David Lereah, NAR Chief Economist believes that signs of recovery in our housing market are evident Resales are projected to fall by about 9 percent this year. New home sales are expected to fall by almost 17 percent. As we enter the new year, further contraction in the housing industry may be limited. The signs are out there – but you need to look. We’ll need to wait for at least two more months of data before confirming that we have hit bottom. But year-over-year pending sales for existing homes are improving, from a 16 percent drop in July to a 13 percent drop in August to an 11 percent drop in September. Home inventories are also improving. The supply of both existing and new homes fell during the past two months. The supply of existing homes has topped out at 7.3 months, while the supply for new homes fell from 7.1 months in July to 6.4 months in September.Other housing measures also suggest that the industry’s downturn may be over. Home price appreciation has turned negative the past two months. And, while that may sound like bad news it may actually be a welcome development, forcing sellers to show some flexibility and bringing buyers back to the market. With household wages and incomes rising and home prices falling, housing affordability measures are improving. The NAR Housing Affordability Index has moved up in September to 108 compared with 100 in July.
So why should the doomsayers of housing -- those who are predicting a prolonged contraction and a tumbling of home prices -- believe that the housing contraction of 2006 is almost near its end? The answer lies in the attitudes of households. The current contraction has to do with household confidence, or rather, lack thereof. Previous housing downturns were driven more by households’ financial wherewithal to purchase a home.For instance the last two housing contractions (1979-1981 and 1989-1991) occurred against an economic backdrop of job losses, negative GDP growth (a recession), and double-digit mortgage rates. Simply stated, households did not have the wherewithal to purchase homes, even if they wanted to. Today’s housing contraction has more to do with negative household confidence, and home prices rising to unaffordable levels.It won’t be surprising to see home sales bottom out after a year of slowing. During this past year, affordability measures improved. With every home price drop, there is a buyer who was standing on the sidelines and is now willing to get back into the home-buying market. There are also marginal home buyers who now qualify to purchase a home because of falling prices. Further, our growing economy is creating jobs and wage/income gains. So over time, there are market forces that are working to improve affordability, thus permitting households to buy homes. This is why the 2006 housing contraction is almost over.
NAR
Thursday, November 30, 2006
Tuesday, November 21, 2006
Tempting Locations for Vacation Homes
The recent correction in the U.S. real-estate market after years of double-digit percentage growth in home prices may make buyers think twice before buying a vacation home. Some regions even with the recent dip seem prohibitively expensive. Elsewhere, buyers may have understandable fears that places that seem affordable will only become more so as prices continue to fall.
The editors at RealEstateJournal.com set out to identify potential vacation-home deals that would assuage the most nervous Nellies. They looked for appealing locales across the U.S. where prices rose at a rate well below the national average of 84.3% between the second quarter of 1996 and the second quarter of 2006, and have above-average employment outlooks according to data from Economy.com. Invstigatin the areas further, they looked at things like the availability and selection of vacation residences, and proximity to recreational and cultural offerings. Several of their locales are located close to metro Atlanta, these include: Helen, Ga, Blairsville, GA and Dadeville, AL. Wall Street Journal Online
The editors at RealEstateJournal.com set out to identify potential vacation-home deals that would assuage the most nervous Nellies. They looked for appealing locales across the U.S. where prices rose at a rate well below the national average of 84.3% between the second quarter of 1996 and the second quarter of 2006, and have above-average employment outlooks according to data from Economy.com. Invstigatin the areas further, they looked at things like the availability and selection of vacation residences, and proximity to recreational and cultural offerings. Several of their locales are located close to metro Atlanta, these include: Helen, Ga, Blairsville, GA and Dadeville, AL. Wall Street Journal Online
Sunday, November 19, 2006
Information on loan applications:
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:
*a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only) and
a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. If a lender requires the borrower to use a particular settlement provider, then the lender must disclose this requirement on the GFE.
*a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.
If the borrowers don't get these documents at the time of application, the lender must mail them within three business days of receiving the loan application. However if the lender turns down the loan within three days the lender does not need to provide these documents.
The HUD-1 Settlement Statement is a standard form that clearly shows all charges imposed on borrowers and sellers in connection with the settlement. The borrower may request to see the HUD-1 Settlement Statement one day before the actual settlement. The settlement agent must then provide the borrowers with a completed HUD-1 Settlement Statement based on information known to the agent at that time. The HUD-1 Settlement Statement shows the actual settlement costs of the loan transaction. Separate forms may be prepared for the borrower and the seller.
The Initial Escrow Statement itemizes the estimated taxes, insurance premiums and other charges anticipated to be paid from the Escrow Account during the first twelve months of the loan. It lists the Escrow payment amount and any required cushion. Although the statement is usually given at settlement, the lender has 45 days from settlement to deliver it.Disclosures after settlement. For more detailed information see the www.hud.gov website.
When borrowers apply for a mortgage loan, mortgage brokers and/or lenders must give the borrowers:
*a Special Information Booklet, which contains consumer information regarding various real estate settlement services. (Required for purchase transactions only) and
a Good Faith Estimate (GFE) of settlement costs, which lists the charges the buyer is likely to pay at settlement. This is only an estimate and the actual charges may differ. If a lender requires the borrower to use a particular settlement provider, then the lender must disclose this requirement on the GFE.
*a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. It also provides information about complaint resolution.
If the borrowers don't get these documents at the time of application, the lender must mail them within three business days of receiving the loan application. However if the lender turns down the loan within three days the lender does not need to provide these documents.
The HUD-1 Settlement Statement is a standard form that clearly shows all charges imposed on borrowers and sellers in connection with the settlement. The borrower may request to see the HUD-1 Settlement Statement one day before the actual settlement. The settlement agent must then provide the borrowers with a completed HUD-1 Settlement Statement based on information known to the agent at that time. The HUD-1 Settlement Statement shows the actual settlement costs of the loan transaction. Separate forms may be prepared for the borrower and the seller.
The Initial Escrow Statement itemizes the estimated taxes, insurance premiums and other charges anticipated to be paid from the Escrow Account during the first twelve months of the loan. It lists the Escrow payment amount and any required cushion. Although the statement is usually given at settlement, the lender has 45 days from settlement to deliver it.Disclosures after settlement. For more detailed information see the www.hud.gov website.
Saturday, November 18, 2006
Atlanta Builders in for Tough Times
ATLANTA --- A local housing expert told a room of more than 250 Atlanta homebuilding industry representatives gathered for a summit on the state of the industry on Thursday that metro Atlanta’s new home sales slowdown will continue well into the new year.
While Atlanta still boasts one of the most robust new home markets in the country, land prices have driven the cost of new homes so high that resales are now much more attractive to current homebuyers said Steve Palm, a principal of Smart Numbers, an Atlanta-based company that provides residential real estate information, analysis and forecasting.
Historically, resale prices run 8 to 10 percent less than new home prices, Palm said. This year, resale prices are running almost 20 percent less than new home prices, he reported.
As a result, Palm anticipates that resales will finish the year up 3 to 5 percent while new home sales will be down 5 to 7 percent after peaking on June 29.
Traditionally, the ratio of resales to new home sales has been about 3:2, Palm said. Right now the ratio is more like 2:1 in favor of resales.
“The consumer is going for a better value product,” Palm said as he showed slides of some current resales including a five-year old home with four bedrooms on a ½ acre golf course lot in Suwanee that is under contract and was listed for $447,500.
“Hey builders, how many of you can build this house on a ½ acre golf course lot for less than $600,000 now?” Palm rhetorically asked the crowd, which could only groan in response.
The reason that $447,500 house would be $600,000 new is land acquisition cost. It’s why the cost of lot prices as a percentage of new home sales prices has gone from a ratio of 1:5 at the beginning of the decade to 1:4 now.
Palm’s solution for homebuilders: Build on smaller lots and build more attached housing.
Both things are beginning to happen, too. Since 2003, the average lot size in metro Atlanta has gone from .47 acres to .43 acres, a difference of three percent. That may not sound like much Palm said, but it is when you consider that one acre or larger lots are still plentiful in some of the outlying metropolitan counties.
The trend toward attached housing has begun in earnest as attached housing sales as a percentage of total sales has gone from less than 10 percent of all sales in 1999 to 25 percent of all sales in 2005.Palm, who predicted Atlanta’s current new home sales malaise 15 months ago, said he expects a turnaround in the local new home market to occur by the middle of next year. His prediction is more upbeat than the one offered a day earlier by the Economic Forecasting Center at Georgia State University where director Rajeev Dhawan forecast Atlanta housing permits would be down 10 percent this year and 8 percent in ’07.
Who is right? Stay tuned. Tishsa Gay, Metro Brokers GMAC
While Atlanta still boasts one of the most robust new home markets in the country, land prices have driven the cost of new homes so high that resales are now much more attractive to current homebuyers said Steve Palm, a principal of Smart Numbers, an Atlanta-based company that provides residential real estate information, analysis and forecasting.
Historically, resale prices run 8 to 10 percent less than new home prices, Palm said. This year, resale prices are running almost 20 percent less than new home prices, he reported.
As a result, Palm anticipates that resales will finish the year up 3 to 5 percent while new home sales will be down 5 to 7 percent after peaking on June 29.
Traditionally, the ratio of resales to new home sales has been about 3:2, Palm said. Right now the ratio is more like 2:1 in favor of resales.
“The consumer is going for a better value product,” Palm said as he showed slides of some current resales including a five-year old home with four bedrooms on a ½ acre golf course lot in Suwanee that is under contract and was listed for $447,500.
“Hey builders, how many of you can build this house on a ½ acre golf course lot for less than $600,000 now?” Palm rhetorically asked the crowd, which could only groan in response.
The reason that $447,500 house would be $600,000 new is land acquisition cost. It’s why the cost of lot prices as a percentage of new home sales prices has gone from a ratio of 1:5 at the beginning of the decade to 1:4 now.
Palm’s solution for homebuilders: Build on smaller lots and build more attached housing.
Both things are beginning to happen, too. Since 2003, the average lot size in metro Atlanta has gone from .47 acres to .43 acres, a difference of three percent. That may not sound like much Palm said, but it is when you consider that one acre or larger lots are still plentiful in some of the outlying metropolitan counties.
The trend toward attached housing has begun in earnest as attached housing sales as a percentage of total sales has gone from less than 10 percent of all sales in 1999 to 25 percent of all sales in 2005.Palm, who predicted Atlanta’s current new home sales malaise 15 months ago, said he expects a turnaround in the local new home market to occur by the middle of next year. His prediction is more upbeat than the one offered a day earlier by the Economic Forecasting Center at Georgia State University where director Rajeev Dhawan forecast Atlanta housing permits would be down 10 percent this year and 8 percent in ’07.
Who is right? Stay tuned. Tishsa Gay, Metro Brokers GMAC
Thursday, November 16, 2006
State of the market - Winter 2006
There are currently 38,932 residential properties for sale in the Atlanta metropolitan and North Georgia mountains area. 51,800 homes have sold since January 1, 2006. Average list price in September $332,862 with the average sales price of $258,276. Average DOM was 74.9
Yes we are in a Buyers Market but there are plenty of Buyers! Marketed properly your home will sell.
Seventy eight percent of home buyers purchase their home through a real estate agent. 43% of sellers receive a recommendation form a friend, neighbor or relative when selecting their professional.
Thirty eight percent of recent home buyers were under 35 years old. In 2005, first time home buyers accounted for 40% of all homes purchased. With the increase in interest rates and the tougher rules for 100% financing we will watch to see what happens for 2006.
Yes we are in a Buyers Market but there are plenty of Buyers! Marketed properly your home will sell.
Seventy eight percent of home buyers purchase their home through a real estate agent. 43% of sellers receive a recommendation form a friend, neighbor or relative when selecting their professional.
Thirty eight percent of recent home buyers were under 35 years old. In 2005, first time home buyers accounted for 40% of all homes purchased. With the increase in interest rates and the tougher rules for 100% financing we will watch to see what happens for 2006.
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