With consumers’ minds leaving real estate and turning towards their holiday spending, we enter the usually slow period in real estate sales between Thanksgiving and Christmas. It’s a great opportunity to review the past year and understand what the market holds for those of us in the market to buy a new home, or sell our current one.
2007 was a tough year for most national markets. Declining sales numbers of existing homes and decreased new home starts were the norm in all areas of the country. The National Association of Realtors (NAR) reports that existing home sales are down 20.7% nationally vs. last year through October. Last year’s national numbers were not increasing either.
This could be attributed to the continuing increase in inventory from newly foreclosed homes continuing to enter the market from the recent “sub- prime meltdown.” More inventory decreases the pressure on potential buyers to pull the trigger on a purchase. Interest rates have been again reduced to counteract this.
New programs are being proposed, analyzed, and implemented to save many of the homeowners who are currently in foreclosure or headed there. This should serve to decrease the flood of homes entering the market. The results of such legislation will become evident through 2008 as the programs are enacted.
The good news is that the northeast was the least effected of the national regions in 2007. The NAR reports existing home sales down 12.6%, a whopping 20.5% less than the worst performing region. Home prices in our region are slightly higher than they were last year. The Northeast was the only region where there was a reported increase in median sales prices of existing homes from last year, gaining 1.3%. The Northeast was the only
region where there was a
reported increase in median
sales prices of existing homes
from last year, gaining 1.3%. This is contradictory to the fact that the market is decidedly in the favor of buyers. Home prices in the Northeast have been somewhat insulated from the drop that has been experienced through the rest of the nation.
What does this mean to homebuyers in our area? Foreclosed properties bring motivated selling. The increased inventory means more choices in selecting a home, and more leverage as a buyer in securing a good value. The fact that home prices have remained static bodes well for the equity you will acquire when buying. Finally, lower than ever interest rates allow you to secure great fixed-rate 30-year mortgages with commensurate credit.
The NAR forecasts continued but decreasing declines in the national markets through mid 2008. The numbers then suggest the recent downward trend in sales and prices will turn around, with most markets rebounding in number of existing sales and median price. It will be interesting to see what the Housing Forecast/Pending Home Sales Index will reveal on January 8.
Federal mortgage agencies, Fannie Mae and Freddie Mac have already tightened their guidelines announcing new Loan-Level Price Adjustments. In the first quarter of 2008, most borrowers who have good credit, but have FICO scores below 680 will be forced to either pay more points at closing or incur a higher interest rate. If you’ve been looking to buy a home in the past few months into the first or second quarter of 2008, you might want to consider this information if you’ve found a home you like and are waiting for the rates to drop further.
We already know the prices in our region have increased from last October, if only moderately. We also know that the changes that will be implemented in the first quarter of next year will only increase the cost of buying and owning a new home. New governmentally mandated programs should decrease the influx of homes to the market, tipping the buyers market a bit more to the sellers. Now is the time to place an offer on the home you’ve been watching, or to get serious about your home search.
