Despite the lowest mortgage rates of all-time, home buyers are slowing the pace at which they’re buying homes.
According to the National Association of REALTORS®, on a seasonally-adjusted basis, the Pending Home Sales Index fell 1 percent in August.
The Pending Home Sales Index measures homes under contract, but not yet sold, nationwide. In this respect, the Pending Home Sales Index is a forward-looking housing market indicator; a predictor of future home sales.
It’s one of the few national indices that “looks ahead” to future market conditions. Most housing data, by contrast, describes past events.
On a regional basis, only the South Region showed improvement in August’s Pending Home Sales Index report :
Northeast Region: -5.8%
Midwest Region : -3.7%
South Region : +2.6%
West Region : -2.4%
That said, even the value of regional data can be questioned. Like all things in real estate, the number of homes going under contract will vary on the local level.
For example, in the Northeast Region where pending home sales slipped in August, there are close to a dozen states. Some of those states performed better than others, and there is no doubt that cities and towns exist in the region in which pending home sales actually climbed.
As a national/regional report, the Pending Home Sales Index cannot show local market data and, for that reason, it’s somewhat irrelevant to everyday buyers and sellers in Cincinnati. If you’re in the market to buy or sell a home today, it’s your local housing market data that matters to you.
We watch the Pending Home Sales Index because it paints a broad picture of housing nationwide. To get local market conditions, though, you’ll want to talk with a local real estate professional.
Standard & Poors released its monthly Case-Shiller Index this week. The Case-Shiller Index measures home price changes from month-to-month, and year-to-year, in 20 select U.S. cities. It also reports a “national” index; a composite of the values in said cities.
The most recent Case-Shiller Index shows a 0.9% rise in home values from June to July 2011. Home values were higher in 17 of the 20 tracked cities. Only Phoenix and Las Vegas fell. Denver was flat.
Also noteworthy is that, of all of the Case-Shiller cities, Detroit posted the strongest 1-year, home price improvement. As compared to July 2010, home values are higher by 1.2 percent in Detroit. This bests even Washington, D.C. — long-believed to be the nation’s healthiest housing market.
That said, we should be careful of the conclusions we draw from July’s Case-Shiller Index — both on a city-wide level, and on a national level. This is because, as with most “home price trackers”, the Case-Shiller Index has flaws in its methodology.
The first Case-Shiller Index flaw is its limited scope. Although it’s purported to be a “nationa”l housing index, the data that comprises the monthly Case-Schiller Index is sourced from just 20 U.S. cities. These 20 cities represent just 0.6% of the more than 3,100 municipalities nationwide.
The second Case Shiller Index flaw is that the sample sets include single-family, detached homes only. iCondominiums, multi-unit homes, and new construction are specifically excluded from the Case-Shiller Index.
In some markets, “excluded” home types outnumber included ones.
And, lastly, the Case-Shiller Index is flawed in that it takes 2 months to gather data and report it. It’s nearly October, yet we’re still discussing the real estate market as it existing in July. For buyers and sellers in Cincinnati , July in ancient history.
The Case-Shiller Index is useful for tracking long-term trends in housing, but does little to help individuals with their choices to buy or sell a home. For relevant, recent real estate data, talk to a real estate agent in your market. Real estate agents are often the best source for real-time, real estate data.
According to the Census Bureau, the number of new homes sold slid for the fourth straight month in August, easing 2 percent from July. On a seasonally-adjusted, annualized basis, home buyers bought 295,000 newly-built homes last month.
August marked the lowest new home sales tally since February. News outlets are jumping on the story, with at least one calling it a “blow” to the housing market.
That’s an unfair assessment.
It’s tough for the new home market to tally big sales numbers when the number of homes for sale is dwindling and, in August, that’s exactly what we saw. The number of new homes for sale nationwide fell to 162,000 last month. This is the fewest number of new homes for sale since at least 1993, the first year the Census Bureau tracked such data.
In other words, using New Home Sales as a housing market gauge may be misleading. A better metric may be new home supply.
In August, new home supply edged 0.1 months higher to 6.6 months. This means that, at today’s sales pace, the complete new home inventory would be sold out in 6.6 months.
It’s the second-fastest reading in 2 years.
The new home market represents an interesting opportunity for home buyers in Cincinnati. Builders are facing new competition from bank-owned homes and foreclosures, dragging builder confidence to all-time lows. Furthermore, builders have low expectations for the next 6 months.
As a buyer, you can use this to your advantage. Builders may be more willing to negotiate on price and finishes versus this time last year. You may find a good “deal” in new construction once you go in search of it.
According to the National Association of REALTORS®, Existing Home Sales rose 8 percent in August from the month prior, and 19 percent as compared to August of last year.
“Existing homes” are homes that are previously owned; ones that cannot be considered new construction.
A total of 5.0 million existing homes were sold last month on a seasonally-adjusted, annualized basis. This is slightly better than the 12-month home resale average, a statistic partially powered by “distressed sales”. Distressed homes — homes in various stages of foreclosures or sold via short sale – accounted for 31 percent of all home resales in August.
At the current rate of sales, the national home resale inventory would be depleted in 8.5 months. This pace is a full month faster as compared to July, and the lowest home supply reading since March 2011.
There are currently 3.58 million existing homes for sale nationwide
29 percent of home buyers paid cash in August
Real estate investors bought 22% of homes in August, up from 18% in July
Home prices throughout Cincinnati are based on Supply and Demand and, at least right now, it appears the supply is dropping. Furthermore, with mortgage rates at all-time lows, it’s reasonable to expect demand to pick up. These two conditions should lead home prices higher.
If you’re shopping for a home right now, recognize the trends and work them to your advantage. It may be “cheapest” to buy now.
With the change of season, it’s a good time to make sure your home’s gutter system is clean and well-functioning.
Home gutters serve a specific purpose. By capturing and funneling rainwater away from a home “footprint” water damage to walls, windows and roofing can be minimized. A well-functioning gutter system can keep a home’s basement from flooding, and a foundation safe from long-term structural damage.
Damaged or dirty gutters can lead to major home damage that may not be covered by insurance.
For homeowners in Indian Hill , keeping clean gutters is essential. Luckily, with the right tools, gutter maintenance can be a do-it-yourself job.
First, gather the necessary tools. You’ll need a ladder for climbing; a bucket for holding debris; a hose for flushing your gutters; and a small, scooping tool such as a trowel.
Next, carefully climb to your gutter. Using your hands, scoop large debris and place it in the bucket. Use the trowel to get to hard-to-reach places and for removing sticks and leaves. For safety, do not stretch to reach the next section of gutter.
After clearing the first gutter portion, step down from the ladder, move it to the next section of gutter, and repeat. Do this until all gutter sections are free from debris.
Next, find a garden hose with a spray attachment. Carry the hose up the ladder with you to the highest point of your gutter system — usually opposite the downspout. With the water supply on, spray water into the gutter to flush the remaining debris.
If the water fails to drain, there’s likely a clog in the downspout. Using a screwdriver, separate the downspout, find the clog, and remove it. Or, if you find standing water, adjust the slope of your gutter by removing the gutter hangers, fixing the slope, and re-attaching the hangers.
A gutter system should slope roughly one-quarter inch for every 10 feet of gutter.
Gutter maintenance is a twice a year task that you can do yourself. However, if you’re uncomfortable on a ladder, or prefer to hire professionals, that’s okay, too. As with everything in home maintenance, it’s safety first.
Single-Family Housing Starts fell for the second consecutive month, dropping to a seasonally-adjusted, annualized 417,000 units in August 2011.
A “Housing Start” is defined as a home on which ground has broken.
We shouldn’t put too much faith in the findings, however. Although housing starts were lower last month, as noted by the Census Bureau, the margin of error in the August Housing Starts report exceeded the actual result.
From the official report:
August’s Published Results : -1.4% from July
August’s Margin of Error : ±10.3% from July
Therefore, August’s Housing Starts may have actually increased by up to +8.9% from July, or it may have dropped as much as -11.7%. We won’t know for sure until several months from now, after the Census Bureau has gathered more housing data.
One thing is certain, though — the long-term trend in Housing Starts is “flat”. There has been little change in new home construction since last summer.
The same can’t be said for Building Permits.
Considered a pre-cursor to Housing Starts, Single Family Building Permits climbed 2.5 percent with a minuscule Margin of Error of ±0.9 percent.
When permits are issued, 86 percent of them begin break ground within 60 days. Therefore, expect Housing Starts and new home inventory to rebound in the months ahead.
For now, housing remains steady. And, with mortgage rates at all-time lows, homebuyer purchasing power in an around Cincinnati is higher than it’s been in history. If you’re in the process of shopping for a home, talk with your lender to plan your mortgage budget.
Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
The vote was 7-3 — the second straight meeting at which the FOMC adjourned with as many 3 dissenters. Prior to that last meeting, there hadn’t been 3 FOMC dissenters since 1992.
In its press release, the Federal Reserve presented a dour outlook for the U.S. economy, noting that since its last meeting in August:
Economic growth “remains slow”
Unemployment rates “remain elevated”
The housing sector “remains depressed”
The Fed also said that there are “significant downside risks” to the economic outlook, tied to strains in the global financial markets.
The news wasn’t all bad, however.
The Fed noted that business investment in equipment and software continues to expand, and that inflationary pressures on the economy appear to have stabilized. The Fed then re-iterated its plan to leave the Fed Funds Rate in its current range near 0.000 percent “at least until mid-2013″. This means that Prime Rate — the rate to which credit card rates and lines of credits are often tied — should remain unchanged at 3.250 for at least another 2 years.
Furthermore, as expected, the Federal Reserve launched a market stimulus plan aimed at lowering long-term interest rates. The Fed will sell $400 billion in Treasury securities with a maturity of 3 years or less, and use the proceeds to buy the same with maturity between 6 and 30 years.
Mortgage market reaction to the FOMC statement has been positive this afternoon. Mortgage rates in Ohio are improving, but note that Wall Street sentiment can shift quickly — especially in a market that’s as uncertain as this one.
If today’s mortgage rates and payments fit your household budget, consider locking in a rate. Rates can change swiftly.
The FOMC’s next meeting is a 2-day affair, scheduled for November 1-2, 2011.
The Federal Open Market Committee adjourns from a two-day, scheduled meeting today, the sixth of 8 scheduled meetings this year, and the seventh Fed meeting overall.
The FOMC is a designated, 12-person committee within the Federal Reserve, led by Fed Chairman Ben Bernanke. The FOMC is the voting members for the country’s monetary policy. Among its other responsibilities, the FOMC sets the Fed Funds Rate, the overnight rate at which banks borrow money from each other.
Note that the “Fed Funds Rate” is different from “mortgage rates”. Mortgage rates are not set by the Fed. Rather, they are based on the price of mortgage-backed bonds, a security traded among investors.
As the chart at top illustrates, the Fed Funds Rate and conforming mortgage rates in Cincinnati have little correlation. Since 1990, the two benchmark rates have been separated by as much as 5.29 percent, and have been as close as 0.52 percent.
Today, the separation between the Fed Funds Rate and the national average for a standard, 30-year fixed rate mortgage is roughly 4 percent. This spread will change, however, beginning 2:15 PM ET Wednesday. That’s when the FOMC adjourns from its meeting and releases its public statement to the markets.
There is no doubt that the Fed will leave the Fed Funds Rate in its current target range of 0.000-0.250%; Fed Chairman Bernanke plans to leave the benchmark rate as-is until at least mid-2013. However, the Fed is expected to add new support for markets.
Unfortunately, there are few clues about how the Fed will support markets, and there is no consensus opinion regarding the size of the said support. As a result, mortgage rates should be bouncy today. First, they’ll be volatile ahead of the Fed’s statement. Then, they’ll be volatile post-Fed statement.
Even if the Fed does nothing, mortgage rates will change. This is because Wall Street is prepping for an announcement and — no matter what the Fed says or does — investors will want to react accordingly.
When mortgage markets are volatile, the safest move is to lock your mortgage rate in. There too much risk to float.
Homebuilders are feeling worse about the market for new homes nationwide.
With construction credit tight and competition from foreclosures increasing, the National Association of Homebuilder’s Housing Market Index slipped 1 point in September, falling to levels just below the index’s 12-month average.
The HMI measures homebuilder confidence nationwide. It’s the result of 3 separate homebuilder surveys, each designed to measure a specific facet of the homebuilder’s business.
How are market conditions for the sale of new homes today?
How are market conditions for the sale of new homes in 6 months?
How is prospective buyer foot traffic?
Each component survey showed a drop-off from August. Responses fell 1 point, 2 points, and 2 points, respectively. Together, September’s composite reading was 14 out of a possible 100 points. Readings over 50 are considered favorable.
The HMI not been above 50 since April 2006.
With homebuilder confidence low — and stagnant — buyers of new homes Cincinnati in should remain alert for “deals”. Builders are more likely to offer free upgrades and other concessions to incoming buyers. The availability of such deals may increase as the seasons change and as the year comes to a close.
Low mortgage rates are making new homes attractive, too. Last week, 30-year fixed rate mortgage rates fell to their lowest levels of all-time. As compared to just 8 weeks ago, 30-year fixed rate mortgage payments are lower by 5 percent at all loan sizes, down $27 per month per $100,000 borrowed.
According to the U.S. Environmental Protection Agency, a common class of airborne toxins known as Volatile Organic Compounds (VOCs) is ruining indoor air quality, and causing some U.S. homeowners to become dizzy, asthmatic, and ill.
VOCs are gases emitted by certain, common household products, including paint and paint strippers, cleaning supplies, and copiers and printers — even when the aforementioned products aren’t in use. You can find VOCs “everywhere” because organic chemical compounds have become essential in everyday life.
VOCs are what give cars that “new car smell”. They’re also the cause of “Sick Building Syndrome“.
As a homeowner in Indian Hill , VOCs in your home can make you sick. Therefore, the EPA advises homeowners to take the following steps to reduce VOC levels in their respective homes and improve and home air quality.
When using VOC-emitting products such as paints and paint thinners, keep a well-ventilated home.
Avoid purchasing cleaning supplies or paint in bulk. Buy only what you need.
Never mix household cleansers. It may yield unintended results.
Throw out “dry cleaning bags” as soon as possible. Most dry cleaning makes use of harmful VOCs.
Do not burn tobacco products inside your home.
There are a half-dozen other recommendations, too. They’re listed on the EPA website.
You can’t remove VOCs from your home, but you can minimize their negative effects. And keep your household as healthy as possible.
It’s not just 30-year fixed rate mortgages that are posting all-time lows these days. The 15-year mortgage has been plunging, too.
If you’ve ever considered a 15-year loan term, it’s a terrific time to talk to your lender. According to Freddie Mac’s weekly mortgage rate survey of roughly 125 U.S. lenders, at 3.30 percent, the 15-year fixed rate mortgage is at its lowest point in history.
The 3.30% rate doesn’t come for free, however. Based on average loan term nationwide, borrowers in Ohio choosing to “go 15″ should expect to pay 0.6 discount points at closing. 1 discount point is equal to 1 percent of your loan size.
With low rates, 15-year fixed rate mortgage can be enticing; a primary benefit is the huge reduction in the long-term interest costs of your loan. The downside, though, is that monthly mortgage payments can be relatively large.
At today’s mortgage rates, a 15-year fixed rate loan carries a principal + interest payment of $705.10 per $100,000 borrowed — a 46% increase over a comparable 30-year fixed rate loan. If you can manage the bigger payments, though, you’ll reap $47,000 in interest payments savings per $100,000 borrowed in paying off your loan in full.
$47,000 per $100,000 borrowed is a huge amount of savings and those saved monies can be used to fund items such as college, home improvement, and retirement, among others.
That said, the 15-year fixed rate mortgage is not for everyone.
Because it comes with higher monthly payments, the 15-year fixed rate mortgage may add financial stress to your household budget. And, once you have committed to a 15-year loan term and its payments, you’re can’t “go back”. Your lender won’t revert your loan to a 30-year schedule without a refinance, and a refinance could be costly.
On an annual basis, foreclosure filings fell last month. As compared to August 2010, last month’s foreclosure filings dropped 33 percent. ”Foreclosure filing” is a catch-all term, comprising default notices; scheduled auctions; and bank repossessions.
The study was published by foreclosure-tracking firm RealtyTrac and this month’s report reveals a slowing rate of foreclosure within each of the Top 10 most foreclosure-heavy states.
All news is not good, however.
On a monthly basis, foreclosure filings spiked, led by a surge in default notices. Default notices made their biggest one-month jump since August 2007 on the way to a 9-month high last month. Default notices are the first step in the foreclosure process so this jump may foreshadow a large number of bank repossessions as foreclosures “make their way through the process“.
It’s also noteworthy that just 6 states housed half of the nation’s bank repossessions last month.
California : 18 percent of bank repossessions
Florida : 8 percent of bank repossessions
Georgia : 7 percent of bank repossessions
Michigan : 6 percent of bank repossessions
Texas : 6 percent of bank repossessions
Arizona : 6 percent of bank repossessions
As a home buyer in Cincinnati , foreclosures can save you money. The National Association of REALTORS® reports that distressed homes sell with typical discounts of 20 percent versus comparable, non-distressed homes. However, buying a home from a bank is a different process from buying a home from a “person”. Contract negotiations are different and it can take months to finally close on a foreclosed home.
If you’re buying a foreclosed, therefore, enlist the help of a professional real estate agent. Real estate agents can help you navigate the sometimes-complicated world of foreclosures, and help you come out ahead.
It’s no secret. Rates are low right now. And, it’s not just mortgage rates, either — all types of rates are scraping rock-bottom. Borrowing rates, lending rates and savings rates are at or near their all-time lowest levels.
As a homeowner in Cincinnati , one way to take capitalize on today’s low rates is to apply to refinance your home. But there are other ways to take advantage, too.
In this 5-minute piece from NBC’s The Today Show, you’ll learn of a half-dozen ways to exploit the current rate environment, including:
Refinance a car loan from a high rate to a low rate, for cheap, in an hour
Balance transfers between credit cards with teaser rates lasting up to 20 months
Move some savings to an “online” bank where savings rates are higher
The interview’s theme is to examine both where you’re spending and saving your money, and make sure you’re doing what’s best for your budget.
Federal Reserve Chairman Ben Bernanke has pledged to hold the Fed Funds Rate near 0.000% until at least 2013. So long as the Fed Funds Rate is low, there will be places you can save.
For the first time in a year, homeowners with adjusting mortgages are facing rising mortgage rates. The interest rate by which many adjustable-rate mortgages adjust has climbed to its highest level since September 2010, and looks poised to reach higher.
This is because of the formula by which adjustable-rate mortgage adjust.
Each year, when due for a reset, an adjustable-rate mortgage’s rate changes to the sum of fixed number known as a “margin”, and a variable figure known as an “index”. For conforming mortgages, the margin is typically set to 2.250 percent; the index is often equal to the 12-month LIBOR.
LIBOR stands for the London Interbank Offered Rate. It’s a rate at which banks lend to each other overnight.
Expressed as a math formula, the adjusting ARM formula reads :
(New Mortgage Rate) = (2.250 percent) + (Current 1-Year LIBOR)
LIBOR has been rising lately, which explains why ARMs are adjusting higher as compared to earlier this year. There has been considerable stress on the financial sector and LIBOR reflects the uncertainty that bankers feel for the sector.
LIBOR last spiked after the collapse of Lehman Brothers in 2008 amid global financial fears. Analysts expect LIBOR to rise into 2012 because of bubbling concerns in the Eurozone.
Despite LIBOR’s rise, though, most adjusting, conforming ARMs are still resetting near 3 percent. For this reason, homeowners with ARMs in Ohio may want to consider letting their respective loans adjust with the market.
This is because an adjusting mortgage rate near 3 percent may be better than what’s available with a “fresh loan” — even as 5-year ARMs rates make new all-time lows. Unlike a straight refinance to lower rates, an adjusting loan requires no closing costs, requires no appraisal, and requires no verifications.
So, if you have an adjustable-rate mortgage that’s set to reset this season, don’t rush to refinance it. Talk to your lender and uncover your options. Your best course of action may be to stay the course.
Flooding is the top-ranked natural disaster in the United States, with a dozen potential causes ranging from heavy rains, tropical storms and hurricanes to new housing developments and rain after fire. Floods can occur in all 50 states and, when they do, they leave massive damage in their wake.
Flood damages exceed $2.7 billion annually.
As a homeowner, you carry homeowners insurance to protect against theft and loss. Typical homeowners insurance, however, excludes damages from flooding. Homeowners in Cincinnati , therefore, should make sure to have a separate flood insurance policy. And once that policy is in place, there are other steps you should follow, too.
First, make a log of your possessions, either on paper or by video. In your log, include everything that you own of value. Next, if you own jewelry, have it appraised and store the appraisal; if you own appliances, log the serial numbers and attach original receipts.
Then, buy a safe-deposit box at a bank, for example, and store your possession log.
All of this information matters because, in the event you need to make a claim, you’ll have an easier time dealing with the insurance adjuster. It’s hard to prove possession of items that have been washed away by flood waters, after all.
You’ll also want to share this list with your insurance agent in advance so your policy is made with the proper amount of coverage.
Floods can strike anywhere and, as many people learn the hard way, standard homeowners insurance does not include flood coverage. If you’re without flood coverage, talk to your insurance agent about adding a flood policy.
Because many policies don’t take effect until 30 days from purchase, this is one form of insurance you’ll want to buy in advance.
Despite the lowest mortgage rates of all-time, home buyers are slowing the pace at which they’re buying homes.
According to the Census Bureau, the number of new homes sold slid for the fourth straight month in August, easing 2 percent from July. On a seasonally-adjusted, annualized basis, home buyers 
Single-Family Housing Starts fell for the second consecutive month, dropping to a seasonally-adjusted, annualized 417,000 units in August 2011.
Wednesday, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.
How healthy is the air in your home?
