Pending home sales slightly up!

(WASHINGTON) – NAR reports its Pending Home Sales Index of contracts signed in February rose to 82.1 from a reading of 80.4 in January – but is still below last year’s February index of 83.3.
Alternatively, because of the general decline in housing prices, NAR’s Housing Affordability Index for February reached a record high of 173.5 compared to 172.6 in January.
According to trade association calculations, a median-income family earning $59,700 could afford a home costing $285,600 in February, assuming a 20 percent down payment.
NAR Chief Economist Lawrence Yun said he expects housing inventories to rise through early summer. He added, however, that he expects price stabilization in most markets by the end of the year.

Small signs of improvement!

Despite the economic gloom of the past few months, there are some positive dynamics taking shape in the current cycle.

• Low Mortgage Rates—Mortgage rates continue to hover at 50-year lows – 5% and even 4.75% for 30-year mortgages, and still lower for 15- and 20-year mortgage terms.

• Improvement in Oil Prices—We’re all paying a lot less at the gas pump, and seeing sharply discounted prices on retail goods and autos.

• Saving Money—Americans are actually saving again, the national savings rate took a nearly 3% jump last month. That might sound small, but it’s hugely important if it is the start of a trend.

• Action on Capitol Hill—The incoming Obama administration is expected to introduce a massive economic stimulus package early in 2009. A resulting improvement in the employment picture and available credit can help restore consumer confidence and spike a surge in economic activity.

• Coming Price Stabilization—Some economists are expecting housing prices to stabilize and/or rise (in 2009) after a likely boom in mortgage refinancing as rates fall and loan applications increase. There are signs that housing prices are stabilizing in some parts of the country. The latest monthly Federal Housing Finance Agency index found home prices up by 0.6% in the Mountain states and by 0.2% in New England.

* All down-cycles tail come to an end. Keep your eyes open for the small positive signs that are accumulating out there.

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A Realtors Take on the Stimulus Bill

Here’s our take on the Stimulus Bill and Treasury announcements made this week. We look at the Stimulus package AND the Treasury’s package holistically, in compliment with each other – mostly because that’s how the Obama team is looking at it. Our representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have). Here they are: 1) get loan limits raised for high cost areas, 2) make the $7,500 tax credit NOT a loan, 3) try to find ways to push interest rates down (which are higher than they should be due to systemic risk right now) by 200 basis points, and 4) help provide solutions to the foreclosure/short sale problem.

So here’s what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES’s thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

In addition, we preserved what we have – which some tend to forget is always on the table when these negotiations start up again – mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).

We did make a run at the $15,000 credit — and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of ‘what we are willing to give up to get a $15,000 tax credit’ and kept the debate again, on how much it should be. It’s pretty hard to complain when they give you what you ask for and you lose something you never had.
While we study the Treasury specifics on their major role in providing the rest of the housing solution — there is much more to come and we are working diligently with the Administration to help ‘unclog the pipeline’ and get capital flowing into housing again.

*Supplied by the NAR… Looks like it is time for buyers and sellers to get busy! Yeah!

Thanks,
Laura Wunder

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• Talk to the real seller of the property. Many wholesalers that you speak to are selling other investors properties that they have no control over. We have a valid contract with the sellers of these properties and are ready to make a deal with you today!

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• Be able to talk to a real person. A real live phone number is on each listing so that you can contact us with any questions that you may have about the property and discuss price.

 

 

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