Real Estate New York group
Market Update January 2012_________
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The Real Estate Year in Review
The “government, the mortgage industry, and forces of nature all shook the housing market in 2011,” according to a recent Time magazine article, which highlights the key issues that had the greatest impact on the real estate market this year--and what’s expected to have a major impact in the new year as well.
Here are a few of the issues that the Time magazine article by Jed Kolko, Trulia’s chief economist, notes as having some of the greatest impact:
1. The robo-signing scandal
The issue: Banks were accused of approving numerous foreclosures without proper reviews when a robo-signing scandal first broke in October 2010, continuing well-into 2011.
The fallout: Banks slowed their processing of foreclosures greatly in 2011, making sure to take extra precautions. Regulators and states are working on a settlement with banks over the scandal — one that could include reducing loan balances of current home owners, if approved. Once a settlement is in place, housing experts predict the pace of foreclosures to pick up in 2012.
2. Natural disasters
The issue: A series of natural disasters wreaked havoc on real estate in 2011, from tornados, floods, and hurricanes. The National Flood Insurance Program was pushed into the spotlight, a program still financially strapped after Hurricane Katrina. The program’s insurance premiums were not fully covering insurance claims in disasters this year, according to the Time magazine article.
The fallout: For home owners living in flood-prone areas, “you can’t get a mortgage if you don’t have flood insurance,” the Time magazine article notes. “Without NFIP, housing markets in these areas would skid to a stop.” NFIP recently received an extension until May 2012 but experts say the future of the program still remains uncertain.
3. The conforming loan limit
The issue: In October, the government lowered the conforming loan limit for loans backed by Fannie Mae and Freddie Mac as well as those insured by the Federal Housing Administration from $729,750 to $625,500 in most areas. The real estate industry urged the government to keep the conforming loan limits higher. In November, the government raised the loan limits back up for FHA loans, but they left out Fannie and Freddie loans.
The fallout: “Mortgage lenders are willing to charge lower rates for loans that are backed by Fannie or Freddie; with a lower conforming loan limit, a small number of loans that used to qualify for federal backing no longer do,” the Time magazine article notes.
Read more from the Time Moneyland
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Positive Market Report Sends Housing Stocks Soaring
Good news spread Thursday December 29, 2011 for home builders, home improvement companies, and mortgage lenders, as stocks ticked up after the National Association of REALTORS® released a new report showing that pending home sales in November reached their highest level in a year-and-a-half.
Pending home sales — a gauge for the future of the market — increased 7.3 percent in November to a reading of 100.1, NAR reported in its index. (A reading of 100 is considered healthy for the real estate market.)
Analysts are predicting that 2012 will mark a turnaround for the real estate market, after years of a drastic slowdown in activity.
Stocks inched up on Thursday for several home builders. For example, Hovnanian Enterprises Inc., saw the biggest rise in shares following Thursday’s report, with shares increasing 9 cents, or nearly 7 percent, to trade at $1.39. Also, homebuilders D.R. Horton Inc. saw shares rise 45 cents, or 3.7 percent, to $12.65; Lennar Corp. added 77 cents, or 4.1 percent, to $19.75; and PulteGroup Inc. gained 28 cents, or 4.8 percent, to $6.24, the Associated Press reported.
Also, mortgage companies also saw an increase to their stocks. For example, Bank of America shares increased 11 cents, or 2.1 percent, to $5.40 on Thursday while Huntington increased 16 cents, or 2.8 percent, to $5.63; and Wells Fargo shares jumped 55 cents, or 2 percent, to $27.66.
Read more from the Associated Press
Buyer vs. Seller on Home Prices
Housing analysts are expecting home prices to stabilize in 2012, but that doesn’t mean that buyers and sellers won’t continue to be at odds over home prices in the new year.
While buyers are feeling good about the housing market and saying its a great time to buy, seller sentiment is falling to record low, a new report by the Mortgage Bankers Association shows. Sellers say they are unhappy because they’re unable to snag the prices for the home that they want.
According to the MBA report, a large gap is occurring between home buying and home selling that isn’t expected to narrow for at least the next five quarters.
From 1992 to 2005, seller sentiment remained high — between 40 percent and 60 percent, according to the report. However, since 2005, seller sentiment has decreased to 7.6 percent. Meanwhile, home buyer sentiment has remained high despite unemployment and economic conditions. Nearly 80 percent of American households say now is a good time to purchase a home.
As home values have dropped over the last few years, many sellers are refusing to budge on their prices to reflect current market traditions. One reason why: Some sellers are underwater on their homes. About 20 percent of home owners nationwide are considered “underwater,” owing more on their mortgage than their home is currently worth. Also, some sellers are realizing there may be a benefit in waiting to sell or to keep the home on the market holding out for a higher price, notes the author of the report, Gary Engelhardt, a Syracuse economics professor. “This could hold prices high enough to drive a substantial wedge between the existing buyer and seller. And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this,” an article at HousingWire notes about the report.
Why Won't the Media Report the Good News
This is something that has always bothered me. Have you ever noticed that no matter what news channel you turn on it’s always negative stuff? I can’t remember the last time I saw a news story about Habitat For Humanity helping a family in need. I sure haven’t seen any news stories about the Toys for Tots program that will give out thousands of toys this year. Why is that?
On to the focus of this post...why won’t the media report on the real estate recovery as passionately as they did about the recession? I believe the media as a whole damaged our country. They reported on everything negative there was to find that could raise their ratings and they piled on needlessly. Now the housing market is recovering and you don’t hear a peep. I think they owe it to the American public to help undue some of the damage they caused.
read more from Tutas Town Realty
Ed: The Market Update tries to present a balanced picture of the real estate market for the Capital Region. However, bad news, it's often said, sells newspapers. But accurate reporting of both the good and bad indicators of the market are essential to planning both the purchase and sale of real estate.
FHA to Continue Waiver of its Anti-Flipping Rule
For the second year in a row, the Federal Housing Administration is extending a temporary waiver of its "anti-flipping" rule, meaning homebuyers relying on FHA-insured financing will continue to be able to buy homes that have changed hands in the last 90 days.
The waiver is a boon for investors seeking to rehab and flip properties, because it expands the pool of eligible borrowers to include those relying on FHA-backed loans, popular with first-time homebuyers and others who lack the cash to make large down payments.
What's in Store for Real Estate in the Coming Year
The worst for the housing market may finally be over, according to housing experts in a recent article in Kiplinger. After median home price have dropped nearly 40 percent nationwide, a rebound is taking shape -- although, housing experts say, the market may stay flat for awhile before gradually ticking up.
According to housing experts in a recent Kiplinger article, here are some predictions for the real estate market in the coming year:
Home prices stabilize: Mark Zandi, chief economist at Moody's Analytics, predicts that home prices nationwide may still drop another 3 to 5 percent in 2012, but the new year will most likely finally bring a leveling off of home prices before gains start to take shape in 2013. When markets do begin to stabilize in the new year, “price appreciation tends to spread unevenly, creating a lot of confusion about where the recovery is occurring and when,” David Stiff, chief economist at Fiserv Case-Shiller, told Kiplinger. “Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.”
Housing affordability high: Housing affordability -- the ratio of median home prices to median family income -- will likely remain at record levels in 2012. Homes in many cities are “substantially undervalued,” the Kiplinger article notes. That may even lead to a mini bubble with double-digit spikes in prices, such as an increase of 10 to 15 percent in a given year in some markets, housing experts say.
Low mortgage rates: Helping to keep affordability high, low mortgage rates are expected to continue on in 2012 -- at least the first part of the year, economists predict. The 30-year fixed-rate mortgage, the most popular among home buyers, has been hovering under a 4-percent average the past few weeks, staying in record low territory. Rates are expected to stay between 4 to 5 percent in 2012, predicts Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.
Sales increases: The National Association of REALTORS® has already been showing a tick up in sales taking shape with increases in existing-home sales during the summer and early fall of 2011. High inventories of homes continue to flood the market but a drastic slowdown in new-home building the past three years is “gradually easing the surplus,” the Kiplinger article notes.
Foreclosures: Foreclosures remain the problem and still plague many markets. After a slowdown with lenders processing the paperwork, foreclosures have began to pick up once again. About 1.84 million home loans are 90 days or more delinquent and 2.17 million have finished the foreclosure process but aren’t up for sale yet, according to RealtyTrac data. Alex Villacorta, director of research and analytics at Clear Capital, told Kiplinger that he predicts regardless of the downward price pressure caused from foreclosures, overall home prices won’t fall as long as lenders bring additional foreclosures to the housing market at a steady pace.
Market Statistics as of January 1, 2012
Average Sale & List Prices for Albany, Schenectady, Rensselaer, Saratoga Counties
The average list and sale prices for the month of December 2011 show typical decline in sales prices for the holidays as seen in previous years. However, the number of sales is up.
The average asking price to sale price has increased slightly from 96.20% in November to 96.77% for December. The number of sales at 449 are up from 412 last month.
a note about the Skinny video (below above). The data used for our immediate market update is calculated as of the first day of the month while other sources such as the Greater Capital Region of Realtors uses final stats compiled much later. In addition, the Skinny reports data from the entire Capital Region MLS rather than the four main counties, as is reported above.
Market Statistics as of January 1, 2012
The graph above shows the number of sales in a given month divided by the number of homes on the market in the four main counties of the Capital Region.
November sales figures show a continued steady Buyers' Market but turning toward a seller's market.
*This ratio can be used to determine whether we are in a buyers' or sellers' market as indicated in Dennis Maier's article on Market Timing featured in eZine Real Estate. In general, if it would (theoretically) take less than 6 1/2 months to sell the current inventory it's a sellers' market. If it would take more than 9 months to sell all the homes on the market it's a buyers' market.
Real Estate New York Continues REBATE
Once again, after much soul searching, the sales associates and brokers of Real Estate New York have agreed to extend our 10% commission rebate (details) until April 30, 2012. For while this is a direct cut in our income at a time when we are all coming out of a tough year, the real estate market in New York is still struggling toward recovery. We believe our aid in helping New Yorkers will benefit our community for years to come. We are all in this together.
Also see our discounted Full Service Seller Commission
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