Housing Affordability | Home prices are still 30 percent below the mid-2006 peak. Buyers are taking advantage of the current market prompting would be Buyers to get off the sidelines and begin purchasing before prices begin to climb once again. According to Lawrence Yun, NAR (National Association of Realtors) chief economist, “Nationally, the typical mortgage payment now takes less than 25 percent of a middle-income family’s monthly income to buy a median priced home, with payment percentages so far in 2009 being the lowest on record dating back to 1970. As long as home buyers stay within their budget, mortgage payments will be very manageable.”
First Time Buyer Credit| Housing affordability and the approaching deadline of November 30, 2009 to qualify for the First Time Home Buyer’s Tax Credit of $8,000 have increased sales activity. Home sales rose in July to the highest level in well over two years. NARestimates that 1.8 Million to 2 Million first-time Buyers will take advantage of the stimulus credit.
Lower Interest Rates | Mortgage rates for 30-year home loans increased slightly this week, but still remain close to the record lows we reached over the spring.
Contract activity for pending home sales has increased for six consecutive months. According to the National Association of Realtors this is a pattern not seen in the history of the index since it began in 2001. The Pending Home Sale Index, a progressive study of contracts that were signed in July indicate an increase nationally in sales contracts of existing homes of 3.2 percent to 97.6. Showing and overall increase of 12 percent higher than July 2008.
In the Southern region of the country, pending home sales activity increased 3.1 percent to 103.8 in July, an increase of 12 percent from July 2008. The Western regions of the US experienced the largest gains with 12.1 percent to 112.5, that being a 20.0 percent increase from one year ago. Both the Northeast and the Midwest had downturns; the Northeast fell 3.0 percent to 78.8 in July, however their index is still higher than July 2008. The Midwest also slipped 2.0 percent to 88.1, but with an increase of well over 8.1 percent from a year ago.
With all this positive news on the horizon, can a recovery be imminent? Anyone who follows the real estate market can see that the market is still not back to normal…but was it ever normal with astronomical yearly increases in home values? The party had to end at some point.
The recent slump has erased $4 Trillion in homeowners’ equity. Thousands of people just simply walked away from their homes because they were worth far less than what they paid for them. Resorting to options once unthinkable for a Seller to consider; Short Sales, Foreclosures and even worse Bankruptcy. The Buyers did not fare any better, feeling they were pushed out of the market because of the credit crunch, not qualifying for lender’s new stringent lending policies. Making the speculation of attaining the “Dream Home” a thought of the past.
The last couple of years have really battered both the Buyers and Sellers. For a while either side failed to accept the current market. Not everyone was in Foreclosure or in dire need of selling because they were going broke. Nor was your home worth what it was once valued at it’s peak. Not all the upgrades, built-ins and bells & whistles in the world you added to your home after you purchased it…made it immune to falling home values. Finally it seems both sides are on the same page and understand the current market and comprehend VALUE!!! Yes! Value…appreciate it when they see it and understand when it’s just not there!
Here are the simple facts that will get us underway to a real recovery;
The faster that home prices begin to stabilize, the sooner that Buyers feel confident and financially secure on making home purchases, and the quicker lenders and the credit markets start to extend credit responsibly once again. We can stop the demise of the American Dream of home ownership and right the wrongs of the past.
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Philip Lyle Smith | 561.445.2282
Carla Ferreira-Smith | 561.445.2299
or email us at TheSmiths@LuxuryResortPortfolio.com
A Transaction Brokerage Team Representing Both Buyers And Sellers
All information is derived from the Palm Beach County Property Appraisers website and the MLS.