By Matt Mullins on March 25, 2011
Today’s article from Builder Magazine compares new home sales versus existing homes. According to the 2010 Census, this past year posted the lowest new home sales transactions since data was collected in 1963. Although not good news for builders and developers, buyers looking to build new will continue to find enticing properties and deals in 2011.
New Home Sales Hit Lowest Rate On Record, Census Reports
New homes are struggling to compete with existing-home prices, which have been pushed down by distressed properties.
Sales of new single-family houses plunged in February to the lowest annual rate on record since the census began compiling the data in 1963. With only 19,000 homes sold during the month, the nation’s annual rate hit a dismal 250,000 units, according to statistics released today by the U.S. Census Bureau. The numbers reflect a drop of 16.9% from January’s revised rate and a 28.0% decline year over year.
While many factors are contributing to the weakness in new home sales, the sheer number of foreclosures on the market have made them an unusually dominant force. Distressed properties pushed the median price for an existing home down to $156,100 in February, a month in which distressed properties made up 39% of all existing-home sales, according to data from the National Association of Realtors. Meanwhile, the median price for a new home in February was $202,100—29.5% higher than a used one.
And February’s pricing was discounted. The median price for a new home fell 13.9% from January’s median of $230,600 and dropped 8.9% year over year.
Home builders are feeling the squeeze on both ends, notes Chris G. Christopher, senior principal economist at IHS Global Insight. “Prices and sales are falling. Inventory is increasing. And the rising commodity prices are hitting the residential construction industry especially hard, as if they didn’t have enough problems already,” he wrote in a statement today regarding the Census Bureau’s numbers.
While all areas of the country saw declines on both a monthly and yearly basis, the Northeast led the losses with a staggering 57.1% drop from January and a 50.0% decline from the previous year. The Northeast also had the lowest annual rate of any region, a sparse 15,000 units.
The Midwest saw the second-highest loss, falling 27.5% from January and down 40.8% year over year, to an annual rate of 29,000.
The West declined 14.7% on a monthly basis and 34.1% annually, to a rate of 58,000.
While the South also experienced declines—6.3% and 17.8% on a monthly and yearly basis, respectively—the region still sold more new homes than all other regions combined, reaching an annual rate of 148,000 units.
At the current sales rate, builders have an 8.9-month supply, a 20.3% gain from the previous month and 11.3% over where the stock stood the previous year.
Claire Easley is senior editor, online, at Builder.
Posted in Buyers, New Construction |
By Matt Mullins on February 21, 2011
Not all home improvements have a positive return-on-investment (ROI). What may be appealing to one buyer can be offensive to another. The following is a list of improvements to avoid:
Many people, often working under the assumption that all renovations increase the value of a property, spend thousands of dollars on expensive upgrades, changes and additions to their homes. What these people forget, though, is that the next owner may not like the renovations. In fact, most people who buy property make significant changes to it over a period of time. Also, the price of a home is dictated mostly by market forces (such as what other similar houses are selling for), not necessarily by the characteristics of a home. Yes, some qualities are highly-sought after (depending on the area, the time of year, and the personal interest of potential buyers) — such as garages, finished basements, enclosed yards, big kitchens, etc. — but many of the things assumed by some to increase the value of a home in fact do not affect the value at all. They include the following: Continue reading “10 Home Renovations that may not pay..”
Posted in Home Improvement |
By Matt Mullins on February 15, 2011
4 Bedrooms for the Price of 4 Wheels – Yahoo! Real Estate
via 4 Bedrooms for the Price of 4 Wheels – Yahoo! Real Estate.
Posted in Buyers |
By Matt Mullins on February 11, 2011
The recent proposal to reform Fannie Mae and Freddie Mac could have major implications on future homeowners, as well as sellers. Although it is likely to be years before any changes are implemented, the ability to finanace a home could be much more difficult in the years to come.
How Buying a Home Is Likely to Change by Rick Newman Thursday, February 10, 2011
Last year’s sweeping financial-reform law revamped much of the banking system. But there’s one industry it didn’t touch: housing finance. For good reason. Unlike the convalescing banking sector, the housing market is still a wreck, with any false move likely to destabilize things even further and cause fresh damage. More from USNews.com: • 12 Ways Our Quality of Life Has Improved • 20 Industries That Are Bouncing Back • Who Will Prosper in 2011 But the system can’t continue the way it is either, so policymakers in Washington are gingerly starting to propose ways to fix the way we finance the purchase of homes and assure that there’s never another housing bust like the one that began in 2006 — and still isn’t over. Continue reading “Future of Fannie and Freddie could have major impacts on homeownership”
Posted in Buyers, Mortgage/Finance, Sellers |
By Matt Mullins on February 2, 2011
As we continue to regain traction in the housing market, 2010 will be a year many builders would like to forget. This past year, building activity was at its lowest in 47 years across the country. Continued tighter lending standards, lack of consumer confidence, and higher than normal unemployment rates kept new housing construction at bay for most of the year. Last year, Twin Cities metro area cities issued about 2,900 housiing permits for about 5,500 units, up from 2009. Most builders are optimistic 2011 will be better than last year, a sentiment we certainly hope is true.
Posted in Market Stats, New Construction |
By Matt Mullins on January 5, 2011
Today’s link provided 10 ways homeowners can increase the energy efficiecy of thier homes. Although the energy efficiency tax credit expired with the new year, many improvements are worth pursuing as they will save money over the life of the home. In the upper Midwest, most homeowners seek to reduce their heating costs in the winter through insulation, new windows or doors, etc. Even a whole house humidifier will allow you to reduce the temperature by about 2 degrees. Although windows will save energy costs, it usually takes about 10 years or more to recoup the window cost and installation. However, many homeowners seek to reduce drafting so it is worth the cost if it increases comfort.
http://www.builderonline.com/energy-efficiency/10-strategies-to-increase-the-energy-efficiency-of-your-homes.aspx?printerfriendly=true
Posted in Buyers, Home Improvement, Remodeling |
By Matt Mullins on December 20, 2010
If your like many homeowners, you recently received your 2011 property tax statment in the mail this past month. Like most homeowners, the value of your property decreased..however many households found thier property taxes increasing! It doesn’t sound fair I know, however some municipalities such as Minneapolis have really socked it to homeowners, many experiencing increases of over 10%! With a budget shortfall in the State of Minnsota, expect a lively debate at the Capital on how they will make up this difference, I have a hunch property taxes are sure to be a part of that conversation. Please see link below, very interesting facts on how property taxes are calculated.
http://realestate.yahoo.com/promo/9-things-that-make-your-property-taxes-rise.html
Posted in Market Stats |
By Matt Mullins on December 16, 2010
Here in Minnesota, we all know how much our energy bills can fluctuate due to the wide changes in climate. Heating and cooling your home accounts for nearly one-half of your total utility bills over the course of the year. There is still time left to take advantage of the $1,500 tax credit for energy efficiency furnaces, but time is short as the program expires on Dec. 31st. Please see archicle below regarding other energy effiences to help make add some $$ back in your pocket.
http://finance.yahoo.com/family-home/article/111560/energy-wasters-in-your-home
Posted in Home Improvement, Remodeling |
By Matt Mullins on November 23, 2010
The attached article sums up today’s buyers…more and more buyers are not seeking high loan-to-value ratios and are either putting more money down or paying cash. However, many of these buyers are not your “typical” first-time homebuyer who may have little equity (less than 5%) to contribute to the down payment. As lenders have tightened underwriting criteria, this article is not a big surprise.
More homeowners paying cash in effort to deleverage
Cash was the top source of financing home purchases in September, as more homeowners look to deleverage their debt. According to a recent Campbell/Inside Mortgage Finance survey, 30.5% of home purchases during the month were financed with cash, up from 24.4% in January.
The survey attributed this jump to the amount of distressed properties on the market being purchased and a decrease in the number of first-time homebuyers. Distressed properties are more likely to be bought with cash because they are at a lower valuation and don’t require as much financing, and first-time homebuyers do not typically have enough cash on hand to buy homes without financing.
As of September, real estate-owned and short sale transactions accounted for 47.5% of market purchases, according to the Federal Reserve Bank of Cleveland. First-time homebuyers accounted for 34.4% of purchases, down from 42.4% in June.
Homeowners are also deleveraging mortgage debt by reducing their loan-to-value ratios and loan maturity terms.
“Loan-to-value ratios have steadily declined since they peaked, falling 680 basis points for existing homes and 520 basis points for new homes,” the Fed said.
As of September, the average term to maturity of all loans closed was 27.6 years, down from 29.6 years in June 2007.
The Cleveland Fed said homeowners desire to deleverage debt is driving down the mortgage obligation ratio, which measures the outstanding value of a mortgage as a percent of a borrower disposable income. The ratio peaked in 2007 at 11.3%, but steadily dropped thereafter to 10.3% as of the latest data released by the Fed.
Posted in Buyers, Market Stats, Mortgage/Finance |
By Matt Mullins on November 17, 2010
It has always been a given homeowners have historically had a higher net worth than renters, however new data released suggests owners have a 41% higher net worth! Please see link below for further information:
http://www.housingwire.com/2010/11/16/nar-homeowners-net-worth-41-times-greater-than-renters
Posted in Buyers, Market Stats, Rental Housing |
