Keeping You Current: Madeleine Romanello

Madeleine Romanello

Keeping You Current

July 2009

NAR Survey

April shows the number of buyers looking at homes has

increased 14% from a year ago. Source: NAR 5/27/09

NAR Survey April shows first-time buyers declined to 40% of transactions from 53% in March, implying more second-time buyers are entering the traditional spring home-buying season.

Source: NAR 5/27/09

“We appear to be in the early stages of the market gradually tilting back toward a more normal balance of sales across the home price spectrum. As more sellers get realistic, more buyers get off the fence and more lenders offer reasonable terms for high-end purchase financing, we’ll see a more normal share of sales in the more established, higher-cost areas that have been nearly comatose.” -John Walsh, President MDA DataQuick

Source: Housing Wire 6/18/09

Cost vs. Price

Interest Rates

Mortgage Rates – 30 year fixed

1/1/2009

Source: Federal Reserve

6/25/2009

Even if prices decrease by 10%, if the interest rate increases by more than 1%,

the buyers’ monthly cost goes up!

“While the recent rise in mortgage rates is negative for housing, it may spur some buyers into the market in the near-term if they assume rates will continue to rise.”

Source: PMI 6/09

Pricing

Cost vs. Price “The more rates go up, the more we need home prices to go down to equalize consumers’ payments. It’s those payments that have brought about a level of stability in housing unit sales.” -Donald Rissmiller, chief economist, Strategas Research Partners

Source: Bloomberg 6/04/09

Trulia Survey Nearly one in four US homes ‘for sale’ today have had at least one price reduction.

Categor % yAll Reductio 10.6 listings < $2M n 9.7 >$2M Source: Housing Wire 6/05/09

14.3

"We're no longer falling off a cliff. We're just rolling down a very steep hill." -Patrick Newport, economist IHS Global Insight

Source: Market Watch 5/26/2009

Home Valuation Code of Conduct (HVCC) “The code bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. This has encouraged lenders to outsource the selection to appraisal-management companies, or AMCs, which take a sizable cut of the appraisal fee. As a result, appraisers are under pressure to ‘do it faster, do it cheaper,’ said Bill Garber, a spokesman for the Appraisal Institute, a trade group. Some appraisers said AMCs settle for appraisers who have little experience or live far from the homes they evaluate. John Simms of Peoria, Ariz., said he often gets assignments more than 100 miles away in neighborhoods he doesn't know well.”

Source: Wall Street Journal 6/9/09

How to sell your home today 1.) Maintain and stage 2.) Help pay closing costs 3.) Offer a home warranty 4.) Offer mortgage protection 5.) Don't snub low offers

Source: Market Watch 6/15/09

Foreclosures

Mortgage Bankers Association Not only has foreclosure activity surged, it’s become more widespread, as

prime, fixed-rate mortgages now constitute 56% of mortgages in the foreclosure process. Source: Housing Wire 5/28/09

Unemployment “The first wave of mortgage delinquencies was sparked by borrowers who took out subprime mortgages and other risky loans that became unaffordable, causing them to fall behind on their monthly payments. But the current wave is increasingly driven by unemployment or underemployment, economists and housing counselors say.”

Source: Wall Street Journal 6/26/09

Unemployment Rates by State – May

Source: Wall Street Journal 6/20/09

12 Month Change in Payroll Employment – April 2009

Source: PMI 6/09

When?

Fortune.com “Housing analysts say that while sales are picking up, home prices are likely to continue dropping through say 2010, and some midprognosticators say until 2013.”

Source: Fortune 6/19/09

Mortgage Bankers Association

9 0 0 2 “The housing market may not stabilize until the first quarter of 2011, the Mortgage Bankers Association said today, upon release of its National Delinquency Survey.”

0 1 2011 20 Source: Housing Wire 5/28/09

“With any luck, three years should be long enough for the U.S. economy to recover and for the nation's housing inventory to shrink to more normal levels.”

Source: Business Week 6/09

"I think that once prices bottom out, they're going to stay flat for several years.” - John Burns, president of John Burns Real Estate Consulting

Source: Fortune 6/19/09

FHFA Price Decline Study “It tends to take longer for prices to rise from the trough to their former peak than it takes prices to decline from peak to trough… FHFA’s Metropolitan Statistical Area and Division (MSA) indexes suggest that the time from peak to trough tends to be about 3¾ years, whereas the median recovery period (from trough to prior peak) was 6⅔ years.”

Source: FHFA 6/09