Buyers are writing contracts at a furious pace nationwide.
On a seasonally-adjusted basis, the Pending Home Sales Index rose 2 percent last month to reach its highest level since March.
A “pending home sale” is a home under contract to sell, but not yet closed.
The forward-looking Pending Home Sales Index is up 11 percent from its low of the year, according to the National Association of REALTORS®, and well ahead of its rolling 6-month average.
Unfortunately, national data isn’t always helpful for buyers and sellers in Cincinnati and nationwide. To help make data more relevant, therefore, the official Pending Home Sales Index report includes a region-by-region breakdown.
Between May and June 2011, results were mixed:
Northeast Region: -0.4%
Midwest Region : -3.7%
South Region : +4.4%
West Region : +6.4%
However, even the value of regional data may be dubious.
The West Region, for example, which showed big gains in June, is comprised of multiple states containing thousands of cities and towns. Some of those areas outperformed the region, and some of them underperformed. The Pending Home Sales Index doesn’t show which towns did which. It can’t.
For everyday buyers and sellers in Hyde Park , it’s the local data that matters.
The Pending Home Sales Index shows that more contracts were written in June than in April or May — a good sign for housing overall. And because 80% of all contracts close within 60 days, we can expect the summer’s home resale activity to be high.
This leads home prices higher.
With mortgage rates low and home sales spiking, now may be the best time to buy a home in 2011. Home prices appear to be rising and mortgage rates should, too.
Standard & Poors released its May 2011 Case-Shiller Index this week. The index measures change in home prices from month-to-month, and year-to-year, in select U.S. cities.
May’s Case-Shiller Index showed a 1 percent increase from April 2011. Home values rose in 16 of the Case-Shiller Index’s 20 tracked markets. Only Detroit, Las Vegas and Tampa fell. Phoenix was flat.
Don’t look too far into the findings, though. Like the FHFA’s Home Price Index, the Case-Shiller Index is rife with flaws.
The first flaw of the Case-Shiller Index is its limited geography. Despite being positioned as a national housing index, Case-Schiller Index is sourced from just 20 cities nationwide. There are more than 3,100 municipalities nationwide.
The Case Shiller Index’s second flaw is that it ignores all home types excepts for single-family, detached homes in its findings. Condominiums, multi-family homes, and new construction are not included in the Case-Shiller Index.
In some markets, these excluded home types outnumber the included ones.
Furthermore, the Case-Shiller Index is flawed in that it takes 60 days to release.
The Case-Schiller Index reports on a housing market from 2 months ago — hardly helpful for today’s buyers and sellers in Cincinnati , trying to make sense of today’s real estate market data.
When you want real-time housing market data, therefore, for Hyde Park or anywhere else, look past the Case-Shiller Index and talk to a real estate professional instead. It’s where you’ll get your best, most relevant information.
According to Census Bureau data, the number of new homes slid 1 percent from May. On a seasonally-adjusted, annualized basis, home buyers bought 312,000 newly-built homes last month.
It’s the third straight month of falling sales and the headline data casts the Cincinnati housing market in a negative light.
Upon closer inspection, however, the numbers appear quite strong.
First, sales are down marginally. Total units sold have dropped just 2 percent from the highs of the year. And, second, the number of newly-built homes for sale is down markedly from last year
At today’s sales pace, the complete new home inventory would be sold in 6.3 months – the quickest sell-out window since the expiration of the 2010 federal home buyer tax credit.
Builders are feeling better about their business, too.
After falling to a 9-month low, homebuilder confidence rebounded this month, boosted by expectations for a strong fall season. For buyers across Ohio , this could be seen as a market-shifting signal.
When builder confidence rises, negotiating for upgrades and price reductions can be tougher; “good deals” get scarce.
If you’re a home buyer and are considering new construction, don’t let the headlines fool you. Sales figures are slipping, but that’s because there are fewer homes are for sale nationwide. The inventory is shrinking and that can push home prices higher.
With mortgage rates still low, today’s market may be your best value of the year.
The FHA is insuring a greater percentage of loans than during any time in recent history. In 2006, it insured roughly 5 percent of the purchase mortgage market. Today, it insures one-quarter. ”Going FHA” is more common than ever before — but is it better?
The answer — like most things in mortgage — depends on your circumstance.
Like its conforming counterpart, an FHA-insured mortgage is available as a fixed-rate loan and as an adjustable-rate one. Payments are made monthly and come without prepayment penalties.
That’s where the similarities end, however, and decision-making begins. For homeowners and buyers across Cincinnati , FHA mortgages carry a different set rules as compared to conforming loans through Fannie Mae or Freddie Mac that can render them more — or less — attractive for financing.
For example:
FHA mortgages can be assumed by a subsequent buyer. Conforming loans may not.
FHA mortgages require mortgage insurance, regardless of downpayment. Conforming loans do not.
FHA mortgages do not have loan-level pricing adjustment. Conforming loans do.
FHA mortgages also require smaller downpayment requirements versus a comparable conforming mortgage. FHA calls for a minimum downpayment of 3.5%. Conforming mortgages often require 5 percent or more.
And, lastly, FHA mortgages are priced differently from conforming ones. Since 2005, the average FHA mortgage rate has been below the average conforming mortgage rate more than 50% of the time, meaning that an FHA mortgage’s principal + interest payment is lower than a comparable Fannie/Freddie loan.
Today, conforming mortgage rates are lower.
So, which is better — FHA loans or conforming ones? Like most things in mortgage, it depends. FHA-insured loans can be big money-savers or money-wasters. To find out which is best for you, ask your loan officer for today’s market interest rates and study the results.
With less than 20% equity, the answer is often clear.
In today’s Cincinnati homes, front-loading washing machines are a popular choices as compared to traditional, top-loading machines for 3 main reasons:
They wash more clothes per cycle, lowering household energy costs
They’re environmentally-friendly, using less water per cycle
They’re gentler on clothes, preserving colors and fabrics longer
They also require more care in the “cleaning” department.
Because of the way most front-loading washers are built, they tend to pool water in their drums, which can be a breeding ground bacteria and mildew.
Whether your front-loading washer smells “dirty” or not, you’ll want to follow proper procedures to keep it clean.
First, only use High Efficiency detergent. High Efficiency detergent is super-concentrated and creates fewer suds than traditional laundry detergent. Fewer suds means more soap is drained in the rinse cycle, leaving fewer chemicals and fragrances to sit in the drum.
High Efficiency detergent is also sold fragrance-free. This is the preferred variety for a long-term, stink-free washing machine.
Next, at least once weekly, take a dry cloth and wipe the inside rim of your front-loading washer. There, you will find a wide plastic tube in which water settles between loads of laundry. If you find stains or grime, remove it.
If your washer has a drain filter on its front-lower edge, remove the filter and allow the water to drain — preferably onto a towel or into a bucket.
Then, lastly, consider running an empty cycle with just bleach and water. This is optional, but can help remove lingering stench.
Once your front-loading washing machine is cleaned, going forward, after each load runs, try leaving your washer’s front door open. This will allow fresh air to circulate through the washer and help drum-settled water to evaporate.
With less water and humidity in the drum, bacteria growth is slowed.
It’s the HPI’s second straight increase, and puts the monthly index at its highest point since January 2011.
As a home seller in Cincinnati , you may appreciate news such as “rising home prices”, but it’s important to remember that the Home Price Index has a several built-in flaws — the biggest of which its age.
Today, the calendar nearly reads August, yet, we’re still discussing May’s housing data. A 2-month delay does little to help buyers and sellers wanting to know the “right now” of housing.
Unfortunately, the Home Price Index data is even more aged than that.
Because the FHFA’s Home Price Index measures home prices as recorded at closing, the actual sales prices included in the index are from real estate contracts written 30-60 days prior.
In other words, when we look at the Home Price Index report for May, what we’re really seeing is a snapshot of the housing market as it existed in March. March’s housing market has little to do with the forces driving home prices today.
Today’s real estate market is driven by today’s economics.
The Home Price Index is a useful gauge for economists and law-makers; it shows long-term national trends in the housing market which can be used to allocate resources to a project, or to form new policy. For home buyers across the state of Ohio , though, it’s less helpful.
For today’s real estate buyers and sellers, there’s no substitute for real-time data. For that, talk to a real estate professional.
Home resales slipped for the 3rd straight month, according to data from the National Association of REALTORS®.
The Existing Home Sales posted a 1 percent drop from May as the number of homes sold fell to a seasonally-adjusted, annualized 4.77 million units. It’s the monthly report’s lowest reading since November 2010.
The report also showed the national supply of homes for sales rising to 9.5 months — also its highest reading since November 2010.
Home Supply is the amount of time it would take to exhaust the complete home inventory at the current pace of sales.
June’s Existing Home Sales data would have been stronger if not for a high contract cancellation rate. As compared to May’s 4 percent rate, June’s cancellation rate was 16 percent; an elevated figure that “stands out in contrast” to what’s typical, according to the REALTOR® trade group.
By region, home resale activity varied:
Northeast : -5.2% from May
South :+0.5% from May
Midwest : +1.0% from May
West : -1.7% from May
This disparity from region-to-region highlights an important housing market concept. Namely, that all real estate is local. Because just as the Existing Home Sales varies on a regional level, it varies on a state-wide level, too.
What’s true for California housing is not necessarily what’s true for Florida housing, for example. Each of the 50 states has its own trends, and within those 50 states, there are thousands of cities and neighborhoods, each with their own trends, too.
The “national housing market” doesn’t exist, so national data is rendered somewhat useless.
For data in Cincinnati or your local market, talk to your real estate agent.
According to the Census Bureau, Single-Family Housing Starts rose to 453,000 on a seasonally-adjusted, annualized basis in June – a 9 percent spike from the month prior and the highest reading in 3 seasons.
A “Housing Start” is defined as a home breaking ground on new construction.
June’s reading is largest one-month jump since June 2009. The reading surprised Wall Street despite that the Homebuilder Confidence survey may have foreshadowed the results.
Monday, the National Association of Homebuilders reported that builders are more confident about the future of the new home sales market, and forecast a large increase in sales over the next 6 months.
For buyers of new construction, the news is mixed. Rising confidence may mean that builders in Cincinnati are less willing to negotiate on upgrades and/or price, but rising construction levels add inventory to an already fragile market.
Adding to the nation’s home supply without a corresponding increase in buyer demand shifts negotiation leverage away from builders.
The Census Bureau also reported on Building Permits.
In June, permits for single-family homes rose by 1,000 units nationwide on a seasonally-adjusted, annualized basis. This, too, bodes well for housing because 89 percent of homes with permits start construction within 60 days.
Momentum should carry forward into fall.
If you’re buying new construction in Ohio , ask your real estate agent about local home supply, and how the market is trending. With mortgage rates low and the fall buying season approaching, you may find some of your best deals in the next few weeks.
One month after an unceremonious dip highlighted by poor sales figures and dim prospects for the future, the National Association of Homebuilder’s Housing Market Index rebounded two points to 15 in July.
The monthly Housing Market Index is scored on a 1-100 scale. Readings above 50 indicate favorable conditions for homebuilders and the “new home” market. Readings below 50 indicate unfavorable conditions.
The Housing Market Index has not read higher than 50 in more than 5 years.
As a housing metric, the HMI is actually a composite of three separate surveys, self-reported by builders. The surveys ask about current single-family home sales volume; projected single-family home sales volume; and current buyer foot traffic levels.
The most noteworthy reading is the rapid rise in Projected single-family home sales. Although builders aren’t experiencing more foot traffic, they think sales will spike between now and the New Year.
That could spell bad news for Cincinnati home buyers.
When builders harbor higher expectations for the future, they’re less willing to make concessions for upgrades and/or price. Your likelihood of getting “a great deal” as a buyer diminishes.
That’s why it’s good that mortgage rates are still so low. Low mortgage rates help with home affordability and can offset slight jumps in sale price.
According to the National Association of REALTORS®, there are more than 3.7 million homes for sale this month. If your home is among them, are you doing what it takes to stand apart from the crowd?
This 4-minute piece from NBC’s The Today Show pulls no punches. It’s titled “5 Mistakes Sellers Can’t Afford To Make” and it covers falling home prices, buyer mentality, and the need to be smart when faced with that first offer.
Some of the tips include:
Why you should list your home at a price within 5 percent of its “true value”
How to turn “low-ball” offers into legitimate ones
How to interview and select a real estate agent to sell your home
In addition, based on the truth that “people shop with their eyes” and then review home details, the video includes advice on using great photographs and making the most of an online listing.
It can be tough to find buyers in any market. But if you follow the tips outlined above, you can get more showings, and do more with them.
Despite worsening jobless figures and an increase in the Cost of Living, Retail Sales are climbing. In June, for the 12th straight month, retail receipts rose, excluding cars and auto parts.
For home buyers and would-be refinancers in Cincinnati , this is a bit of unwelcome news. Mortgage rates are rising in the wake of the Retail Sales data release.
This is because Retail Sales account for roughly half of consumer spending, and nearly one-third of the economy overall. A rise in Retail Sales, therefore, suggests stronger growth ahead.
Here’s how it happens.
As consumers spend more money, businesses sell more product. So, to accommodate burgeoning demand, business hire additional employees, and are forced to make additional capital expenditures as well.
This rise in spending prompts other businesses to hire and spend; to meet their own respective demand surges. There’s a chain reaction-like effect.
Then, with businesses carrying larger payrolls and bigger staffs, federal, state and local governments realize bigger tax bases and can fund new and existing projects.
This, too, leads to hiring and the cycle repeats.
A weak economic outlook dragged down mortgage rates last week. This week’s Retail Sales data reversed that flow. Mortgage rates are higher by 1/8 percent — roughly $8 per $100,000 borrowed.
For the 9th straight month last month, foreclosure activity slowed.
According to foreclosure-tracking firm RealtyTrac, the number of foreclosure filings dropped 29 percent nationwide on an annual basis in June. The phrase “foreclosure filing” is a catch-all term, comprising default notices, scheduled auctions, and bank repossessions.
June marked the ninth consecutive month of sub-300,000 filings after 20 months above it – a promising signal for the housing market in Ohio and nationwide.
It’s also noteworthy that each of the 10 most foreclosure-heavy states showed fewer foreclosures in June 2011 as compared to June 2010, led by Florida’s 54% decline. Florida is one of 4 states on the leading edge of foreclosure activity since 2007.
The other 3 states performed similarly well in June:
California : -22% on an annual basis
Arizona : -7% on an annual basis
Michigan : -25% on an annual basis
The decrease in foreclosure filings comes at a time when buyer demand is highest. According to the National Association of REALTORS®, “distressed properties” account for more than 30 percent of all home resales and no wonder — homes in various stages of foreclosure or sold by short sale are selling with discounts of 20 percent versus comparable non-distressed homes.
For buyers in search of foreclosures in the Indian Hill area , talk with a licensed real estate. Buying homes in foreclosure follows a different process path as compared to buying a “traditional” home. Make sure you seek the help of a professional.
The Federal Reserve released its June 2011 Federal Open Market Committee meeting minutes Tuesday. It contained no surprises and, as such, mortgage rates in Ohio have idled in the hours since.
The Fed Minutes is published 8 times annually, three weeks after each scheduled Federal Open Market Committee meeting. It’s the official log of the meeting’s conversations and debates.
The Fed Minutes is the lengthier companion piece to the FOMC’s more well-known, post-meeting press release. As compared to the brief-and-focused press release,by comparison, the Fed Minutes are long and detailed.
The June minutes reveal some interesting perspectives from within the Federal Reserve, too.
On growth : Economic recovery had been slower than the committee expected
On housing : The market remains depressed. Foreclosures are “holding back” construction.
On rates : The Fed Funds Rate should remain low for an “extended” period
In addition, the Federal Reserve discussed whether a new round of economic stimulus was necessary. Committee members agreed that a poor outlook for employment in the medium-term would make this move more likely.
There was little that surprised Wall Street in the June Fed Minutes. This is why market reaction has been muted since its release.
The FOMC meets next August 9. If jobs data continues to weaken between now and then, expect the stimulus chatter to continue. It’s unclear, however, how this would impact mortgage rates.
For now, mortgage rates remain near their all-time lows, and they have much more room to rise than to fall. If you’re shopping for a loan, therefore, the timing is right for a lock.
More commonly called APR, Annual Percentage Rate is a government-mandated mortgage comparison tool. It measures the total cost of borrowing over the life of a loan into dollars-and-cents.
A loan’s APR is printed in the top-left corner of the Federal Truth-In-Lending Disclosure, as shown above. When quoting an interest rate, loan officers are required by law to disclose a loan’s APR, too.
APR is meant to simplify the process of choosing between two or more loans. The theory is that the loan with the lowest APR is the “best deal” for the applicant because the loan’s long-term costs are lowest. However, the loan with the lowest APR isn’t always best.
APR makes assumptions in its formula that can render it moot.
First, APR assumes you’ll pay your mortgage off at term, at never sooner. So, if your loan is a 15-year fixed rate, its APR is based on a full 15 year term. If you sell or refinance prior to Year 15, the math used to make your loan’s APR becomes instantly flawed and “wrong”.
Example: Let’s compare two identical loans in Ohio — one with discount points and a lower interest rate; and one without discount points and a higher mortgage rate. The loan with discount points will have a lower APR in most cases. However, if the homeowner sells or refinances within the first few years, the loan with the higher APR would have been the better option, in hindsight.
Second, APR can be “doctored” early in the loan process.
Because the APR formula accounts for third-party costs in a mortgage transaction, and third-party costs aren’t always known at the start of a loan, a bank can inadvertently understate them. This would make the APR appear lower than what it really is, and may mislead a consumer.
And, lastly, APR is particurly unhelpful for adjustable-rate loans. Because the APR calculation makes assumptions about how a loan will adjust during its 30-year term, if two lenders use a different set of assumptions, their APRs will differ — even if the loans are identical in every other way. The lender whose adjustments are most aggressively-low will present the lowest APR.
Summarized, APR is not the metric for comparing mortgages — it’s a metric. For relevant comparison points, talk to your loan officer.
Painting rooms in a home can be a do-it-yourself project. Armed with paint, tape, tarp and some brushes, there’s nothing you can’t re-color.
While some rooms call for a complete sand-down, there are some that don’t, and for those, Rule #1 is that your walls must be stain-free before adding the next coat of paint.
Stains can come in all varieties and the most basic stains can be treated with a damp rag or a Mr. Clean Magic Eraser. For everything else, you’ll need a more cleaning power.
For example, of all the stain-types, “grime” is the most common. To remove ground-in dirt and oil, start with 1 gallon of warm water in a bucket, then add 1 cup of ammonia, 1/2 cup of distilled white vinegar, and 1/4 cup of baking soda.
Rub gently and follow up with a clean water rinse.
For other common stains, try these remedies:
Permanent Marker : Blot the stain with a rubbing alcohol-soaked cotton ball. Allow to air dry.
Mildew : Add 1 tablespoon of vinegar to 4 cups of water. Spray and allow to air dry.
Crayon : Dust a damp sponge with baking soda and scrub. Baby wipes work, too.
If your wall stains are “water stains”; the result of a leak or something similar, make sure the water source is corrected prior to painting. Then, to remove spots, mix 1 part bleach to 4 parts water, thoroughly rinse the stain, and use a hair dryer to dry the solution on the wall.
Buyers are writing contracts at a furious pace nationwide.
Home builders are slowly reducing inventory.
In today’s Cincinnati homes, front-loading washing machines are a popular choices as compared to traditional, top-loading machines for 3 main reasons:
A strong spring season helped home values recover, says the government.
The American Consumer will not be deterred.
The Federal Reserve released its June 2011 Federal Open Market Committee meeting minutes Tuesday. It contained no surprises and, as such, mortgage rates in Ohio have idled in the hours since.
Painting rooms in a home can be a do-it-yourself project. Armed with paint, tape, tarp and some brushes, there’s nothing you can’t re-color.
