RISMEDIA, August 5, 2009-Pending home sales are up for the fifth consecutive month, the first time in six years for such a streak, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 3.6% to 94.6 from an upwardly revised reading of 91.3 in May, and is 6.7% above June 2008 when it was 88.7. The last time there were five consecutive monthly gains was in July 2003.
Lawrence Yun, NAR chief economist, said a combination of positive market factors is fueling the gains. “Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines. Activity has been consistently much stronger for lower priced homes,” he said. ”Because it may take as long as two months to close on a home after signing a contract, first-time buyers must act fairly soon to take advantage of the $8,000 tax credit because they must close on the sale by November 30.”
The Pending Home Sales Index in the Northeast rose 0.4% to 81.2 in June and is 5.8% above a year ago. In the Midwest the index increased 0.8% to 89.9 and is 11.6% above June 2008. The index in the South jumped 7.1% to 100.7 in June and is 8.9% higher than a year ago. In the West the index rose 2.9% to 100.4 but is 0.2% below June 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, is hopeful that a recently elevated level of contract cancellations will ease. “Last month, Freddie Mac and Fannie Mae clarified that appraisals should be done by professionals with clear local expertise,” he said. “This should mitigate the situation of many valuations done by out-of-area appraisers coming in below the price negotiated between buyers and sellers. Hopefully, in the months ahead, we’ll see an even closer relationship between contract activity and closed transactions.” McMillan said NAR is continuing to press the appraisal issue. “We have asked Congress and the Federal Housing Finance Agency to immediately implement an 18-month moratorium on the new appraisal rules to further address unintended consequences of the new guidelines,” he said.
NAR’s Housing Affordability Index (HAI) remains very favorable. The affordability index stood at 159.2 in July, down from record peaks in recent months but it remains 36.6 percentage points above a year ago. Under these conditions the typical family would devote 15.7% of gross income to mortgage principal and interest, well below the standard allowance of 25%. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.
“A monthly rise in home prices and somewhat higher mortgage interest rates led to a modest decline in affordability in June, but it was still the sixth highest index on record dating back to 1970,” Yun said. “Because housing is so affordable in today’s market, job security and the first-time buyer tax credit are bigger factors in influencing home sales.”
A median-income family, earning $60,700, could afford a home costing $289,100 in June with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80% of what a median-income family can afford. The affordable price was much higher than the median existing single-family home price in June, which was $181,600.
Yun expects existing-home sales to gradually rise over the balance of the year, with conditions varying around the country. “It appears home sales are on a sounder footing and inventory is gradually being absorbed.”
Read more: http://rismedia.com/2009-08-04/pending-home-sales-up-for-fifth-consecutive-month/#ixzz0NK80N0IR
Wednesday, August 5, 2009
Tuesday, August 4, 2009
Hurry $8,000 Tax Credit Will Soon End!
RISMEDIA, August 3, 2009-TheAssociation of Realtors is encouraging those considering buying a home for the first time to act quickly, as there is very limited time to qualify for the $8,000 first-time homebuyer tax credit. As of August 1, there were only 121 days for first-time purchasers to take advantage of the credit. In order to qualify, the transaction must close before 11:59 p.m. on November 30, 2009.
“November might seem like it is far enough away, but potential buyers need to account for the time it takes to shop for a home, present an offer on the property of their choosing, and manage the various contracts and logistics that are required in a real estate transaction,” said 2009 NJAR President Diane Dilzell. “Starting the process now should allow just enough time to reach closing before the expiration of the credit.”
Prospective buyers, particularly first-time buyers, should factor in the following steps that are typically involved in the purchase of real estate: shopping for and securing a mortgage, finding a Realtor, creating a list of preferable features for the home, searching for homes that fit that criteria, settling on a home, presenting an offer, obtaining a home inspection, shopping for homeowners insurance, and closing. Buyers should factor in extra time to allow for unforeseen circumstances and any additional steps that may be necessary in their particular transaction.
Dilzell added, “The clock is also ticking for buyers to maximize their purchasing power in this market. Affordable prices and low interest rates are aligning right now with the $8,000 credit to form an unprecedented opportunity that is not guaranteed to last much longer.”
All transactions vary, and there are different circumstances for each of them that could lead to a longer buying process. NJAR has compiled testimonials from real New Jersey consumers at www.realstorynj.com/news/real-stories that detail their individual experiences.
“Unique circumstances can be encountered in any transaction so it is important to get started early to account for those factors,” Dilzell said. “Since numerous third parties are involved, delays can often be expected no matter how swiftly you act. That wait time can be very detrimental if it is the difference between $8,000 and nothing.”
The tax credit is available to buyers who have not owned a principal residence during the three-year period prior to the purchase. The credit does not have to be repaid, and it must be claimed on your federal income tax return.
Buyers are finding that the credit is allowing them to take advantage of opportunities they might not otherwise consider. For example, the $8,000 can be applied toward repairs and renovations in fixer-uppers that buyers might not otherwise have been able to afford. The extra funds can be invested for future use, or applied to new furniture and appliance purchases.
“November might seem like it is far enough away, but potential buyers need to account for the time it takes to shop for a home, present an offer on the property of their choosing, and manage the various contracts and logistics that are required in a real estate transaction,” said 2009 NJAR President Diane Dilzell. “Starting the process now should allow just enough time to reach closing before the expiration of the credit.”
Prospective buyers, particularly first-time buyers, should factor in the following steps that are typically involved in the purchase of real estate: shopping for and securing a mortgage, finding a Realtor, creating a list of preferable features for the home, searching for homes that fit that criteria, settling on a home, presenting an offer, obtaining a home inspection, shopping for homeowners insurance, and closing. Buyers should factor in extra time to allow for unforeseen circumstances and any additional steps that may be necessary in their particular transaction.
Dilzell added, “The clock is also ticking for buyers to maximize their purchasing power in this market. Affordable prices and low interest rates are aligning right now with the $8,000 credit to form an unprecedented opportunity that is not guaranteed to last much longer.”
All transactions vary, and there are different circumstances for each of them that could lead to a longer buying process. NJAR has compiled testimonials from real New Jersey consumers at www.realstorynj.com/news/real-stories that detail their individual experiences.
“Unique circumstances can be encountered in any transaction so it is important to get started early to account for those factors,” Dilzell said. “Since numerous third parties are involved, delays can often be expected no matter how swiftly you act. That wait time can be very detrimental if it is the difference between $8,000 and nothing.”
The tax credit is available to buyers who have not owned a principal residence during the three-year period prior to the purchase. The credit does not have to be repaid, and it must be claimed on your federal income tax return.
Buyers are finding that the credit is allowing them to take advantage of opportunities they might not otherwise consider. For example, the $8,000 can be applied toward repairs and renovations in fixer-uppers that buyers might not otherwise have been able to afford. The extra funds can be invested for future use, or applied to new furniture and appliance purchases.
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