August, 2004 Newsletter
+++++++++++ August 1, 2004 +++++++++++++++++++
Introduction: Resales soar, new home sales dip
Mortgage Rate Update: Rates Take a Breather
This Month’s Tip: Various Home Inspections
Introduction: Welcome to the August edition of the
Home Buyer’s Newsletter, brought to you by the
Home Buyer’s Information Center.
The Home Buyer’s Information Center
Sales of existing single-family homes set another record in June, with an improving economy and favorable affordability conditions helping to satisfy a strong market demand, according to the National Association of Realtors®.
Existing-home sales rose 2.1 percent in June to a seasonally adjusted annual rate* of 6.95 million units from an upwardly revised level of 6.81 million units in May, which was the previous record. Last month’s sales activity was 17.4 percent above the 5.92-million unit pace in June 2003.
David Lereah, NAR’s chief economist, said last month’s performance is close to the peak for the housing market. “Although we’ve been expecting sales to ease, it’s clear the market has tremendous momentum,” he said. “The improving job market and higher consumer confidence are feeding into a large demographic demand for housing. It’s unlikely that we’ll top the pace in June, but home sales remain very healthy and are likely to stay quite strong, even with some easing expected in the second half of the year.”
On the new home side, sales of new one-family houses in June 2004 were at a seasonally adjusted annual rate of 1,326,000, according to estimates released jointly on July 27th by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. This is 0.8 percent (±11.2%) below the revised May rate of 1,337,000, but is 11.1 percent (±11.6%) above the June 2003 estimate of 1,194,000.
The median sales price of new houses sold in June 2004 was $209,900; the average sales price was $262,400. The seasonally adjusted estimate of new houses for sale at the end of June was 374,000. This represents a supply of 3.4 months at the current sales rate.
If nothing else, home sales activity in the U.S. definitely has legs! Even with an upward trend in mortgage interest rates, the market has barely taken a breath throughout the first half of 2004. The outlook for the second half? Look for continued strong sales, although the days of record-breaking performance may be, at least for the short-term, abating a bit.
Mortgage Rate Update: Rates Take a Breather
Mortgage interest rates took a breather during the month of July after two months of fairly steady increases. 30-year fixed-rate mortgage rates averaged 6.08% at the end of July after beginning the month averaging 6.21%. This was a bit higher than the low point for July, however, when the average was 5.98% according to mortgage company Freddie Mac. In the same time period, 15-year fixed-rate mortgages opened the month 5.62% and ended the month at an average of 5.49%. As for the trend, although the overall movement during the month of July was down, there were increases in both the 15-year and 30-year averages in the final reporting period which ended on July 29th, so those who have not yet locked in a mortgage need to keep a close eye on rate direction.
Sponsor: Looking to Compare Agents? Try Home Gain.com
The most important part of your team for buying a home should be your real estate Agent. Want to anonymously (and without obligation) compare Agents? You can compare experience, background and much more at Home Gain.com. Compare Agents
This Month’s Tip: Various Home Inspections
Most home buyers are aware of, and arrange for, a whole house inspection prior to making a final commitment to purchase home. In addition, though, there are some other inspections that a buyer may want–or need–to consider when purchasing a home. We will discuss each of these inspections separately:
+ Whole house inspection
+ Engineering/structural inspection
+ Termite inspection
+ Radon inspection
+ Mold/mildew inspection
Whole house inspection
A whole house inspection is designed to reveal major defects in a home (structural, electrical, plumbing, roofing, appliances and the like). It is not designed to address cosmetic items (paint that needs touched up, carpet that is worn, landscaping that needs freshening, etc.).
A whole house inspection is done by either a professional home inspector (home inspections is their only business) or by a general contractor. You may get a more objective report from a professional home inspector, since they have no stake in itmes that need repairs.This could be an issue with a contractor that does inspections, since it is possible that they may be looking for work.
The whole house inspection is done shortly after the contract is approved by both buyer and seller (the inspection, though, must be addressed in the contract). The inspection is almost always paid for by the buyer, and cost will usually range from $300-500, depending on the size and/or the age of the home. For more information on whole house inspections, see the discussion on the site: Home Inspections
If the whole house inspection discovers problems with the structure of the home, it may become necessary to have an engineering or structural inspection of the property. This type of inspection will go into much more depth and detail when investigating the problem (for example, a badly cracked foundation) to determine both the cause, the remedy and the estimated cost of remediation of the problem.
This type of inspection would be done by a licensed building or structural engineer, and may be paid for by the seller, the buyer or a combination of both.
Although usually referred to as a “termite inspection”, this inspection will check for most types of wood destroying insects and organisms (such as mold). Wood destroying pests are a possible problem in virtually all areas of North America and are potentially serious problems in certain areas of the continent. Unlike other inspections, which are generally optional, a termite inspection is often a required element of the contract.
The termite inspection will be done by a professional pest inspector or pest control company. Who pays for the inspection will depend on what is customary in your area. In some areas the buyer is responsible for the cost and in other areas it is the seller’s responsibility. Repairs due to damage would almost always be the responsibility of the seller and would need to be done before settlement.
Radon is an odorless, invisible gas that may be found in a home due to the normal decay of uranium found in soils. Although some areas of North America are more prone than others, radon is found throughout the continent. The problem with radon is that it has been determined to be a cancer causing gas. The Surgeon General of the United States has determine that radon is the second leading cause of lung cancer in the U.S. today.
The good news is that radon detection inspections are relatively easy and radon control, if it is found, is fairly straightforward and not prohibitively expensive. The inspection generally consists of the placement of a radon detector in the most prone area of the home (the basement or first level) for 2 days to determine whether or not high levels of radon are present in the home.
Testing costs are often the responsibility of the buyer. If high levels are found, removal costs are generally paid for by the seller.
If you are buying a previously owned home, no matter what the age, don’t start short-changing yourself by failing to take advantage of the various inspections that are available to you. Beyond the whole house inspection (which should be done on EVERY purchase) consult your Agent to see what additional inspections would be necessary or recommended in the area in which you are purchasing.
Next Month’s Topic: Buy Low, Sell High
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:Home Buyer’s Checklist
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: Home Buyer’s Information Center Feedback
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 your home buying process!
The Team at the Home Buyer’s Information Center