Thursday, May 14, 2015

Changes to RESPA


The Real Estate Settlement Practices Act, which governs residential mortgage closings, will mandate several changes in closing procedures, beginning in August.  For one thing, we need longer periods until closing--probably 45 days to get a mortgage, and another 15 to close.  Currant rate locks will not last long enough to finish the transactions.  Every change will require three days for clients to look at the documents, so each mistake or missing name will push off a closing.  This will result in no more back-to-back closings--you won't be able to sell your old house and buy your new home on the same day.  There will be more due diligence, and it will need to be done sooner.  All of this will result in a need for an attorney to be involved earlier, and fees will probably go up as a result. 


For real estate agents, we have to do a really good job in managing the expectations of clients.  They may not have anywhere to live between the two closings.  They won't be able to delay the production of forms and facts, and everything will need to be settled sooner.  What's my take away advice?  Buy and sell now, and avoid the whole issue!

Wednesday, May 13, 2015

REAL Trends Housing Market Report

APRIL HOUSING SALES CONTINUE STRONG SURGE ABOVE PRIOR YEAR

May 13, 2015 – The REAL Trends Housing Market Report for April 2015 shows that housing sales increased 13.2 percent from the same month a year ago. All four regions reported unit sales had increased from a year ago with the Midwest leading the way with an increase of 14.8 percent.

The annual rate of new and existing home sales for April 2015 was 5.659 million units up from a rate of 4.999 million in April 2014. 

Housing prices rose an average of 3.5 percent from April 2014, continuing the moderate price increases of the past twelve month period. 

"April housing sales continued to show extraordinary strong growth that started with the March results. The results were strong in every region with only the Northeast reported less than double digit increases over the prior year.  With pending contracts also reported to be very strong we expect the trend of increasing housing unit sales to continue through the rest of the spring selling season", said Steve Murray, editor of the REAL Trends Housing Market Report. "Reports from industry CEO’s in late April and early May indicate that May business will continue to be stronger than expected just a few months ago. The only cautionary note is that inventory continues to decline and in a large number of markets it is approaching critical levels.  Future month’s sales as we head into the summer may be negatively impacted by the lack of inventory and the decline of affordability.”

Housing unit sales for April 2015 increased 14.8 percent in the Midwest, the best performance in all regions. Sales in the South region were up 14.1 percent, the West saw an increase of 14.0 percent and the Northeast had an increase of 6.8 percent.

The average price of homes sold in April 2015 in the South region increased by 5.0 percent, the best result in the nation. The West saw average prices increase 4.0 percent, average prices in the Midwest were up 3.1 percent, and the Northeast saw average prices rise 1.4 percent.

"While the job market remains strong average household incomes continue to show very sluggish growth. And while the private market for mortgages is less stringent than it was inthe past, many of the major lenders remain wary of adopting looser underwriting standards. So while there has been a pick up in first time homebuyer activity, it is not expected to return to normal historical levels of activity", Murray added.

REAL Trends Housing Market Report 
 
April 2015                                                      March 2015


                  
Closed Sales    AVG Price                        Closed Sales     AVG Price


National                     
+13.2%                       +3.5%                         +15.9%                       +4.9%

Regional Report

Northeast
+6.8%                         +1.4%                        +9.3%                          +7.4%

South    
 +14.1%                      +5.0%                        +16.7%                        +4.6%


Midwest
+14.8%                      +3.1%                         +18.4%                      +9.8%

West               

+14.0%                       +4.0%                         +16.4%                      +3.6%

Monday, May 4, 2015

Current Absorption Rates

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period.  If you look at the number for Middletown you can say “If market conditions do not change and if no new listings come on the market it will take 7.4 months for the current inventory to sell at the current pace of the market.  A balanced market’s absorption rate is typically between 5 – 7 months.”


Tuesday, April 21, 2015

Lack of Inventory

Wouldn't it be ironic if the real estate recovery ended up being hampered more by lack of listings, as opposed to too many listings?  When we think of down markets, we think of lots of unsold houses, because people aren't buying.  If you talk to real estate professionals around the country now, they will likely tell you that people aren't buying because they can't find anything they want to buy.


How can this be true?  Shouldn't there be plenty of homes, especially here in Connecticut, where the recovery has been much less robust, and, indeed, where prices are still declining?  Actually, it makes sense, if you think about supply and demand.  The supply here is not keeping up with demand, because owners don't want to list if they can't recover their costs, or get the profit they thought they would.  They know that prices are declining still, and that the average home is worth 20% below what it was worth in 2006.  That, in many cases, deters them from trying to sell.  What is on the market has, in many cases, been there for some time, and isn't being shown.  Sometimes those properties are overpriced, and sometimes they have location, condition, or other issues.  Buyers aren't going to "overpay", especially if they need a mortgage, so those homes just sit.


What we have seen here, however, is that buyers will pay at or above asking, if they see something good, because so many people are bidding on what is available.  Therefore, new listings often have multiple offers on them, because good properties are rare, so paying more is not overpaying, it's an increase in the market rate.  And there's the law of supply and demand, played out for you in real estate.

Monday, April 6, 2015

Urgent Message to Listors and Potential Listors

Last month, I blogged about what I had learned from reading the new book Zillow Talk.  One of my primary takeaways from the book, which used statistics derived from the millions of real estate listings on Zillow to draw conclusions about best practices, was that there is a best and worst time to list.  The worst time--sometime in mid-December--seems obvious.  The best time, however, was a surprise:  30 days after most listings come on the market in the spring.  Why?  Because when buyers get serious, which takes them a few weeks after the spring market begins to heat up, they look for the newest listings, which are not the ones already on, but the new ones just entering. Those, therefore, are homes that have come onto the market just as people have begun to narrow and intensify their searches. 


Why did I mark this post urgent?  Because that sweet spot for listing--at least to get the most money in the fastest time, statistically--is now!  The authors boiled it down to "between filling out your bracket sheets for March Madness, and when the green jacket is slipped on at Augusta".  For those of you who don't follow golf, the green jacket-winning golfer at Augusta is crowned this coming Sunday. 


Now, I realize that there are always exceptions to every rule.  People who decorate well, and keep their homes neat all year, can do very well in December, when very little is on the market, and those buyers that are out there are very motivated.  Any given home can do well at any particular time, especially if it is well-priced, and in a good location.  However, if you want to play the odds, now is your time.  So beat the green jacket, and list this week!