Posts Tagged ‘home sales’

Mortgage Applications Spike 16 Percent as Investors Take Over the Residential Market

Tuesday, March 29th, 2011

Although analysts are sounding a cautionary note, the number of Americans applying for mortgages rose by 16.1 percent in the first week of March – the largest monthly increase since June of 2009. The activity could be due to investors with money to spend, and not the first-time homebuyers who will play a vital role in the housing market’s recovery.  The refinance index increased 17.2 percent and the purchase index increased 12.5 percent, to the highest level this year.  The refinance share of activity increased to 65.5 percent of all applications from 64.9 percent the last week of February.  That’s the good news.  That bad news is that mortgage applications are likely to decline over the next several months because homeowners are unable to sell their current homes and trade up.  At present, cash buyers and investors — lured by low prices and soaring rents — represent the majority of sales, said Paul Ashworth, chief U.S. economist with Capital Economics.  Also, rates are low.  According to Zillow.com, the average 30-year fixed-rate mortgage is now 4.73 percent.

During January, first-time homebuyers fell to 29 percent of the market, the lowest percentage in almost two years.  Foreclosures made up 37 percent of sales and all-cash transactions were 32 percent of sales — twice the rate when compared two years ago when the National Association of Realtors began tracking these deals.  New-home sales fell to a seasonally adjusted rate of 284,000 in January. That is significantly less than the 700,000-to-800,000 pace considered healthy by a number of economists.

“Taking into account typical seasonal patterns, purchase applications rose to their highest level of the year last week.  On an unadjusted basis, purchase application activity is the highest since last May,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “An improving job market is beginning to pave the way for an improving housing market.  Additionally, mortgage interest rates remained below five percent for a second week, maintaining affordability for buyers and leading to an increase in refinance applications.”  The four week average for the seasonally adjusted Market Index rose percent.  The four week average rose 1.2 percent for the seasonally adjusted Purchase Index, while this average is up 3.6 percent for the Refinance Index.  The refinance share of mortgage activity increased to 65.5 percent of total applications from 64.9 percent the previous week.  Adjustable-rate mortgages (ARM) rose to 6.0 percent from 5.5 percent of total applications from the previous week.

“The housing market in the U.S. still has a lot of challenges ahead of it,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto.  “Ultimately it’s all about how many homes still are going to hit the market. People don’t want to buy homes because they feel prices could fall further.”

House Sales, Prices on the Upswing

Wednesday, December 9th, 2009

Home prices nationally are on the rise again, according to a new report issued by the Standard &Poor’s/Case-Shiller Home Price Index. The average sale price rose 3.1 percent during the third quarter of 2009, the same percent increase reported during the second quarter.  On the downside, that statistic is still nine percent lower than the number reported one year ago.

In Chicago, prices rose 1.1 percent from August on a seasonally adjusted basis.  Local prices were still 10.6 percent below the level reported for September of 2008, the fifth consecutive month to report an increase.  At the same time, Chicago-area home sales jumped by one-third in October, compared to a year ago, according to the Illinois Association of Realtors.   The group cited lower home prices, affordable mortgage rates and the federal tax credit for first-time buyers as reasons for the rise.

According to David Blitzer, chairman of the Index Committee at Standard & Poor’s, “We have seen broad improvement in home prices for most of the past six months.”  Case-Shiller’s 20-City Composite index rose 0.3 percent compared with the August numbers.  The city with the worst-performing market is Las Vegas, where prices have fallen for 37 months in a row and now are 55.4 percent off their highs.  Chicago home prices rose 1.2 percent during the third quarter.

In another snapshot of the housing market, a report from First American CoreLogic revealed that nearly 25 percent of all mortgage borrowers are underwater.  This condition, as well as the high number of foreclosures, raise doubts about the staying power of the recent upward price trend.

Paul Krugman is Moving on Up

Thursday, September 10th, 2009

Paul Krugman – winner of the Nobel Prize in Economics, Princeton University professor and New York Times columnist – is taking advantage of falling home prices in a difficult market.  Krugman and his wife, economist Robin Wells, recently paid $1.7 million for a three-bedroom co-op apartment in a pre-war building on Manhattan’s upscale Riverside Drive.  The apartment had been on the market for more than one year and had an original asking price of $2.495 million, according to StreetEasy.com, a property listing service.

krugman-788178According to Krugman, “We really wanted a place that has the ultimate New York luxury, which is a washer and a dryer.  I do expect New York prices will fall some more, but we need a place.  And I came into some money.”  Krugman’s Nobel Prize included a $1.4 million cash award.  The six-room apartment has nine-foot ceilings, offers “romantic cityscapes” and has a monthly maintenance fee of $1,820.  Krugman’s long-time one-bedroom apartment on West 89th Street is under currently contract for a bargain $599,000.  Additionally, the Krugmans own a house in Princeton, NJ.

Median Manhattan home prices fell 18.5 percent to $835,700 from a year earlier, according to appraiser Miller Samuel, Inc., and broker Prudential Douglas Elliman Real Estate.  The number of sales is half of the 2008 number.

Krugman’s purchase comes at a time when the housing market appears to be stabilizing.  Existing home sales rose 3.8 percent in the second quarter to a seasonally adjusted rate of 4.76 million over the first quarter, according to National Realtor Association statistics.

Home Sales, Values on the Rise; Consumer Confidence Down

Monday, August 10th, 2009

Sales of new and existing homes rose in June for the third straight month, due primarily to low prices and attractive mortgage rates.  Home sales also rose 11 percent over the previous month. The federal tax credit for first-time homebuyers helped to drive the uptick.  Additionally, home prices rose for the first time in three years in May, a sign that the market might be stabilizing.

nhsaprilAccording to the Standard & Poor’s/Case-Shiller index, home prices have fallen more than 32 percent from their 2006 peaks.  The pace of the decline slowed in May for the fourth consecutive month.  “This could be an indication that home price declines are finally stabilizing” after plunging to levels last seen six years ago in 2003, noted David M. Blitzer, chairman of the S&P index committee.

On the downside, the weakening job market battered consumer confidence in July, possibly delaying a quick economic recovery.  The U.S. Conference Board’s consumer confidence index fell to 46.6 in July from 49.3 in June.  A recent Reuters survey had forecast that the June reading would be 49.  This erosion in confidence is in tune with the rising percentage of Americans who say jobs are hard to find.  Unemployment has hit a 26-year high, with several states reporting double-digit numbers.

“People are getting a bit discouraged.  Jobs are not coming as quickly as expected,” according to John Silvia, chief economist with Wells Fargo.  “This won’t be a V-shaped recovery for either the economy or the jobs market.”

Bernanke Sees Some Light at the End of a Long Tunnel

Friday, May 8th, 2009

Encouraging data on home and auto sales, homebuilding and consumer spending is seen by Federal Reserve Chairman Ben Bernanke as “tentative signs” that the recession may be moderating.  Still, he cautions that lasting recovery depends on the government’s success in stabilizing the reeling financial markets and unfreezing credit.captphoto_1241771944325-6-02

In remarks to faculty and students at Morehouse College in Atlanta, Bernanke said “Recently, we have seen tentative signs that the sharp decline in economic activity may be slowing.  A leveling out of economic activity is the first step toward recovery.  To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets.”

Analysts expect the economy to shrink between two and 2 ½ percent during the second quarter of 2009, a better showing than the 6.3 percent contraction reported for the fourth quarter of 2008.  Although numbers for the first three months of 2009 will not be available until the end of April, some economists believe it will be in the four or five percent range – or perhaps higher.

“The current crisis has been one of the most difficult financial and economic episodes in modern history,” according to Bernanke.