August, 2010 Newsletter
+++++++++++ August 1, 2010 +++++++++++++++++++
Introduction: Resales Slip, New Sales Rise
Mortgage Rate Update: Rates Continue to Drop
This Month’s Tip: Finding the Right Location
Introduction: Resales Slip, New Sales Rise
Welcome to the August edition of the Home Buyer’s Newsletter. In June, sales moved in both directions: Existing home sales dropped while new home sales rose.
With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of Realtors®.
Existing-home sales1, which are completed transactions that include single-family, town homes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.
Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said.
“Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”
In new homes, sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000, according to estimates released jointly on July 26th by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000.
The median sales price of new houses sold in June 2010 was $213,400; the average sales price was $242,900. The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate.
Mortgage Rate Update: Mortgage Rates Continue to Drop
Long-term mortagage rates continued to drop in the month of July. According to mortgage company Freddie Mac, 30-year fixed-rate mortgages averaged 4.54% for the period ending July 29th. The average at the beginning of the month was 4.58%. For 15-year fixed-rate mortgages, the average fell from 4.04% at the beginning of the month to 4.00% at the end, an historical record.
I was just reviewing some old memorabilia from my parents and found their mortgage dated July, 1954. For a 20-year mortgage, their rate was 4.50%. These are rates that for over 50 years, experts said we would never see again. Not only have we seen them, we have in some areas seen rates lower than over a half-century ago. Coupling unbelievably low rates with prices that have tanked in some areas could mean a bonanza for buyers who are in the market today. Our tip for August, “Reverse Mania,” will discuss how far the pendulum has swung in the last 2 years.
For current average mortgage rates, see the rates page.
For more information on mortgages, visit the Mortgage Section
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This Month’s Tip; Finding the Right Location
The old adage about Real Estate is “what determines value” and the answer is “three things. Location, location and location.” Although that saying has been around for decades, it still rings true today.
Before you can think about decorating or landscaping, before you even think about a specific house, you will probably need to consider, compare and choose a neighborhood. Since so much is dependent on the choice of where you want to live–not the least of which is future resale value– it is a decision you’ll not want to take lightly.
Choosing a neighborhood means determining and comparing a number of factors and amenities, including:
+ Proximity to shopping and services
+ Available recreation
+ Traffic patterns
+ Health care
+ Future development
Some of these factors will have more emphasis than others, depending on your personal situation. Parents, for example, will most likely be most concerned with the issue of schools. An active couple may put emphasis on the types and extent of recreation that is available. Older buyers may have concerns regarding access to hospitals and health care. Your first step in choosing a neighborhood should be an assessment of which of these factors–or others– are the most important to you.
Due to a number of factors including tax rates, expenditures, physical school facilities and more, the quality of school districts can vary greatly. Even within a particular school district, there can be considerable difference between the highest rated school and the lowest. All things being equal, most parents will want to gravitate to neighborhoods that offer the best schools but are within their price range.
Proximity to shopping and services
This is not automatically a positive. Although many home buyers will prefer to be close to a wide variety of shopping availability, others will prefer to be further away from extensive shopping areas, largely due to the next variable.
Some of us are not that bothered by traffic (otherwise 90 minute commutes would not exist). For others, though, traffic simply drives them bonkers. Obviously, if you are one of the traffic-adverse, this factor will have a pretty big impact on your selection of a neighborhood.
Although all of us, given our druthers, would probably prefer easy access to health care facilities, as we age this factor increases in importance. Not only for the convenience of, for example, doctor’s offices and clinics, but also for the proximity of emergency health care.
If a neighborhood is an area that is near future development, this is a factor that can be perceived either as a positive or a negative, depending on your outlook. Positive if the future development trends bring added services or add to your resale. Negative if the future development causes congestion, overtaxes existing services or lowers resale values.
To make the most of your neighborhood decision, determine the factor or factors that are of the most importance to you, then make the comparisons you need to make an informed decision. Your Real Estate Agent, with data and information at their disposal, should be able to assist you with these comparisons. It is a good idea to make your comparisons before you begin to look at individual homes. This will save you from “falling in love” with a house that is in the wrong location for your needs.
Next Month’s Tip: Reverse Mania
The Home Buying Checklist
Many of our visitors have said that one of the most valuable aspects of the Home Buyer’s Information Center is the Buying Checklist, where they can make sure that all the bases have been touched. You can find the checklist here.
As always, if you have suggestions for improving the site, or topics you would like to see addressed in this newsletter (or, if you have used the Home Buyer’s Information Center to successfully purchase a home), drop us a quick line here.
A special thanks to all those who have written to let us know that they have found the Home Buyer’s Information Center a helpful resource in their buying process.
Have a great month and good luck in all your endeavors!
The Team at the Home Buyer’s Information Center