Existing Home Sales Rose Again in September
Existing-home sales rose again in September, affirming that a sales recovery has begun, according to the National Association of Realtors®.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, jumped 10.0 percent to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August, but remain 19.1 percent below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November.
Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium. But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions,” he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.35 percent in September from 4.43 percent in August; the rate was 5.06 percent in September 2009.
The national median existing-home price2 for all housing types was $171,700 in September, which is 2.4 percent below a year ago. Distressed homes3 accounted for 35 percent of sales in September compared with 34 percent in August; they were 29 percent in September 2009.
NAR President Vicki Cox Golder said opportunities abound in the current market. “A decade ago, mortgage rates were almost double what they are today, and they’re about one-and-a-half percentage points lower than the peak of the housing boom in 2005,” she said. “In addition, home prices are running about 22 percent less than five years ago when they were bid up by the biggest housing rush on record.”
To illustrate the jump in housing affordability, the median monthly mortgage payment for a recently purchased home is several hundred dollars less than it was five years ago. “In fact, the median monthly mortgage payment in many areas is less than people are paying for rent,” Golder said.
Housing affordability conditions today are 60 percentage points higher than during the housing boom, so it has become a very strong buyers’ market, especially for families with long-term plans. “The savings today’s buyers are receiving are not a one-time benefit. Buyers with fixed-rate mortgages will save money every year they are living in their home – this is truly an example of how homeownership builds wealth over the long term,” Golder added.
As existing home sales rose again in September, total housing inventory at the end of the month fell 1.9 percent to 4.04 million existing homes available for sale, which represents a 10.7-month supply4 at the current sales pace, down from a 12.0-month supply in August. Raw unsold inventory is 11.7 percent below the record of 4.58 million in July 2008.
“Vacant homes and homes where mortgages have not been paid for an extended number of months need to be cleared from the market as quickly as possible, with a new set of buyers helping the recovery along a healthy path,” Yun said. “Inventory remains elevated and continues to favor buyers over sellers. A normal seasonal decline in inventory is expected through the upcoming months.”
A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in September, almost unchanged from 31 percent in August. Real estate investors were at an 18 percent market share in September, down from 21 percent in August; the balance of purchases were by repeat buyers. All-cash sales were at 29 percent in September compared with 28 percent in August.
Single-family home sales increased 10.0 percent to a seasonally adjusted annual rate of 3.97 million in September from a pace of 3.61 million in August, but are 19.5 percent below the 4.93 million level in September 2009. The median existing single-family home price was $172,600 in September, down 1.9 percent from a year ago.
Existing condominium and co-op sales rose 9.8 percent to a seasonally adjusted annual rate of 560,000 in September from 510,000 in August, but are 16.2 percent lower than the 668,000-unit level one year ago. The median existing condo price5 was $165,400 in September, down 6.2 percent from September 2009.
Regionally, existing-home sales in the Northeast increased 10.1 percent to an annual pace of 760,000 in September but are 20.8 percent below September 2009. The median price in the Northeast was $239,200, which is 1.4 percent below a year ago.
Existing-home sales in the Midwest jumped 14.5 percent in September to a level of 950,000 but are 26.4 percent below a year ago. The median price in the Midwest was $139,700, down 5.2 percent from September 2009.
In the South, existing-home sales rose 10.6 percent to an annual pace of 1.77 million in September but are 14.9 percent lower than September 2009. The median price in the South was $149,500, down 2.6 percent from a year ago.
Existing-home sales rose again September in the West increased 5.0 percent to an annual level of 1.05 million in September but are 16.7 percent below a year ago. The median price in the West was $213,600, which is 4.9 percent lower than September 2009.
Foreclosure Help for Military Families
The National Association of Realtors®’ HouseLogic, a free, comprehensive consumer website about all aspects of homeownership, today launched Operation Home Relief, a new Facebook Causes campaign to provide foreclosure help for military families. The campaign aims to increase awareness, rally support and raise funding for USA Cares, a nonprofit organization that provides counseling and financial foreclosure assistance to post-9/11 active duty U.S. military service personnel, veterans and their families.
HouseLogic will donate $1 to USA Cares every time someone “likes” the Operation Home Relief Cause page on Facebook and will match individual donations made to the cause, up to $20,000.
“Owning a home is part of the American dream, where we make memories, build our futures, and feel comfortable and secure; and any family who loses that dream to foreclosure is one family too many,” said NAR President Vicki Cox Golder. "HouseLogic’s Operation Home Relief aims to help sustain homeownership for military families who have already given so much to support our country, and we hope others will join together with us to support this worthy cause.” Clearly, foreclosure help for military families is an important and relevant issue, especially in current times.
When people lose homes to foreclosure, the community, the housing market and the economy all suffer. HouseLogic’s Foreclosure Guide highlights personal stories and offers information and tips to help homeowners facing foreclosure make smart, proactive decisions about what steps to take, where to find help and the alternatives to foreclosure. The guide also includes ideas for how others can get involved to combat foreclosures in their community.
“U.S. military service members bravely face danger around the world every day on behalf of all Americans. Yet, some military service members and their families also face financial dangers and hardships at home,” said William H. Nelson, executive director, USA Cares. “USA Cares’ sole mission is to help these service members and their families in their time of financial need. To that end, we’re excited to have the support of HouseLogic and the National Association of Realtors®. Their new Facebook Causes campaign highlights the work USA Cares is doing, reminding Americans of the many challenges faced by U.S. military service members and their families, and generates support via Facebook for the help that we’re offering every day.” Foreclosure help for military families is a concern for many non-military residents of the U.S.
HouseLogic is a free source of information and tools for homeowners from the National Association of Realtors® that helps homeowners make smart decisions about all aspects of their home and the real estate they own. HouseLogic helps homeowners plan and organize their home projects and provides timely articles and news; home improvement advice and how-to’s; and information about taxes, home finances and insurance.
USA Cares is a nonprofit 501(c)3 organization that helps post-9/11 military and their families with basic needs, assists veterans suffering from post-traumatic stress disorder (PTSD) and traumatic brain injury (TBI) and their families and works to prevent private military home foreclosures and evictions. In seven years, USA Cares has received over 24,000 requests and responded with more than $7 million in grants. Military families anywhere in America can apply for assistance through the USA Cares web site, www.usacares.org or by calling 800-773-0387.
What are the services of a Realtor?
When it’s time to put your house or condo on the market, many people wonder if they are better off selling as a “by owner” or using the services of a realtor. The reason for the quandary is typically a financial one. It is a common myth that the seller will net greater proceeds from the sale of their own home or condo if they sell it themselves. In reality, buyers are typically looking for the “by owner” to drop the price of the realtors commissions as much as 6=10% below the price of comparable homes listed by real estate companies. Buyers can find a more selection of homes and a more trusted sale if they use the services of a realtor.
What are some of the benefits of using a Realtor?
- Your Realtor can help you understand the home selling process from putting your home on the market through closing.
- Advises you as to the right price for the home based on their knowledge of what comparable homes sold for in the last 6 months to 1 year.
- Assists you in determining the necessary home improvements required to get you property in the best selling condition possible and at the lowest possible cost to you.
- Develops your personalized marketing plan and places your home in the Multiple Listing Service to reach as many qualified buyers as possible.
- Handles the showing of your property so your schedule is not tied up keeping appointments with prospective purchasers.
- Negotiates the offer to purchase objectively to obtain the highest possible price for your home.
- Leads you through the home inspection phase and negotiates on your behalf
- Tracks the various stages of the sale from contract to closing.
- Coordinates with all parties involved to provide all the information needed to bring the sale to a successful close.
When using the services of a realtor these are only a few of the things they do for you, the seller. Selling your home is a big deal and most people don’t sell more than two homes in their lifetime so it is not something in which they develop an expertise. There are ever changing laws, ethical considerations and practical considerations that most home sellers do not want to learn through trial and error. Your home is most likely your most valuable financial asset and the last thing you want to do is jeopardize that, it’s just not worth the risk.
International Real Estate Buyers
International real estate buyers are increasingly attracted to property in the United States, according to a report by the National Association of Realtors® titled “2010 Profile of International Home Buying Activity.” Several factors, including the strength of the dollar, the value and desirability of U.S. real estate, the state of the economy and perceptions of economic trends continue to drive international interest in owning real estate in this country.
- The U.S. is a top destination for international buyers from around the world
- Foreign buyers understand the value of owning real estate in the U.S.
How Much Do They Buy?
$66 billion of U.S. residential property, or 7 percent of the entire residential real estate market.
That’s the amount purchased between April 1, 2009 and March 31, 2010 (the length of the report) by foreign buyers including those with residency outside the U.S. as well as recent immigrants and temporary visa holders.
From Which Countries?
International buyers came from 53 countries around the world. The top four countries are:
- Canada (largest buyer group in the last three years)
- Mexico (growing)
- United Kingdom (formerly ahead of Mexico)
- China/Hong Kong
Where Do International Purchasers Buy?
International real estate buyers were reported in 39 states. The market is relatively concentrated, however, with four states accounting for 53 percent of the volume:
- Florida (22.5 percent)
- California (12.5 percent)
- Arizona (9 percent)
- Texas (9 percent)
The vast majority of purchases are made in suburban areas (50 percent) and the central city/urban areas (27 percent).
Two factors seemingly important to international real estate buyers when purchasing property in the U.S. are proximity to their home country and the convenience of air transportation. For example, Florida typically attracts European, Canadian and South American buyers while the East Coast attracts Europeans. Asian buyers are primarily interested in West Coast real estate while Mexican buyers are active in the Southwest.
What Do They Buy?
A majority of international buyers (66 percent) purchased single family detached homes. Condos were also attractive to international buyers, who significantly out-bought condos percentage-wise over their U.S. counterparts, 23 percent to 7 percent.
How Do They Buy?
Foreign buyers are reported as paying cash 55 percent of the time. In contrast, 8 percent of U.S. buyers purchased their homes with only cash (no mortgage financing).
How Much Do Foreign Buyers Pay?
Generally speaking, international real estate buyers participated closer to the upper end of the market. The median price paid by international buyers was approximately $219,400 during 2009/2010, the reporting period of the profile cited at the top of the previous page. In contrast, the overall median price for existing home sales in the U.S. was $173,000 during the same period.
