Transcript Metal Silver - Keller Williams Realty

Keller Williams Research
This Month in Real Estate
Released: September 14, 2009
Commentary……………………………………. 2
The Numbers That Drive Real Estate………… 4
Recent Government Action……………………. 10
Research for Buyers and Sellers………………. 14
1
Green Shoots of Recovery
Some economists believe that the almost two-year-long economic recession ended in June,
and they’re forecasting a return to growth in 2010. So while the encouraging news points to
prosperity ahead, the overall economy may continue to run into some road bumps along the
way. In the meantime, the strengthening housing market indications bode well, as buyer
confidence is increasing with affordability playing a big role.
Looking at existing home sales, the July numbers far exceeded expectations. In fact, for the
first time in five years, existing-home sales have increased for four months in a row. That’s
a lot of activity. So who’s buying, and what are they buying? First-time buyers continue to
pace the market. They purchased 30% of homes in July. And distressed homes accounted
for 31% of overall transactions.
The numbers indicate critical activity is occurring at the bottom of the property ladder, and
this activity is triggering much-needed trade-up transactions. With the gains in sales,
excess inventory continues to be absorbed. And with rosier economic forecasts for 2010,
“the buyer psychology may be shifting from, ‘Why buy now when I can purchase later,’ to ‘I
don’t want to miss out on a recovery,’” said Lawrence Yun, NAR chief economist.
KW Research 2
Green Shoots of Recovery
.
An additional positive factor is the continued stabilization in housing prices. While prices
are lower than they were at this time in 2008, home prices have risen from where they
stood at the beginning of 2009. And that’s great news. As the prices hold more firmly,
creditworthy borrowers are acting quickly to lock in near historically low mortgage rates.
These rates, coupled with excellent affordability, make for an impressive buying
opportunity for savvy investors sitting on the sidelines. “As long as home buyers stay
within their budget, mortgage payments will be very manageable,” Yun said.
On the broader economic front, while unemployment remains a major concern, the
government has had solid success with its spending programs. The first-time home
buyer tax credit and cash for clunkers automobile programs are considered great
consumer successes. Additionally, a proactive Federal Reserve is working to keep
interest rates at low levels as long as necessary. So while high unemployment will weigh
on the economy for some time to come, governmental action, economic expertise, and
time should deliver us to greener returns in the months to come.
KW Research 3
The Numbers That Drive Real Estate
KW Research 4
Home Sales
In Millions
Existing home sales rose 7.2% to an annual rate of 5.24 million in July, marking
the first time in five years home sales have increased for four consecutive
months. The monthly gain was also the largest on record since 1999. First-time
home buyers, who accounted for 30% of all home sales in July, continue to be
the driving force for the housing market’s recovery.
Up 7.2% from
last month
Seasonally Adjusted Home Sales
5.24
5.10
4.94
4.99
4.93
4.74
4.89
4.71
4.66
4.72
4.54
Jul
Aug
Sep Oct
Nov
Latest data release: August 21, 2009
Source: National Association of Realtors
4.55
4.49
Dec
Jan
Feb
Mar Apr May Jun
Jul
KW Research 5
Median Home Price
In Thousands
Existing-home price was $178,400 in July, an 8% bounceback from its low in
January but still 15.1% below the level seen last July. Distressed properties,
which accounted for 31% of all transactions in July, continue to put downward
pressure on home price as they typically sell for 15-20% less than traditional
homes.
$210
$203
$191
$186
$180
$176
$165
$168
$182
$178
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb Mar Apr May Jun
Jul
Latest data release: August 21, 2009
Source: National Association of Realtors
$170
$167
$175
KW Research 6
Inventory - In Millions
Number of homes available for sale
Total housing inventory at the end of July rose 7.3% to 4.09 million existing
homes available for sale, representing a 9.4-month supply at the current sales
pace. This was unchanged from June as the greater inventory was met with the
strong sales gain. Compared to a year ago, when the number of unsold homes
was at a record, there are now 10.6% fewer homes on the market.
4.6
4.3
4.3
4.2
4.2
4.1
3.9
3.7
Number of Homes
Available for Sale
Jul
Aug
Sep Oct
Latest data release: August 21, 2009
Source: National Association of Realtors
Dec
Jan
3.9
3.6
3.6
Nov
3.8
3.8
Feb
Mar Apr May Jun
Jul
KW Research 7
Mortgage Rates
30-Year Fixed
Rates for 30-year fixed loans edged down to 5.08% in the first week of
September. While above the unprecedented 4.78% reached in the spring, rates
still remain at attractive levels for people looking to buy a home or refinance.
According to Frank Nothaft, Freddie Mac’s chief economist, "Low mortgage
rates are helping to keep housing very affordable."
Average Weekly Mortgage Rates
5.59%
5.42%
5.32%
5.29%
5.25%
5.38%
5.16%
5.15%
5.07%
5.12%
5.20%
5.01%
4.98%
5.10%
5.04% 5.03%
4.87%
4.96%
4.84% 4.82%
4.80%
5.25%
5.29%
5.14%
5.20% 5.22%
5.14%
5.12%
5.08%
4.91%
4.86%
4.85%
4.82%
4.78%
4.78%
9/3
8/20
8/6
7/23
7/9
6/25
6/11
5/28
5/14
4/30
4/16
4/2
3/19
3/5
2/19
2/5
1/22
1/8
Source: Freddie Mac
KW Research 8
Affordability - % of Income
The percentage of a median family’s income required to make mortgage payments on a median-priced home
Housing affordability continues to be at record highs this year with the added
stimulus of the first-time buyer credit. So far this year, payment percentages
have been the lowest on record dating back to 1970. A typical mortgage
payment on a median-priced home historically has consumed 25% of a middleincome family’s monthly earnings, it’s now taking up only16%. According to
Lawrence Yun, NAR chief economist, “As long as home buyers stay within their
budget, mortgage payments will be very manageable.”
% of Income Required for Mortgage Payments on a Median-Priced Home
Well below the
historical
standard 25%
21%
20%
20%
19%
21%
23%
25%
24%
20%
16%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Affordability as of July every year. Calculations assume a 20% down payment.
Source: National Association of Realtors
KW Research 9
Recent Government Action
KW Research 10
“Cash for Clunkers” Huge Success
August 2009
“Cash for Clunkers” began July 24 with such overwhelming demand that
the program, originally set to expire November 1, burned through
funding with amazing speed. In the first week alone, the incredible
demand depleted the entire budget of $1 billion. A second round of $2
billion in funds extended the program’s life by a few weeks, but the
program ended on August 24 with no plans to revive or extend it.
The success of the program has put 690,000 new fuel efficient cars on
the road and has saved jobs in the auto industry. In some cases it has
even brought laid-off employees back to work. For example, GM
announced plans to reinstate almost 1,400 employees and add
overtime for a substantial number of existing employees.
The government’s $8,000 first time-home buyer tax credit has also seen
tremendous success with first-timers making up 30% of all buyers in
July. First-time buyers made up as much as half of all buyers in earlier
months this year. As the tax credit reaches its expiration, the
government may take a similar approach as with the Cash for Clunkers
program– declaring it a success and unwinding the program.
Source: The Washington Post
KW Research 11
Phase I of Credit Card Bill Rolls Out
August 2009
On August 20, the first phase of the credit card bill that was approved in May took effect .
Key changes in the way credit cards work include:
1. Customers will now receive 45 days notice,
up from 15 days, before interest rates increase.
2. The minimum balance due can increase by no more
than two times the percentage that it previously has been.
3. Bills must be mailed 21 days, up from 14 days,
before the payment is due.
The balance of the bill’s provisions will become effective in February. Until then,
consumer advocates’ concerns center around credit card issuers continuing to increase
rates, lower credit limits, decrease rewards programs, and close inactive accounts. Credit
card companies reaffirm these actions are not due to legislation but decreasing credit
scores.
This bill intends to help consumers control credit and unknown expenses. As consumers
consider buying or selling a home, knowing monthly expenses becomes increasingly
important in understanding how much they can afford and are comfortable spending on
housing.
Source: The Washington Post
KW Research 12
Fed Confirms Commitment, Bernanke Reappointed
August 2009
President Obama announced Federal Reserve
Chairman Ben Bernanke’s reappointment on
August 25. Largely supported by many of the
nation’s economists, the reappointment will
allow continuity in the Fed’s policies. This will
provide some stability as there will not likely be
dramatic changes.
Earlier in the month, the Federal Open Market Committee (FOMC) meeting
resulted in the Fed confirming its commitment to purchase $300 billion in
Treasury securities. It will complete the remaining purchases by the end of
October. The interest rate on Treasury securities is closely tied to mortgage
rates. The purchase of these securities is one of the most important components
in keeping mortgage rates low.
The overall tone of this month’s meeting involved more caution and less
enthusiasm than expected. The Fed’s message: While economic signs do
continue showing some improvement, full recovery will take longer than previous
recessions.
Source: The Washington Post, Dow Jones, The Wall Street Journal
KW Research 13
Research for Buyers and Sellers
KW Research 14
Motivation for Moving
More Moving for Positive Reasons & Less for Recession
Half of people surveyed by Relocation.com moved to improve their living
situation. This is a huge improvement from last March when the majority
of people moved due to the recession.
•
26% moved to live in a bigger or better home
•
24% moved into a better neighborhood
•
12% moved to be closer to family or friends
•
9% moved into an area with a lower cost of living
•
6% moved due to a change in marital status
•
3% or less for each of the following: school, job loss, retirement, or foreclosure
Source: relocation.com
KW Research 15
First-Time Home Buyers Survey
What are other first-time home buyers doing?
1. The median age is 28, significantly down
from where it was four years ago at 32.
2. The median home size was 1,600 sq ft.
3. Location or Neighborhood was the No. 1
“must-have” for 36% of buyers.
4. 2 out of 5 first-time buyers purchased a
distressed property.
5. 2 out of 3 sellers paid at least part of the
buyer’s closing costs.
6. 76% used their own savings for the down payment.
7. 1 in 4 had help from their family for the down payment.
Source: KW Research – First-Time Home Buyer Survey
KW Research 16
Your Local Market
Although it is important to stay informed about what is going on in the
national economy and housing market, many different factors impact
the real estate market in your area.
Talk to your Keller Williams agent for assistance
interpreting the conditions in your local market.
Keller Williams associates are equipped with all the knowledge and
information to help navigate you through the process of buying or
selling a home in this challenging market.
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About Keller Williams Realty
Founded in 1983, Keller Williams Realty, Inc., is an international real estate
company with more than 74,175 associates and 693 offices located across the
United States and Canada. The company began franchising in 1991, and following
years of phenomenal growth and success, became the third-largest U.S.
residential real estate firm in 2009.
The company has succeeded by treating its associates as partners and shares its
knowledge, policy control, and company profits on a system-wide basis.
Focusing on helping associates realize their fullest potential, Keller Williams
Realty is known as an industry leader in its family culture, unmatched education,
profit sharing business model, phenomenal coaching program, and technology
offerings. The company provides associates with all the tools needed to grow and
thrive in today’s market.
www.kw.com
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