this month in real estate march 2009

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  • 1. This Month in Real Estate Released: March 11, 2009 Commentary. 2 The Numbers that Drive Real Estate 3 Snapshot of the Economy p y 9 Recent Government Action. 13 Research for Buyers and Sellers. 21 Courtesy of Mike Walker P.1
  • 2. Commentary The government acted boldly in February to stimulate the economy and help stabilize the housing market. Among the measures taken was a tax credit of up to $8,000 for a qualified first-time buyers in 2009. Unlike the previous version, the new credit does not have to be repaid. This tax credit will likely help lift overall homes sales and trigger trade-up purchases as well. Good news for a weakened housing industry. Among the many benefits of the massive stimulus package of 2009 is the reinstatement of the conforming loan limit, which expired at the end of 2008. Higher loan limits could allow h f il li i hi h id h df ih l li i ld ll more buyers and existing homeowners to gain access to low mortgage rates. Combined stimulus measures could raise home sales considerably in 2009. which should lead to home price stabilization. President Obama also unveiled a much needed plan designed to help much-needed approximately 7 to 9 million families avoid foreclosure by refinancing or restructuring their mortgages. In terms of the outlook for the broader economy, stabilization is likely to occur if the economic stimulus plan does what it is intended to do. In many areas around the country, home values are priced under market value. Mortgage rates remain at historical lows and housing affordability is greatly improved. Considering these factors, it is likely that demand is building among buyers who are able and willing but waiting on the sidelines. Many smart buyers are taking action and continuing to find deals sidelines instead of trying to time the market. Courtesy of Mike Walker P.2
  • 3. The Numbers that Drive Real Estate Courtesy of Mike Walker P.3
  • 4. Home Sales Pace of Sales in Millions Home sales fell 9% in the first month of the year as some prospective buyers waited for clarity on the housing stimulus package. On February 17, the economic stimulus package included a tax credit for new home buyers and 17 home-buyers anyone who has not owned a home in the last three years. This provision alone could help increase sales by an additional 300,000 homes this year. In turn, this could activate trade-up purchases by existing homeowners, further increasing home sales this year. 5.23 5.10 5.86 6.03 6.23 7.12 6.75 6.46 4.91 4.49 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Courtesy of Mike Walker Note: Pace of sales as of January every year (Data released on February 25, 2009) P.4 Source: National Association of Realtors
  • 5. Median Home Price In Thousands Home prices decreased 15% from a year ago due to the number of distressed sales in the market. $137 $142 $156 $167 $179 $197 $217 $211 $200 $170 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Courtesy of Mike Walker Median home price as of January every year (Data released on February 25, 2009) P.5 Source: National Association of Realtors
  • 6. Inventory - Months Supply Number of months it would take to sell all the homes on the market at the current rate of sales Fewer homes went on the market in January, resulting in a 6% decline in months supply of homes from a year ago. The overall inventory of homes fell to the lowest level in two years due to significant declines in homebuilding activity and moratorium on foreclosures in several states. 4.2 4.2 4.3 4.6 4.3 3.6 5.1 6.6 10.2 9.6 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Courtesy of Mike Walker Inventory as of January every year (Data released on February 25, 2009) P.6 Source: NAR
  • 7. Mortgage Rates 30-Year Fixed Mortgage rates continued to remain at attractive levels for the month of February. For the final week of the month, mortgage rates averaged 5.07%. 5.1% 8.3% 7.1% 6.9% 5.8% 5.6% 5.6% 6.3% 6.3% 5.9% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Courtesy of Mike Walker Mortgage rates as of February every year. (Data released on February 26, 2009) P.7 Source: Freddie Mac
  • 8. Affordability - % of Income The percentage of a median familys income required to make mortgage payments on a median priced home Housing affordability is at record levels due to declining home prices and low mortgage rates. As a result, the purchase power of a typical family rose considerably. According to NARs housing affordability index, a median-income family earning around $60K could afford a home costing $283K i Jin January with a 20% down payment. ith d t 20% 19% 19% 18% 19% 20% 23% 22% 19% 15% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Courtesy of Mike Walker Affordability as of January every year. Calculations assume a 20% down payment. P.8 Source: National Association of Realtors (NAR)
  • 9. Snapshot of the Economy Courtesy of Mike Walker P.9
  • 10. Gross Domestic Product (GDP) According to revised numbers by the Department of Commerce, the economy shrank by 6% in the final quarter of 2008. The pace of decline for the final quarter was considerable as both businesses and consumers continued to aggressively scale back. Consumer spending, which accounts for approximately two-thirds of d i tl t thi d f domestic activity fell by 4% in the final quarter of last year. On an ti ti it f ll b i th fi l t fl t O annual basis, GDP growth for 2008 was actually slightly better than 2001. 3% 4% 1% 5% % 3% % 2% 0.1% 5% 5% -0.2% 1% % %