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When it comes to most topics of interest, I tend to be an optimist by nature. When I read about great stocks like Apple getting cut in half or the overall market being dragged ever further into the tank, I tend to look at it as a buying opportunity (your mileage my vary of course, opinions abound as to what’s value and what’s a value trap) for stocks that have been needlessly battered. When I read about the rising tide of foreclosures and housing prices falling across the globe, I try to look at ias giving new homeowners a shot at getting in on the ground floor. I accept the negatives for what they are and try to find a positive slant, if you will, without one of those “everything will be fine!” mentalities that borderlines denial. Unfortunately for me, the real estate market just can’t seem to find it’s footing, the floor keeps getting redefined, but as with anything else, it’s not all bad.
Let’s look at what we have. If you can find the financing from..well somewhere, rates for mortgages are being driven downward. Sellers are getting increasingly anxious to unload their properties, and so you can find all sorts of exotic ways to pick up a house for a bargain (no, not exotic mortgages..those have gone the way of the dodo). If you’re looking to buy a home, you’ll likely find that sellers are willing to give you a numerous number of perks or meet your conditions, so feel free to haggle and take advantage (pun not intended). It’s definitely a buyers market out there, so good for you if you can manage to secure the funding.
We’ve also had a trickle of good news here and there from the headlines as well. Existing home sales actually rose in December, for example, even as prices continue to fall. Bargain hunters are emerging from the wood work (for reasons listed above) and that could mean a bottom in prices in the near future, although I think the past year has proven that very few people have a functional crystal ball, so I won’t go so far as to say I expect a bottom here. If that’s the case, even current homeowners may have small reasons to celebrate in 2009. Besides, things could be worse, right?
Bloomberg - State Farm Plans to Leave Florida Residential Market (Update3)
Road To Ruin - Twenty-five people at the heart of the meltdown …
The Big Picture - Credit Weakness Spreads from Subprime to Alt-A to Jumbo
The Institutional Risk Analyst - The Big Banks vs. America: A Roundtable with David Kotok and Josh Rosner
Rain City Guide - 2009 is the Brightest Year
Infectious Greed - Quote of the Day: But We Have 67% Less Jets!
Huffington Post - Key Democrat Slams Stimulus, Predicts More Bailouts
Housing Wire - Wells Fargo Extends Modification Access to 478,000 Wachovia Customers
Bloomberg - Hamptons Prices Fall as Recession Hits Wall Street Playground
Oh no, now they are looking for bargains while shopping at Sak’s.
Infectious Greed - Big Swinging Blood Pressure Broker
Morgan Stanley installs blood pressure meters in their NY offices. So, Wall Street now has nationalized health care??!! More TARP $$ well spent.
Housing Doom - About Those Great Existing Home Sales…
Rebuttal to the NAR’s Existing Home Sales Report.
Naked Capitalism - Merrill Pay Down Only Slightly in 2008 From 2007 Levels
Sales of existing homes rose unexpectedly in December although the pace remained below that of a year ago, according to the National Association of Realtors (NAR). The jump was led by a surge in sales in the West. Sales volume was the lowest seen since 1997 while the national median price for an existing home was $175,400. According to Freddie Mac, the national average commitment rate for 30-year, conventional, fixed-rate mortgage fell 5.29 percent in December. Last week, Freddie Mac reported the 30-year rate was 5.12 percent.
The typical buyer plans to stay in their home for 10 years which is the correct approach in today’s market,” said NAR President Charles McMillian, a broker with Coldwell Banker Residential Brokerage in Dallas-Ft. Worth. “With historically low mortgage rates, flexible sellers, a large inventory, and homes that are selling for less than replacement construction costs in much of the country, buyers who’ve been on the fence should take a closer look at today’s market.”
Sales of all types of existing homes, including single-family homes, townhomes, condominiums and co-ops – rose 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December. Despite the increase, sales were still 3.5 percent below the 4.91 million-unit pace of December 2007. Overall, the 4,912,000 existing-homes sold in 2008 is still 13.1 percent lower than the 5,652,000 transactions recorded in 2007.
It appears some buyers are taking advantage of much lower home prices,” explained Lawrence Yun, NAR chief economist, saying home prices continue to fall significantly. “The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers in the foreseeable future.”
Regionally, the West (up 13.6 percent), South (up 7.4 percent) and Midwest (up 4.0 percent) all experienced increases in existing homes sales. December’s annual rate of 1.25 million in the West was 31.6 higher than a year ago, however the median price in the region was down almost the same percentage to $213,100 over the same period. In the South, sales increased to an annual pace of 1.74 million in December which was off 11.2 percent from December 2007. The median price in the South was $158,600, or 8 percent lower than a year ago. The Midwest’s annual level of 1.04 million was 10.3 percent lower than in 2007 while the median price dropped 11.4 percent to $140,800. Only the Northeast experienced a decline, slipping 1.4 percent to 720,000 in December. That’s 14.3 percent below December 2007. The median price in the Northeast also fell to $235,000, down 7.8 percent from 2007.
Sales of single-family homes rose 7.0 percent to a seasonally adjusted annual rate of 4.26 million in December, up from November’s 3.98 million. The median price of $174,700 for a single-family home in December was down almost 15 percent from the previous year. For all of 2008, single-family home sales fell nearly 12 percent to 4.349 million and the median price fell 9.5 percent to $197,100 from 2007 levels.
Existing condominium and co-op sales also increased by 2.1 to a seasonally adjusted annual rate of 480,000 units in December, a 10,000 unit increase over November. Sales remain 18.4 percent below 2007’s level of 588,000 units. Overall, sales declined 21 percent to 563,000 units with a median price of $210,000 for all 2008.
We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected,” said Yun. “Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable homebuyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help stabilize home prices and set the foundation for a sustainable economic recovery.”