Pending Home Sales Show Healthy Gain, Hint at Spring Surge

Now is a GREAT time to GET OFF THE FENCE! You have until the end of April (this month) to have a home under contract to take advantage of the available Gov't money and it usually takes a couple of weeks to get to that stage. CALL ME NOW to FIND YOUR HOME - Steve 801-243-8202



Washington, April 05, 2010

Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”

The PHSI in the Northeast rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009. In the Midwest the index jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago. Pending home sales in the South increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009. In the West the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.

“Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,” 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.

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*The 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 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.

Existing-home sales for March will be reported April 22 and the next Pending Home Sales Index will be on May 4; release times are 10 a.m. EDT.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, tables and surveys also may be found by clicking on Research.

© Copyright NATIONAL ASSOCIATION of REALTORS®

Home Loan Demand Up as Purchase Activity Gains

Great information on the state of home ownership as home loan demand is up and purchase activity gains momentum.

Published: Wednesday, 31 Mar 2010
By: Reuters

U.S. mortgage applications rose in the latest week for the first time in three weeks as demand for home purchase loans reached the highest level since October, data from an industry group showed on Wednesday.

If demand for home purchase loans, a tentative early indicator of home sales, continues to rise it will bode well for the spring season, the peak home buying season.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 1.3 percent for the week ended March 26.

The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 2.2 percent.

The MBA's seasonally adjusted purchase index increased 6.8 percent, hitting its highest level since the week ended Oct. 30.

Michael Fratantoni, the MBA's vice president of research and economics, said the activity may reflect the looming expiration of a homebuyer tax credit, just as many homebuyers in October had rushed to get loans closed before the original expiration of the tax credit.

"We may be seeing a similar pattern now, as the extended version of the tax credit ends next month," he said in a statement.

The government's $8,000 tax credit for first-time home buyers originally was to end on Nov. 30. The Obama administration then extended and expanded the program, adding a $6,500 credit for home owners buying a new residence and increasing income limits. Eligible borrowers must now sign contracts by April 30 and close loans by June 30.

Leif Thomsen, chief executive of Mortgage Master, in Walpole, Massachusetts, said the tax credit has become less relevant in increasing purchases over time, because most people who could have taken advantage of it have already done so.

"There are still some procrastinators out there who have yet to pull the trigger on their decision to purchase a home and they will find themselves out of time very soon," he said.

Meanwhile, higher mortgage rates are muting home loan refinancing. The MBA's seasonally adjusted index of refinancing applications decreased 1.3 percent, reaching its lowest level since the week ended Feb. 19.

"Interest rates are the No. 1 indicator of how the housing market is faring right now, with unemployment coming in a close second," Thomsen said.

The MBA said borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.04 percent in the latest week, up 0.03 percentage point from the previous week and also above the year-ago level.

An all-time low of 4.61 percent was set in the week ended March 27, 2009, based on a weekly survey conducted since 1990.

The MBA said fixed 15-year mortgage rates averaged 4.34 percent, up from 4.33 percent the previous week. Rates on one-year ARMs increased to 6.88 percent from 6.75 percent. Mortgage rates play a crucial role in housing affordability.

February home sales data indicated a lull in the market after signs of a recovery late last year. New home sales fell for a fourth straight month in February to hit a record low, while existing home sales fell for a third straight month.

Any improvement in the housing market would bode well for the U.S. economy, as it points to better demand in the sector where the first signs of the latest recession took root.

Copyright 2010 Reuters.

Real Estate Outlook: Steady Growth Expected

by Kenneth R. Harney

New economic reports indicate steady growth expected for Real Estate. Great news for all of us. Call me now to find your home. Steve @ 801-243-8202.

Harsh weather conditions held back home sales in February -- leading to some renewed gloominess by Wall Street analysts.

But several new economic reports, including on employment, suggest that during the coming several months we're likely to see steady but unspectacular national economic growth, and some pretty good housing rebound numbers to boot.

Even the February home sales numbers were nowhere near as negative as you might expect under the circumstances. Existing home sales were down slightly for the month – by six tenths of a percent – but were still clicking along at more than 5 million on an annualized basis.

Sales in the Northeast region, which took the brunt of the storms, were actually up by nearly 3 percent! Median prices in the northeast gained seven and a half percent!

New home sales were harder hit – down by 2.2 percent for the month. But median prices on new homes sold for the month jumped by six percent over January and were up five percent year over year, according to the Commerce Department.

In California, median home prices rose 11 percent in February and total sales were up by 8 percent, according to MDA Data Quick.

And look for that rising-value trend to continue in many parts of the country, according to statisticians at First American CoreLogic. In a new report they forecast home prices are likely to gain four and a half percent over the coming 12 months. Take out distressed sales from the equation – and prices would otherwise gain 5.6 percent.

A new study by economists at the Federal Deposit Insurance Corp (or FDIC) also provides a positive take on where we're headed. The US housing market, according to the FDIC, is showing "tangible signs of improvement". Affordability – which is obviously a crucial factor in whether households can buy or not – is at "historic high levels," says the report.

Economists at UCLA weighed in last week with their own projections. Not only will there be no so-called "double dip"—that's the bad news scenario where the US economy slips back into recession sometime this year – but the economic expansion will continue rolling along at a two to three percent quarterly rate of increase in the gross domestic product or GDP.

Meanwhile, last week's new filings for unemployment insurance dropped much more than analysts had predicted. This suggests that maybe – just maybe – we're finally on the verge of seeing some new job creation and fewer layoffs.

Bottom line: Don't get bogged down by the economic naysayers and snow storms. The national economy -- and housing -- are moving ahead on a recovery path.

Published: March 29, 2010

Building permits up in Salt Lake, Summit counties

This is awesome news for us here in both Salt lake and Summit counties. I am a new construction specialist and if what your heart desires is a "new" home, give me a call and lets get to work on it. Steve Jackson 801-243-8202.


March 18th, 2010 @ 10:42am

SALT LAKE CITY (AP) -- Some parts of Utah are weathering the recession without significant job losses or real-estate troubles, according to a leading Utah economist.

Jim Wood says Tooele County, with more than 15,000 non-farm jobs, lost only 17 jobs over the past year, while the full state lost 65,000.

Wood is head of the University of Utah's Bureau of Economic Research.

He says residential construction has barely slowed down in Summit County, home of three Park City-area ski resorts. Residential building permits were up by nearly 80 percent there in 2009.

Salt Lake County lost some jobs but permits for apartment construction were up by a third in 2009.

Wood's report is a snapshot of the uneven effects of the recession on Utah. He prepared it for Commercial Real Estate Solutions.

Effective Price Versus Value Counseling

by Dirk Zeller

The "price" of your home is often not the "value" of your home. A quick lesson on the two terms we so often use interchangably.

We have seen many marketplaces shift nationally in recent years. The skill of price value counseling is a more essential tool than others in the last five years. My contention is most Agents are ineffective or out of practice in this discussion.

fundamental mistake that most Agents are guilty of is using the wrong terminology. The buzzword most Agents use is price or price of the home. This word is incorrect because it's not about price; it's about value. The first step in effective price value discussion is beginning to use the word value instead of price. We need to focus the client on what the value of the home is today, in today's marketplace and market conditions.

When we look at price and the influence of price, it's really fundamentally connected to marketing. The raising or lowering of the price of something creates a layer or smaller pool of potential purchasers, based on how the potential purchasers perceive the value. We all make our buying decisions based on value. Our job as Champion Agents is to position the property relatively close to the value to widen the pool of prospective purchasers. Price is clearly a function of marketing, not value.

As an example, a ten-year-old BMW 7 Series car has a certain value. You can price it at $100,000, but the real value of the car is substantially less than that. In fact, the Kelly Blue Book value is right around $15,000. What are the odds (pricing this car at $100,000; $50,000; or even $25,000) that you would receive even close to those figures? As they say in Texas, slim to none, and slim just left town.

To demonstrate our value and why we should be hired, we need to separate price from a value discussion. We must secure agreement on the value of the property before we proceed to a strategic marketing or price discussion. In the end, the value of the home is what we are trying to reflect through our CMA.

Too many Agents still believe that price and value are interchangeable, but they are not. Value relates to what something is really worth; what one could expect to receive in money in the free market. It doesn't matter what the value was last year, last month, or even last week. Value is determined by the conditions and influences of the marketplace. Too often, sellers get hung up on that fact when the marketplace shifts against them so to speak. They don't want to view the reality that their home was worth $750,000 a year ago and today, based on supply and demand, is only worth $680,000. Value is extended by the scarcity of something and the ease of replacement with similar, equal, or better products or service. In essence, this all reconnects with the law of supply and demand.

Here are a couple scripts to help you have a price value discussion:

1. "Mr. Smith, many Agents are more concerned with seeing the listing rather than having a real conversation about the value of your property. They will talk in terms of price, not value. They will get you all worked up about the price and set you up for the big surprise. The question is, do you want the truth now or later?"

2. "Mr. Smith, let's agree to talk in terms of value – what your house is worth. Once we agree on that, we can talk about price, which is really a marketing strategy. Is that agreeable with you?"

Published: February 26, 2010
by Dirk Zeller

The Mortgage Walkaway Number

By: Diana Olick
CNBC Real Estate Reporter


With more and more evidence of more and more borrowers walking away from their mortgage commitments due to overwhelming negative equity, I got to thinking: What exactly is the monetary tipping point for a homeowner, someone occupying the home, hanging pictures on the walls, perhaps raising their kids in the second and third bedrooms, going to the neighborhood block parties...what exactly is the negative equity number that makes them say, "We're outta here."

Negative $70,000.

At least according to First American Core Logic. FACL put out its quarterly negative equity report today, showing that the number of "underwater" loans is rising, from 10.7 million in Q3 to 11.3 million in Q4 or 24 percent of all borrowers from 23 percent.

What interested me was a paragraph lower down in the report:

"The rise in negative equity is closely tied to increases in pre-foreclosure activity and is a major factor in changing homeowner default behavior. Once negative equity exceeds 25 percent, or the mortgage balance is $70,000 higher than the current property values, owners begin to default with the same propensity as investors."

This behavior is apparently measured by the actual data, that is, the default rates of investors vs.. owners and comparing that to loan-to-value ratios.

I asked for a little deeper explanation from their economist, Mark Fleming.

"The closing of the gap between owners and investors represents the change in owners behavior because up to that point investors default at higher rates, but beyond that point owners propensity to default increases to nearly match that of investors.

It’s not necessarily strategic default – I don’t even like that term because it can’t be identified – but I would characterize it as the behavior becoming more rational or calculating. Put another way, when someone is 25% or on average $70k in the hole, they know they will not climb out of that hole for some time and they figure that they can default and repair their damaged credit while saving money faster than they can ride out the price recovery."

HOME PRICES RISE FOR 6TH STRAIGHT MONTH IN NOV.

Awesome News!!! National home prices continue to rise, according to Case-Shiller. To find out if your area's home prices have stabilized give me a call 801.243.8202.

MIAMI (AP) — Home prices rose for the sixth straight month in November, with 14 of 20 metro areas posting improvements from the month before.

The Standard & Poor's/Case-Shiller home price index released Tuesday inched up 0.2 percent to a seasonally adjusted reading of 145.49. The index was off 5.3 percent from November last year, nearly matching analyst's estimates that it would fall by 5.1 percent.

The index is now up 3.4 percent from its bottom in May, but still 30 percent below its peak in May 2006.

Phoenix and San Francisco posted the highest month-to-month gains on a seasonally adjusted basis, while New York and Chicago had the largest declines.

Recent price gains have been fueled by a federal tax credit for first-time homebuyers, who rushed to purchase homes ahead of a Nov. 30 deadline. Congress eventually extended the deadline into the spring, and expanded the program to include a tax credit for current homeowners.

While prices have risen steadily on a national basis, some economists predict they will dip again early this year because of high unemployment and foreclosures.

"Until we get job growth, we won't get complete healing of the housing market," said Jeff Humphreys, an economist with the University of Georgia.

Humphreys said data for December and January could show price declines due to a lull in buyer activity after the tax credit was extended.

Rising prices are important to the economic recovery because they make homeowners feel wealthier and lead them to spend more money. They also help millions of homeowners who owe more to the banks than their houses are worth.