Power Tools on the Housing Market

Every market has its ups and downs, and real estate is certainly no exception. When a hot housing market begins to cool down, REALTORS®, sellers and buyers all need to readjust their strategies and expectations. The Field Guide to Surviving & Thriving in a Slowing Market, a new resource in the Virtual Library on Realtor.org, offers tips and ideas to help you and your clients survive and thrive in a cooling market.

Posted on September 18 at 02:57 PM | Permanent Link | Add a Comment (0) | TrackBacks (0)

Home sales will probably be lower than originally projected this year, according to a new forecast from NAR, as the market works its way through increasing inventory and high prices. Existing home sales are projected to fall 7.6% to 6.54 million in 2006, which would still make it the third-highest year on record after 2004 and 2005. Home prices are expected to rise 2.8% nationally. "This year sales are slowing, homes are plentiful and sellers are negotiating. Under these conditions, we’ll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory,” explained NAR Chief Economist David Lereah.

Numbers released earlier this week by OFHEO supported NAR's revised forecast, showing a marked slowdown in the quarterly house price appreciation rate. “The very high appreciation rates we’ve seen in recent years spurred increased construction,” said OFHEO Chief Economist Patrick Lawler. “That coupled with slower sales has led to higher inventories and these inventories will continue to constrain future appreciation rates.”

30-year mortgage rates were up slightly this week, but remained below 6.5 percent. “Mortgage rates are one of the bright spots in the economy right now," Lereah said, "with an unexpected decline recently in the 30-year fixed rate to a narrow range around six-and-a-half percent.”

Posted on September 8 at 09:58 AM | Permanent Link | Add a Comment (0) | TrackBacks (0)

Interest rates are an influential force in the housing, consumer and financial markets, and now it appears that they could hold sway in politics as well. "Every election cycle has its own important set of undecided, or swing, voters," says a report in today's Washington Post. "This year could mark the emergence of what might be called mortgage moms -- voters whose sense of well-being is freighted with anxiety about their families' financial squeeze." Holders of mortgages and credit cards with variable interest rates tend to feel the impact of economic changes more directly than others, the Post says, since their monthly payments go up or down as interest rates adjust.

In the next year $1 trillion worth of adjustable-rate loans with readjust to a higher interest rate, according to research firm Loan Performance, making millions of homeowners either refinance or accept what could amount to a 25 percent increase in their monthly mortgage payments. Combine that uncertainty with another trend revealed by recent polls, showing that most swing voters tend to be unhappier with their economic situation than others, and we end up with the mortgage moms. "A large number of voters have a definite foreboding about the economy, and that isn't good news for incumbents," the Business Industry Political Action Committee's Gregory S. Casey told the Post. "They feel disappointed in government institutions that they think have let them down."

Posted on September 5 at 11:03 AM | Permanent Link | Add a Comment (0) | TrackBacks (0)

NAR's Pending Home Sales Index for July was released today, showing signed contracts on homes for sale down 16.0 percent from July 2005. Accompanied by another report today of a slowdown in home construction and last week's existing home sales report for July, the Pending Sales Index provides further evidence that our record-breaking housing market is beginning to calm down. “...[T]he index shows existing-home sales should continue to ease after a stronger-than-expected decline in July, but are likely to flatten in the months ahead," said NAR Chief Economist David Lereah.

Lereah went on to say that news coverage of the housing market is one of many factors making buyers more hesitant. "Psychological factors are causing some buyers to remain on the sidelines, waiting for prices to stabilize or for more favorable news about the market and the economy," he said. Buyers and sellers waiting for that favorable economic news should be heartened at least a little by a couple of other items making the rounds today: the Labor Department announced that the nation's unemployment rate is lower than expected, indicating that the general economy is still on solid footing, while Freddie Mac's weekly survey shows mortgage rates on the decline -- always good news for buyers and owners hoping to refinance.

But for home buyers, all of these economic numbers should be taken with a grain of salt. The condition of the local market is more important than what's happening nationally, and even more important is the state of the buyer's own finances. As SmartMoney's James B. Stewart said in a column yesterday: "If you like something, it fits your budget, and you plan to be there for an extended period, stop worrying about where prices are headed. Instead, be grateful you weren't buying a year ago."

Posted on September 1 at 12:45 PM | Permanent Link | Add a Comment (0) | TrackBacks (0)