The real estate market is moving steadily along today but with reservation. As corporations continue to move into our area and the state attracts businesses all over the Commonwealth, we were ranked #7 in the most transient states in the country – pretty impressive for those of us selling houses! In order to be successful, you have to find the buyers and sellers so get out there and get busy looking – they won’t come to you, you have to go to them!
In addition to this, existing home sales increased 7.6% in April. This was expected as the home buyer tax credit was set to expire but let’s keep a close eye on this in the coming months and see if the sales momentum continues. We should be in good shape and should continue to outpace the rest of the country as we continue to create jobs, have affordable housing prices, and interest rates remain low.
Not only did existing home sales increase but so did new home sales! New home sales rose 14.8% in April – the highest performance in two years! Be wary however as the pace of new home permits dropped 10.7% in April as well. We can expect this number to drop next month as a result of fewer permits being issued couple with low builder inventory.
Mortgage interest rates also continue to be a driving force in continued sales. This week it was reported interest rates are at their lowest level since December as the instability in financial markets overseas have lowered borrowing costs. If rates continue to stay low, buyers will understand the fundamentals for ownership are strong and will continue buy homes.
Another key to the market continuing to blossom this spring is consumer confidence. As the economy continues to improve and we ease out of the recession, consumers believe their personal situation is improving and as a result, they are spending again. As we know, consumers drive the recovery in their “perception” of their situation and not necessarily, reality.
Now, let’s talk about the reservation part of the blog. Although refinance applications remain strong – they have increased 3 consecutive weeks – purchase applications have continued to decrease and have done so four consecutive weeks. As a result, purchase applications have dropped to their lowest levels since 1997. Keep a close eye on this number as it indicates future settlements on home purchases.
Next, is the double dip in home prices that Dave Stevens mentioned at our year end meeting in December. Two price indices – the dreaded S&P Case-Shiller and the Federal Housing Finance Agency reported housing price decreases in the first quarter. As we have mentioned, the under $400,000 market and the $800,000 – $1,000,000 market continue to be strong but the inventory priced between $400,000 – $800,000 are still trying to find the bottom and that is where a majority of our houses are priced today. Couple this with the fact that mortgage delinquency rates have hit 10% – a record. If these homes go into foreclosure and don’t end up as a HAP sale or a short sale, prices could continue to slide.
Lastly, another monkey wrench that could be thrown into the equation that could affect getting home loans is if Fannie Mae implements the right to pull credit up until the day of closing. It can have a significant impact on a purchaser’s ability to close on their loan if their credit score goes down by just one point. As we know, it is monkey see monkey do in the lending arena so others may implement this same strategy to limit the number of defaults in the future. Stay tuned for further details.
So, what do you do? Work! As previously mentioned – people are buying and selling houses here in Northern Virginia – get out there and network. Create urgency – rates won’t stay this low forever, prices will increase and if you can afford the home today, buy it. Be a professional Realtor and set yourself apart from others in the industry and you will survive in any market. Get it? Got it? Good!