February 2011

Real Estate News

 

What’s the Buzz?

Once again we’re hearing predictions of the real estate market that span the complete spectrum.  It’s probably a good time to go review 4 key fundamentals that will impact the real estate market in 2011… and beyond.

4 Real Estate Market Fundamentals for 2011

  • GDP Growth: After two years of either zero or negative GDP growth, the U.S. reversed course in 2010; real GDP growth for 2010 is estimated to be 2.9%. GDP is predicted to grow at about 3.9% in 2011. And although not in line with the 4-5 % growth many economists believe is required for a full recovery, future GDP growth predictions represent a positive trend.

  • Unemployment Rate: Unemployment shot up to 10% by late 2009, after hovering around 5% for most of the past decade. In 2010, unemployment stayed high, falling no lower than 9.5%. The Fed is predicting unemployment to drop to around 9% by the end of 2011 and 8% by the end of 2012. While this is still high, the rate is dropping – and this represents another positive trend.

  • Foreclosures: You don’t need an analyst to tell you that foreclosures are high. Moody’s estimates 2010 foreclosures were about 1.8 million. What you may not have known is that foreclosures are predicted to rise into 2011. Moody’s predicts as many as 2.1 million foreclosures in 2011. The good news? 2011 looks to be the peak, as foreclosures should begin falling thereafter. According the Mark Zandi, chief economist at Moody’s Analytics, “the majority of those at risk of foreclosure are already in the pipeline.”

  • Mortgage Rates: Of all the real estate related fundamentals listed, mortgage rates are certainly the most volatile, hardest to predict, and impact real estate market most directly. In 2010, mortgage rates dropped to the lowest level ever recorded in the US, falling below 4.2 % on a 30 year fixed in October-November. However, in December the average 30 year rate jumped to 5.2%. Currently things have settled back to around 4.8%. Why the recent rise? I think a lot has to do with optimism. For example, the 3.9% predicted increase in GDP for 2011 mentioned earlier is much more aggressive than the 3.0% widely predicted just a few weeks prior. So what about 2011? The consensus is that rates will slowly rise, probably going north of 5.0%. Despite the rise in mortgage rates though, we’re still at historically low levels. Additionally, many believe that a rise in mortgage rates will increase home sales, as buyers feel pressured to lock in before rates go further up.

Market Snapshot

The new home market finished the year with an impressive December which showed improvement in all its major indicators. Both home prices and sales posted impressive gains while new home inventory continued to decline.

New home sales surged 17.5% from the previous month in December, mainly due to a jump in activity in the West region. This is the highest the annual sales pace of new homes has been since April when the federal homebuyer tax credit expired. While new home sales remain at historically low levels, they are up 20% in the past five months after reaching an all-time record low in August.

Stronger sales activity also helped prices firm up in December. Median new home prices rebounded 12.1% from the previous month to $241,500 in December. This is the second straight month that new home prices have increased and the highest they have been since April 2008. New home prices are also up 8.5% from this time last year and 5.2% higher than they were this time two years ago.


Please keep us in mind with all your Real Estate needs (don’t forget to refer your friends to us). We are always looking for new buyers and sellers, so if you know of anyone planning to buy or sell a home, please point them our way!


~Bonnie & Chuck Kennedy

In this edition:

Pending Home Sales Continue Uptrend

Housing Moving to Higher Ground in 2011

U.S. Home Sales Skyrocket

What Home Buyers Can Expect from the Real Estate Market in 2011

Fewer homes for sale in Valley

What's Driving Buyers To Buy Homes?

Buying Home Is Cheaper Than Renting in Most Big U.S. Cities

Mortgage Rates

Pending Home Sales Continue Uptrend

RISMEDIA, January 29, 2011—Pending home sales improved further in December 2010, marking the fifth gain in the past six months, according to the National Association of REALTORS®.

The Pending Home Sales Index, a forward-looking indicator, increased 2.0% to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2% below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. Click here for complete article.

Housing Moving to Higher Ground in 2011

RISMEDIA, January 18, 2011—Housing will see gradual improvements in activity this year as the nation’s economy and job market continue to move to higher ground, establishing momentum that will produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders’ Show in Orlando on January 12. “This year’s spring selling season will be better than last year’s,” said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s tax credits for home buyers. Click here for complete article.

U.S. Home Sales Skyrocket

PHOENIX -- U.S. home sales jumped more than 12 percent from November to December 2010, according to the National Association of Realtors. Home sale numbers in Maricopa County show a 17 percent increase over the same time period, according to figures released from Arizona State University. Click here for complete article.

What Home Buyers Can Expect from the Real Estate Market in 2011

RISMEDIA, January 7, 2011—The drumbeat from the housing community was loud and clear in 2010: There was never a better time to buy a home. For most of the past 12 months, home prices tumbled, mortgage rates ticked downward, and the inventory of available traditional and distressed homes was plentiful. But would-be buyers, even if they were able to overcome job worries, found that the hurdles to obtain a loan were formidable. They remained on the sidelines, and housing analysts opined that if the broader economy improved and unemployment fell, pent-up demand would be unleashed, credit guidelines would ease and home sales would improve. Click here for complete article.

Fewer homes for sale in Valley

The number of homes for sale in metro Phoenix is declining, a sign that the housing market could start to recover this year. However, foreclosures and short sales continue to dominate the region's home sales.

Data from the Arizona Regional Multiple Listing Service show the number of homes for sale in the Phoenix-area dropped by almost 3,000 to 42,500 in December. Fewer homes for sale means less supply. Demand from homebuyers must return to balance out the healthy equation for the market. Housing inventory averaged about 43,000 a month during 2010. Click here for complete article.

What's Driving Buyers To Buy Homes?

January 21, 2011 – The Wall Street Journal is reporting that “affordability” is the top reason for home buying in 2010. That makes sense, especially in unstable market conditions. Buyers, as always, are looking for a bargain but, more than ever, they’ve been enticed by low home prices and low interest rates, according to a survey by Weicher Realtors, Inc. Click here for complete article.

Buying Home Is Cheaper Than Renting in 72% of Big U.S. Cities, Trulia Says

Buying a home is cheaper than renting in 72 percent of the largest U.S. cities, led by Miami and Las Vegas, as an increase in foreclosures boosts demand for apartments, said real estate data provider Trulia Inc. The cities where purchasing is most affordable include Arlington, Texas, and Mesa and Phoenix, Arizona, according to Trulia’s latest Rent vs. Buy Index, released today. The San Francisco-based company compares the costs of leasing and buying a two-bedroom home in the 50 biggest cities each quarter. Click here for complete article.

Mortgage Rates

U.S. averages as of February 1, 2011:

  • 30 yr. fixed: 4.83%

  • 15 yr. fixed: 4.10%

  • 30 yr. jumbo: 5.37%

  • 5/1 ARM: 3.44%

    View current rates