Tooele County—Our Tooele office reports an extremely slow sales week. I would attribute it to the 4th of July holiday. Listing inventory almost the same.
  Utah County—
  Active Sellers in Utah County
  June - 2009 4442
  July - 2009 4378
  Down by 1%
  
  Active Buyer's in Utah County
  June - 2009 883
  July - 2009 1055
  8.4% increase in # of active Buyers in one month
  
  Multiple offers, in number of issues with short sales and banks (2nds) not
  cooperating & placing home into foreclosure.
• Weber County— Not much has changed with regards to the market. However, there is some concern around the potential for failed transactions with the new Mortgage Disclosure Improvement Act that will become effective on July 30th. We have noticed many low appraisals in the past few weeks, causing sale price changes.
  
  Commentary from Axiom Mortgage President Melissa Wright:
  
  “June saw many fluctuations in rates due to speculation that the economy had turned the corner. The good news for homebuyers is that rates have settled down and remain at historically low levels. Although there is a huge supply of government debt, there is still demand, with the U.S. Treasury auctioning off record amounts of government debt. The solid results have helped keep Treasury Yeilds lower, alleviating mortgage rate upheaval. Refinance activity has slowed, producing less supply on the market resulting in greater rate stability. The Federal Reserve announced they will keep the Fed Funds rate at an exceptionally low level for an ‘extended period’ due to inflation remaining subdued. They also reiterated their commitment to help rates remain low through their purchasing of mortgage-backed and Treasury securities. If the current factors remain unchanged, rates will likely remain at low throughout the summer.”

Regardless of the market or the reason behind the recent upswing, things are starting to pick up throughout Utah. It seems buyers are finally starting to get the message that we may have hit bottom and, as buyers take action, we’re slowly but surely working our way into a transitioning market.

It’s been a challenging ride but what we have to look forward to is exciting. Prepare. The coming months and into 2010 are going to be an exciting ride.

Make it a great week,

Dan Christensen
Coldwell Banker Residential Brokerage Utah