From Homescape

After unprecedented home-price declines in the first half of the year, many markets can anticipate stabilizing price trends in the second half, according to report released by the National Association of Realtors (NAR) on Monday. The number of homes under contract to be sold rose unexpectedly in April, as buyers went bargain hunting, according to the report.

NAR’s Pending Home Sales Index rose to 88.2 in April, up 6.3 percent from March’s reading of 83 and the highest level since October. However, NAR says the median price of existing homes is still expected to fall 6.4 percent this year, a 4 percent adjustment from the 2.4 percent decline projected in May.

As for the median home price on new constructions, NAR forecasted a decline of 3.1 percent to $239,500 this year with a rise to 5.4 percent next year to $252,400.

Lawrence Yun, NAR chief economist, said in press release the underlying fundamentals point to a pent-up demand. “Home sales are at about the same level as they were 10 years ago, yet the population has grown by 25 million people and we have over 10 million more jobs,” Yun said. “The housing market has been underperforming by historical standards, partly because buyers were hampered by mortgage availability issues, but that’s improved and an upturn is more likely. On the other hand, it’s unclear what role consumer confidence will play in the coming months.”

Pending sales index
NAR’s Pending Home Sales Index, which is based on home-purchase contracts signed in April, rose 4 percent year-over-year in the West while dropping 22.5 percent in the South, 13.1 percent in the Midwest and 12.2 percent in the Northeast.

The trade group’s Pending Home Sales Index is considered a more forward-looking indicator of home sales than the NAR’s closely watched existing home sales report. Unlike existing home sales estimates, pending home sales are usually counted a month or two before a closing sales contract is signed.

In a separate report from Fiserv Lending Solutions, 75 of the 100 top U.S. cities, prices are expected to fall in the next 12 months.

The S&P Case/Shiller Home Price Index, which tracks 20 of the largest housing markets, showed prices plummeting by 12.7 percent in the 12 months ending February. That’s the biggest drop since the index began tracking prices in 2000.

Meanwhile, foreclosure filings more than doubled in the first three months of 2008, spiking 112 percent. So far this year 156,463 families have lost their homes to repossessions, according to data provided by RealtyTrac. Housing experts don’t expect many markets to hit bottom till late 2009 or even 2010.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Sales of newly built, single-family homes rose 3.3 percent in April to a seasonally adjusted annual rate of 526,000 units, the U.S. Commerce Department reported on Tuesday. But don’t pop open the bubbly just yet. The gains reflected downward revisions to sales numbers reported for each of the previous three months, including a particularly large revision for March.

“The fact that new-home sales are up slightly from a dismal beginning to the spring home buying season in March isn’t much to celebrate,” said Sandy Dunn, president of the National Association of Home Builders (NAHB) in a recent press release. “We still need a great deal of help from the [Bush] administration and Capitol Hill to halt the downward trends in home sales and house prices that are producing such a drag on our nation’s economy and disrupting financial markets.”

Modest rebound
NAHB Chief Economist David Seiders said the modest rebound in new-home sales recorded for April followed a sharp decline in March and “belies the fundamental weakness that continues to exist in the nation’s housing market.”

The recent report also showed that home sales were down 42 percent on a year-over-year basis, the largest such reversal since September 1981. Turnover of new homes has fallen steadily in the past two years, excepting some month-on-month gains, amid one of the worst U.S. housing market downturns in decades.

The housing meltdown has been exacerbated in the past nine months by a broad credit crunch, which has swept through the banking sector, making it harder for home buyers to obtain mortgages and credit.

“Our latest builder surveys actually show that home buying has not yet stabilized, and we are anticipating some further erosion over the coming months,” Seiders said. “Certainly, the need remains for Congress to approve targeted policy stimulus, in the form of a temporary tax credit for home buyers and other measures, and to do this as quickly as possible.”

On a brighter note, the report did show that the average sales price of a new home in April was $321,000, marking a 10 percent gain from a month earlier.

Regional home sales
April’s preliminary sales pace of 526,000 units was equivalent to the previously reported pace for March. But the Commerce Department this month revised March’s reading substantially downward to 509,000 units — 11 percent below the revised February reading — which accounted for the increase in April.

Sales rose in three out of four regions in April. The Northeast posted a 41.7 percent gain that erased an equivalent decline in the previous month, while the Midwest and West recorded gains of 5.8 percent and 8.3 percent, respectively. The South, which is the nation’s largest housing market, posted a 2.4 percent decline.

The inventory of new homes for sale declined 2.4 percent in April to 456,000 units, which is a 10.6-month supply at the current sales pace. Completed homes accounted for 40 percent of total new homes for sale, up from 33 percent a year earlier. And the median number of months that homes have remained for sale since their completion rose to 8.0 — the highest since mid-1991.

With the start of spring and warmer weather, Realtors expect home sales to improve as warmer weather in many parts of the country lures potential buyers outside to actively look for a home.

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Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

Do you think there is room for emotions in a real estate transaction? Some people think that adding emotions to real estate could be a formula for disaster, but I totally disagree. Emotions are the core of real estate, without them, transactions would be equal to buying a gallon of milk at the grocery store. How can you ignore those feelings of elation when you walk into a home that you absolutely love? There’s a certain rush of adrenaline and excitement you get when you start to imagine yourself living there.

Controlling your emotions
As Realtors in Miami, we deal with customer emotions daily, and we help people identify the reasons they feel good about a property, as well as help them negotiate the right price for that property. We must always keep their emotions in mind.

Take for example this couple I was working with not to long ago. After three weeks of looking at properties, they fell in love with a house in Miami Shores. I did a price analysis and they decided to place an offer. The sellers were not very flexible and made a ridiculous counter offer, which made the experience unpleasant. As a result, my clients decided to pull away from the transaction. Two weeks later, I received a call from the seller’s agent saying the sellers would now consider our customers original offer. The whole experience had been so negative that they decided not to entertain it.

This example teaches us two lessons. One lesson is for buyers: Let your emotions flow when looking for and finding a property — but don’t let your emotions get in the way when negotiating. The second lesson is for the seller. You should always try be careful with how you counter an offer, because you may turn people away and lose out on great opportunities.

Read between the emotions
In today’s buyers market, it is of the utmost importance to be able to identify serious buyers and to be able to negotiate and make deals happen. Knowing that people are emotional by nature is crucial. Working with the right real estate professional is even more important. One that can guide you and lets you know when emotions are appropriate and when they are getting in the way.

The real estate market is going through a rough patch (this should not be news to anyone), which means understanding the process and the in-and-outs of emotions involved is crucial for a successful transaction. Make sure you work with a Realtor that has your best interest in mind and understands the emotional side of real estate.

Ines Hegedus-Garcia

As we plod along through the morass of today’s real estate market, the news media has repeatedly come under fire for being “too negative” with our “gloom and doom” reporting about the sad state of housing affairs. The barbs come mainly from industry folks, especially the National Association of Realtors (NAR), who have gone so far as to outright blame us for causing the market downturn and prolonging its misery with negative news stories.

Here’s a diatribe from a frustrated Realtor, whom NAR President Dick Gaylord applauded in his blog:

The Media’s attack on the real estate industry is nothing new. For decades they have practiced doom and gloom tactics, and in some cases have actually caused real estate prices to decline short term. … Sit back and enjoy some of these dire media projections from yesteryear and allow them to mirror the wide variety of “fear factor”- type “media” comments that exist today.

Gaylord then lists a series of “dire media projections” from various news publications, dating as far back as 1947, that reflect the struggling market conditions of their time.

Straight from the horse's mouth
Thanks, Dick. But the truth is, we’re reporting what you’re giving us. (We do the same with other purveyors of key housing stats, including RealtyTrac and S&P Case/Shiller). Month after month, we read NAR press releases riddled with national and regional figures that for a while now have been pretty dismal. These releases are embellished with a good dose of positive spin by NAR Chief Economist Lawrence Yun. But the record numbers tell the real story: The nation’s real estate ship has been sinking, with no quick recovery in sight.

Why the backlash against the media? I realize that Realtors have an easier time putting bread on their tables when buyers are confident, and what gives them confidence is good news. But it’s Gaylord & Co. who dish out the negative numbers, and it is our civic duty as journalists — not as the cynical propagandists we’re accused of being — to report these numbers accurately.

At the National Association of Real Estate Editors (NAREE) conference in Dallas last week, NAR president-elect Charles McMillan reiterated what we’ve been hearing from NAR for a while now: “Real estate is local, like the weather!”

Yeah, it is to a certain extent, but when it’s raining foreclosure cats and dogs in such bellwether states as Nevada, California, Arizona and Florida, and national home prices continue tumbling, especially in top metro areas, then “local” simply isn’t cutting it right now for the nation’s recession-dazed economy.

Fun at the NAREE conference
About 70 real estate journalists from print, online and broadcast news operations gathered at the NAREE conference not to poo-poo the market but to gain new perspectives about it. We toured areas in Dallas-Ft. Worth with booming development and attended panel discussions with economists, policymakers, bankers, developers, architects and urban planners, who shared their insights about market trends, local developments and urban planning. And we shared ideas on covering the many other aspects of homeownership, including design and architecture, and programs that build community cohesiveness.

Every week, I open my newspaper’s real estate section and find some very positive articles on home buying. “The Bright Side of the Housing Bust,” was a recent headline. So it’s not just the gloom-and-doom outlook that Gaylord accuses us of peddling.

As any responsible journalist will tell you, there are two sides to every story, and there’s always a silver lining amid troublesome circumstances.

“This is the longest, deepest housing-market correction in a long time. The market could still be 18-24 months away from recovery,” Debbie Dunn, executive vice president of CTX Mortgage, told NAREE attendees.

Yes, I agree.

While NAR’s McMillan proclaimed: “In today’s housing market, we have pent-up demand throughout the nation. Interest rates are at a historic low. For those who want to buy, the choices are incredible.”

I TOTALLY AGREE!

Got hot local housing tips or a story you want to share? Contact Dean Golemis at openingdoorsblog@homescape.com.

While the national housing market has looked like an endless black hole, signs of a recovery can be seen in scattered metro areas across the country. Officials with the National Association of Realtors (NAR) say that a proportionately larger slowdown in home sales from a year ago in high-cost markets is continuing to drag down the aggregate national median price.

According to a report released this week by NAR, the median existing single-family home price in the first quarter of this year was $196,300, down 7.7 percent from the first quarter of 2007, when the median price was $212,600. But Lawrence Yun, NAR chief economist, said the numbers don’t tell the whole story.

“These are highly unusual results, because there were very few jumbo loan originations in the latest quarter, so sales are much slower in high-cost areas, and at the same time foreclosures related to subprime mortgages rose,” Yun said in a press release. “Neighborhoods with little subprime exposure are holding on very well, while prices have fallen in neighborhoods with a wide prevalence of subprime loans, because more foreclosed properties are being sold at discounted prices.”

Yun pointed out that homeowners with subprime loans account for less than 10 percent of all homeowners. “Sharp price declines are principally in neighborhoods where subprime lending has been widely prevalent,” he said.

Market turnaround
The typical seller in the first quarter, who purchased their home six years ago, saw a sizable equity gain despite a price drop from a year ago, according to the NAR data. The median increase in value for sellers who purchased their home in the first quarter of 2002 is 23.8 percent, and the median home equity accumulation is $37,700.

NAR officials say the typical home buyer today plans to own their property for 10 years, and with a long-term view, real estate will continue to remain a safe investment.

“Inventories have stabilized and mortgage availability is beginning to improve, so we expect overall prices to go positive during the second half of the year,” said Richard Gaylord, NAR president.

In the first quarter, the largest single-family home price increase was in the Binghamton, NY, where the median price of $109,700, rose 11.8 percent from a year ago. Next was Peoria, IL, at $119,000, up 10.4 percent from the first quarter of 2007, followed by Spartanburg, SC, where the first-quarter median price increased 10.1 percent to $130,300.

Existing home sales
In all states, total existing-home sales, including single-family houses and condominiums, were at a seasonally adjusted annual rate of 4.95 million units in the first quarter, down 0.9 percent from the fourth quarter, and are 22.2 percent below a 6.36 million-unit pace in the first quarter of 2007.

In the South, the median existing single-family home price was $164,200 in the first quarter, down 7.5 percent from a year earlier. After Spartanburg, the strongest price increases in the South were three areas in Texas: El Paso at $134,600, up 8.5 percent from a year ago, followed by the Amarillo with an 8.2 percent gain to $122,200 and Beaumont-Port Arthur at $122,900, up 6.1 percent.

The median existing single-family home price in the Midwest declined 7.9 percent to $142,700 in the first quarter from the same period in 2007. After Peoria, the strongest metro price increases in the Midwest were in the Decatur, IL, area, where the median price of $79,400 was 4.2 percent higher than a year ago, and Springfield, IL, at $172,200, also up 4.2 percent. Next was the Wichita, KS, area, at $112,700, up 4.0 percent from the first quarter of 2007.

In the West, the median existing single-family home price was $296,300 in the first quarter, which is 12.3 percent below a year ago. “This is the area hardest hit by the slowdown in jumbo mortgage loan origination, which is just now starting to improve,” Yun noted.

The strongest metro price increase in the West was in the Yakima, WA, at $148,400, up 9.0 percent from a year ago, followed by Farmington, NM, at $190,000, up 6.3 percent, and the Salt Lake City area, at $225,700, up 3.5 percent from the first quarter of 2007.

To see how your local housing market is faring go to Realtor.org.

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Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.