this month in real estate november 2010

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This Month in Real Estate Newsletter Presentation for November 2010

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  • 1. Commentary 2 h b h i l Released: TheNumbersThatDriveRealEstate 3 RecentGovernmentAction 9 Topics for Home Buyers Sellers and Owners 11 November7,2010 TopicsforHomeBuyers,Sellers,andOwners 11 Broughttoyouby: KWResearch

2. Commentary Thehousingmarketcontinuesitsgradualrecoverywithouttheaidofthetaxcredit. Salesareslowerbutgrowing.Althoughitwilllikelybeunevenattimes,slowgrowthisg g g y , g believedtobethetrendmovingforward.Interestrateshitanewhistoriclowagain,a majorfactorinhelpingkeepmortgagepaymentsincrediblyaffordable. ExtendedperiodsofrecordlowinterestratesandfurtherplansfromtheFederalReserve Boardtoexpediterecoveryhavesomeconcernedaboutfutureinflation.Onesuch investmentguru,JohnPaulson,toutedthebenefitsofowningrealestateasahedgeg , , g g againstinflationonForbes.com.Yourdebtandinterestpaymentsgetlockedinat recordlows,whilethepriceofyourhomewillriseIfyoudontownahomebuyone ifyou ownonehome,buyanotherone,andifyouowntwohomes,buyathirdandlend yourrelativesthemoneytobuyahome. Thismarchbackupcontinuestoprovideexcellentopportunities:anampleselectionof h ff d bl i d hi t i ll l i t t t E t ti i t b th thhomes,affordableprices,andhistoricallylowinterestrates.Expertsanticipateboththe economyandthehousingmarketwillcontinuetheirpathsonthewaytoacomplete recovery. KWResearch2 3. HomeSales 4 HomePrice 5TheNumbersThat Inventory 6 MortgageRates 7DriveRealEstate Affordability 8 Broughttoyouby: KWResearch 4. HomeSales In MillionsInMillions HomesalescontinuedtoreboundinSeptember,increasing10%comparedtothepreviousmonth. ThisbuildsonAugustsgainof7.6%thatfollowedalargedropcausedbytheexpirationofthe federaltaxcreditinJuly.Salesareexpectedtograduallygrowasthemarketmovestoward recoverywithoutgovernmentstimulus.Therecentforeclosuremoratoriumhasopenedup opportunitiesforshortsales.Althoughitcouldmaketheneartermchoppyattimes,industry experts expect the overall trend to continue growing slowlyexpertsexpecttheoveralltrendtocontinuegrowingslowly. FirstTimeHomeBuyer TaxCredit S h d l d t i ExtendedandExpandedHomeBuyerTaxCredit RenewedNovember7 Tax CreditIs i d RecoveryGaining WithoutTaxCredit Scheduledtoexpire November30 MusthavecontractsignedbyApril30 MustclosebyJune30 Expired KWResearch4 LatestDataRelease:October25,2010 Source:NationalAssociationofRealtors 5. HomePrice In ThousandsInThousands Afterfourmonthsofpricesremainingonparwithyearagolevels,Septembershowedaslight decline Last September distressed properties were 29% of all home sales; this September thatdecline.LastSeptemberdistressedpropertieswere29%ofallhomesales;thisSeptemberthat numberroseto35%.Thelargerproportionofdistressedsales,whicharetypicallydiscounted, helpstoexplainthedecline.Whilethesediscountedsalesprovideopportunitiesforbuyers,sellers lookforwardtothegeneraltrendingupwardofhomeprice. KWResearch5 LatestDataRelease:October25,2010 Source:NationalAssociationofRealtors 6. Inventory In Millions Numberofhomesavailableforsale InMillions TherearefewerhomesonthemarketagaininSeptember,representing10.7monthsofinventory. While still at a relatively high level months of inventory shrank by nearly a month in SeptemberWhilestillatarelativelyhighlevel,monthsofinventoryshrankbynearlyamonthinSeptember fromAugusts11.6andnearlytwomonthssincethe12.5monthsupplyinJuly.Thiscontinuesto representanexcellentopportunityforbuyersandinvestorswhohavenotyettakenadvantageof theabundantopportunitiesofthemarketincludingrecordlowrates,anamplebutshrinking selectionofhomes,andhighlyaffordableprices. KWResearch6 LatestDataRelease:October25,2010 Source:NationalAssociationofRealtors 7. MortgageRates 30Year Fixed MortgageratesonceagainsetnewrecordlowsinearlyOctoberto4.19% andremained below 4 3% throughout the month These historically low rates contributed to real savings 30 YearFixed below4.3%throughoutthemonth.Thesehistoricallylowratescontributedtorealsavings forbuyers.Furthermore,thelongerthebuyerownsthehome,thegreaterthesavings theywillrealize.Aseconomicactivitygainsmomentum,rateswillrisetokeepinflationat an acceptable level 30YearAverage 8.90% anacceptablelevel. 1YearAverage 4.75% KWResearch7Source:FreddieMac 8. Affordability Percentage of Income Thepercentageofamedianfamilysincomerequired tomakemortgagepaymentsonamedianpricedhome PercentageofIncome Housingremainsatnearrecordaffordabilitylevels,andprospectivehomebuyersstand to benefit from the lowest mortgage rates in decades, as well as advantageous hometobenefitfromthelowestmortgageratesindecades,aswellasadvantageoushome prices.Housingisapproximately60%moreaffordablenowthanduringtheheightof themarket. HistoricalStandard:25% KWResearch8 AffordabilityasofSeptembereveryyear.Calculationsassumea20%downpayment. Source:NationalAssociationofRealtors 9. Recent Recent Foreclosure Concerns 10 GovernmentAction RecentForeclosureConcerns 10 Broughttoyouby: KWResearch 10. RecentForeclosureConcerns RoboSigning Scandal ExplainedRobo SigningScandalExplained Anewfoundsetofissueswithforeclosures,oftenreferredtoastherobosigningscandal,has receivedconsiderableattentioninthemediarecently.Sowhatdowereallyneedtoknow? Thescandaleruptedwhenemployeesatthenationslargestloanservicingcompaniesadmitted tofraudulentlysigningorforgingthousandsofdocumentsrelatedtoforeclosureproceedings, without knowledge of the documentationwithoutknowledgeofthedocumentation. Manylendershaveagreedtoatemporarymoratoriumonthesaleofbankownedproperties, whilehaltingcurrentforeclosureproceedings.Althoughsomelendershaltedforeclosuresinall states,thisispredominantlythecaseinstateswhereajudgesapprovalisrequiredtoforeclose., p y j g pp q Thescandalisgenerallyconsideredproceduralinnature,stemmingfromanavoidancedue process.Actualdebtamountsanddelinquenciesthatwouldhavewarrantedforeclosure proceedingshavenotbeencalledintoquestion. Whilethetimeframeforresolutionofthecurrentsituationisnotknown,lendersandregulators areassessingthesituationasquicklyaspossibletoassureborrowersthattheirrightswillbe protected,aswellasbuyersofbankownedpropertiesthatacleartitlewillbeconveyed. A lt f th t t i f th ti l t b k h d t d Asaresultofthecurrentmoratorium,manyofthenationslargestbankshavedevoted additionalresourcesintotheprocessingofshortsalesandloanmodifications. KWResearch10Sources: cnnmoney.com, wsj.com, washingtonpost.com, CitiGroup Global Markets Foreclosures Gone Wild Oct 12, 2010 11. TopicsforHomeBuyers,p y , Sellers,andOwners PrimeTimetoBuy 12 Broughttoyouby: KWResearch 12. PrimeTimetoBuy 7 Reasons Why Now Is a Great Time to Buy a Home7ReasonsWhyNowIsaGreatTimetoBuyaHome Recenthistoryhasreframedsomeofwhathadlongbeentakenforgranted about buying a home Namely weve learned that even though buying a homeaboutbuyingahome.Namely,we velearnedthateventhoughbuyingahome remainsoneofthebestandsafestinvestmentsavailable,ahomeshouldnot functionasanATMorashorttermspeculationstrategy.So,wheredoesthat leave us? A lot smarter able to recognize an opportunity when we see one andleaveus?Alotsmarter,abletorecognizeanopportunitywhenweseeone,and awareofthefactsthatpointtonow astheprimetimetobuyahome. 1.Homeaffordabilityisatanalltimehigh. Themedianmortgagepaymenton themedianpricedhome,asapercentageofthemedianhouseholdincome,is lowerthanitsbeeninageneration. 2 Mortgage rates are at rock bottom Its hard to imagine interest rates going2.Mortgageratesareatrockbottom.It shardtoimagineinterestratesgoing muchlower,andwhentheystarttoinchbackupward,monthlypaymentsand totalloancostswillspikeupward. 3 H i b k h i Af d li i f 30 h h i3.Homepricesarebackontherise.Afterdecliningfor30months,homeprices aretrendingbackupward.Thetimetogetinthemarketisnow. KWResearch12 13. PrimeTimetoBuy(contd) 7 Reasons Why Now Is a Great Time to Buy a Home7ReasonsWhyNowIsaGreatTimetoBuyaHome 4. Sellers are motivated. This means that buyers have the upper hand. Sellers4. Sellersaremotivated.Thismeansthatbuyershavetheupperhand.Sellers arefiercelycompetingamonganexcessofhousinginventory,whichoften meansbuyershaveuntoldchoicesandnegotiatingpower. 5 Fi i i dil il bl B k b k i th d d t l d5. Financingisreadilyavailable.Banksarebackinthegameandreadytolend towellqualifiedbuyers. 6. Owningvs.rentingisincreasinglyfavorable.Since2009,theaverage principalandinterestpaymenthasfallenbelowtheaveragerentalrates,and thegapisnowwiderthanitsbeeninthepast22years. 7 Homeownership is still at the core of the American Dream Owning a home7. HomeownershipisstillatthecoreoftheAmericanDream.Owningahome iscriticaltofinancialstabilityandwealthbuilding.Itsaforcedsavings account,aplacetolive,andafabuloustaxdeduction. Formoredetail,checkoutKellerWilliamsRealtys7ReasonsWhyNowIsa GreatTimetoBuyaHome!andTheWallStreetJournals10ReasonstoBuya Home. KWResearch13 14. YourLocalMarket Alth h it i i t t t t i f d b t h t i i i th ti lAlthoughitisimportanttostayinformedaboutwhatisgoingoninthenational economyandhousingmarket,manydifferentfactorsimpacttherealestate marketinyourownarea. Talk to your KW associate for assistance interpreting theTalktoyourKWassociateforassistanceinterpretingthe conditionsinyourlocalmarket. KWassociatesareequippedwiththeknowledgeandinformationtohelpyou navigate through the homebuying or selling process in this challenging market.navigatethroughthehome buyingorsellingprocessinthischallengingmarket. ThefollowingisasnapshotoftheprimarylocalmarketwherePaulDrury services KWResearch14 services. 15. Local Market Absorption RateLocalMarketAbsorptionRate KWResearch15 16. Number of Homes in playNumberofHomes inplay KWResearch16 17. Avg Price per sq ftAvgPricepersqft KWResearch17 18. Sold to List Price ComparisonSoldtoListPriceComparison KWResearch18 19. Avg Price For Sale VS SoldAvgPriceForSaleVSSold KWResearch19 20. AboutKellerWilliamsRealty Foundedin1983,KellerWilliamsRealty,Inc.,isaninternationalrealestate company with more than 81 000 associates and 686 offices across the Unitedcompanywithmorethan81,000associatesand686officesacrosstheUnited States andCanada.Thecompanybeganfranchisingin1991and,afteryears