Wednesday, December 8, 2010

November 2010-Real Estate Market Update


November 2010
.
Market Update
The housing market continues its gradual recovery without the aid of the tax credit. Sales are slower but growing. Although it will likely be uneven at times, slow growth is believed to be the trend moving forward. Interest rates hit a new historic low again, a major factor in helping keep mortgage payments incredibly affordable.
Extended periods of record low interest rates and further plans from the Federal Reserve Board to expedite recovery have some concerned about future inflation. One such investment guru, John Paulson, touted the benefits of owning real estate as a hedge against inflation on Forbes.com. “Your debt and interest payments get locked in at record lows, while the price of your home will rise … If you don’t own a home buy one … if you  own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.”
This march back up continues to provide excellent opportunities: an ample selection of homes, affordable prices, and historically low interest rates. Experts anticipate both the economy and the housing market will continue their paths on the way to a complete recovery.

Home Sales
Home sales continued to rebound in September, increasing 10% compared to the previous month.  This builds on August’s gain of 7.6% that followed a large drop caused by the expiration of the federal tax credit in July. Sales are expected to gradually grow as the market moves toward recovery without government stimulus. The recent foreclosure moratorium has opened up opportunities for short sales. Although it could make the near-term “choppy at times,” industry experts expect the overall trend to continue growing slowly.
Home Price
After four months of prices remaining on par with year-ago levels, September showed a slight decline. Last September distressed properties were 29% of all home sales; this September that number rose to 35%. The larger proportion of distressed sales, which are typically discounted, helps to explain the decline. While these discounted sales provide opportunities for buyers, sellers look forward to the general trending upward of home price. 
Inventory
There are fewer homes on the market again in September, representing 10.7 months of inventory. While still at a relatively high level, months of inventory shrank by nearly a month in September from August’s 11.6 and nearly two months since the 12.5-month supply in July. This continues to represent an excellent opportunity for buyers and investors who have not yet taken advantage of the abundant opportunities of the market including record low rates, an ample but shrinking selection of homes, and highly affordable prices.
Affordability
Housing remains at near-record affordability levels, and prospective home buyers stand to benefit from the lowest mortgage rates in decades, as well as advantageous home prices. Housing is approximately 60% more affordable now than during the height of the market.
Source: National Association of Realtors
Interest Rates
Mortgage rates once again set new record lows in early October to 4.19% and remained below 4.3% throughout the month. These historically low rates contributed to real savings for buyers. Furthermore, the longer the buyer owns the home, the greater the savings they will realize. As economic activity gains momentum, rates will rise to keep inflation at an acceptable level.
Rates as of November 4 .
This Month's Video
Topics For Home Owners, Buyers & Sellers
 

Prime Time to Buy

7 Reasons Why Now Is a Great Time to Buy a Home

Recent history has reframed some of what had long been taken for granted about buying a home. Namely, we’ve learned that even though buying a home remains one of the best and safest investments available, a home should not function as an ATM or a short-term speculation strategy. So, where does that leave us? A lot smarter, able to recognize an opportunity when we see one, and aware of the facts that point to now as the prime time to buy a home.
  1. Home affordability is at an all-time high. The median mortgage payment on the median-priced home, as a percentage of the median household income, is lower than it’s been in a generation.
  2. Mortgage rates are at rock bottom. It’s hard to imagine interest rates going much lower, and when they start to inch back upward, monthly payments and total loan costs will spike upward.
  3. Home prices are back on the rise. After declining for 30 months, home prices are trending back upward. The time to get in the market is now.
  4. Sellers are motivated. This means that buyers have the upper hand.  Sellers are fiercely competing among an excess of housing inventory, which often means buyers have untold choices and negotiating power.
  5. Financing is readily available. Banks are back in the game and ready to lend to well-qualified buyers.
  6. Owning vs. renting is increasingly favorable. Since 2009, the average principal and interest payment has fallen below the average rental rates, and the gap is now wider than it’s been in the past 22 years.
  7. Homeownership is still at the core of the American Dream. Owning a home is critical to financial stability and wealth building. It’s a forced savings account, a place to live, and a fabulous tax deduction.
For more detail, check out Keller Williams Realty’s 7 Reasons Why Now Is a Great Time to Buy a Home! and The Wall Street Journal’s 10 Reasons to Buy a Home.  
Sources: The Wall Street Journal, Inman News, KW Research


your local real estate experts,
for information about what's going on in our area. 

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report. 
The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.  You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.  Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.  All information presented herein is intended and should be used for educational purposes only.  Nothing herein should be construed as investment advice.  You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.  All investments involve some degree of risk.  Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.
Smitha and Rahul Ramchandani are a licensed real estate Broker-Salesperson/Sales Representative Team with Keller Williams in New Jersey. They are Buyer Specialists and a Home Marketing Experts. You can reach Smitha and Rahul and their team online at: http://www.Morris-Homes.com
Smitha  and Rahul and their team specialize in all Morris County Towns such as Boonton, Chatham, Chester, Convent Station, Denville, East Hanover, Florham ParkHanover, Harding Twp., Mendham, Montville, Morristown, Morris Plains, Morris Twp., Mountain Lakes, Parsippany, RandolphRockaway, Whippany

December 2010-Real Estate Market Update



December 2010
Market Update
The housing market continues its uneven and gradual recovery without the aid of the tax credit. Experts believe this will be the trend moving forward. Interest rates hit another record low but have started moving back up as the overall economy improves. 
Despite a less-than-expected employment report, consumers seem to be feeling brighter about the future. While the Consumer Confidence Index about the Present Situation rose only slightly, the Expectation Index showed substantial improvement. As we enter into the holiday gift-buying season, consumers are expected to be out shopping and buying more gifts for under the tree this year. Reports indicate a 13-24% increase in retail sales from last year. Consumer spending accounts for about half of all economic activity in the US; as long as consumers are spending and using debt responsibly, this is a positive indicator for economic growth.
This march back up continues to provide excellent opportunities: an ample selection of homes, affordable prices, and historically low interest rates. Experts anticipate both the economy and the housing market will continue on a path to a complete recovery.

Home Sales
Home sales dropped slightly in October, compared with the previous month, despite a temporary moratorium on foreclosures, which have recently represented more than one third of sales activity. Sales were up 15% from July when the tax credit expiration caused a drop-off in sales. The most significant indicator of a market rebound, however, appears to be the October pending sales report. A 10.4% increase in pending sales, which measures homes under contract, signals stronger home sales activity in the coming months as the homes under contract close.



Home Price
Home prices have shown considerable stability when compared with the previous several years. October’s median home price declined slightly, down less than 1% from the previous month and year. A recent study shows an increased interest in smaller homes. Smaller homes often mean smaller price tags, depending on location. While the market currently provides many opportunities for buyers, sellers look forward to the general trending upward of home price as the market’s stability without government support grows deeper roots.


Inventory
There are fewer homes on the market. Total inventory fell to 3.86 million in October from 4 million in September. The month’s supply* of homes on the market fell to 10.5 months.  While still at a relatively high level, months of inventory has shrunken substantially since July’s 12.5 months. As lending standards continue to loosen and return to historical norms, more people will be able to buy their first home, move up, or invest and take advantage of the abundant opportunities in the current market – including  historically low interest rates, highly affordable prices, and an ample but shrinking selection of homes.
* Month’s supply of inventory measures how many months it will take to sell all the homes that are for sale, if no new homes come on the market and buyers continue to buy at the same pace or rate. 
Affordability
Housing is at record affordability levels. Prospective home buyers stand to benefit from the lowest mortgage rates in decades, as well as advantageous home prices. The home price-to-income ratio, 13.5% in October, continues to remain well below the historical standard. Stabilizing home prices and rising interest rates are anticipated to begin drawing affordability back up toward more normal levels.

Source: National Association of Realtors - October housing data released November 23.
Interest Rates
Mortgage rates hit another record low of 4.17% on November 11 after which they rose to close to 4.4% for the remainder of the month. Historically low rates have contributed to real savings for buyers who will continue to realize those savings for as long as they own the home. As overall economic recovery gains traction, rates must rise to keep inflation in check. Industry economist Lawrence Yun anticipates rates to be between 5.4% and 6% by the end of 2011.

 

Type

Rate
30 year fixed
4.46%
15 year fixed
3.81%
5/1-year ARM
3.25%
30 year average for a 30 year fixed rate mortgage
8.9%
Source: Freddie Mac, Rates as of December 2.
This Month's Video
Topics For Home Owners, Buyers & Sellers
 

Prime Time to Buy

Homes Have Never Been More Affordable

For most individual home buyers, there are only a few factors that really matter:
     •   Can I afford this home?
     •   Is it a good investment?
     •   Does it meet my family’s needs?
So it’s a bit surprising that the most important housing statistic has gone largely unreported: homes have never been more affordable.  Affordability, measured by the median mortgage payment on the current median-priced home ($171,000) as a percentage of the median household income ($62,141), is lower than it’s been in a generation.  The chart below shows affordability at a record level, having significantly improved since the height of the recent housing boom in 2006.
For more detail, check out Keller Williams Realty’s 7 Reasons Why Now Is a Great Time to Buy a Home!
 
Sources: National Association of Realtors, KW Research


your local real estate experts,
for information about what's going on in our area. 


Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report. 
The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.  You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.  Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.  All information presented herein is intended and should be used for educational purposes only.  Nothing herein should be construed as investment advice.  You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.  All investments involve some degree of risk.  Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.

Smitha and Rahul Ramchandani are a licensed real estate Broker-Salesperson/Sales Representative Team with Keller Williams in New Jersey. They are Buyer Specialists and a Home Marketing Experts. You can reach Smitha and Rahul and their team online at: http://www.Morris-Homes.com

Smitha  and Rahul and their team specialize in all Morris County Towns such as Boonton, Chatham, Chester, Convent Station, Denville, East Hanover, Florham ParkHanover, Harding Twp., Mendham, Montville, Morristown, Morris Plains, Morris Twp., Mountain Lakes, Parsippany, RandolphRockaway, Whippany