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Home-buying in metro Denver took a slight breather in January after a robust December, but a lack of inventory threatens to cut off the oxygen in the market if more sellers do not start showing up soon.
Inventory is the topic right now.
Buyers closed on 2,470 residential properties in January, a 21.7 percent decline from December, but a 14.6 percent increase from the 2,156 homes sold a year earlier.
Buyers and sellers often rush to close deals in December ahead of the year’s end, so January is often a slower month, Bauer said.
The number of homes for sale, however, took another tumble,
(The Denver Post)
falling to 10,443, a 5 percent decline from December. Inventories are down 41.6 percent from January 2011, when 17,890 homes were available, and by two-thirds from the all-time peak reached in July 2006.
Normally, a big decline in supply should signal a bottom in the market. As demand outstrips supply, prices rise, but that hasn’t happened yet.
The median price of a single-family home sold dropped 2.7 percent to $218,855, compared with $225,000 for January a year ago. It is down 4.8 percent from December’s median $230,000.
Explanations vary. One is that banks have moved slower on foreclosures, reducing the supply of distressed properties hitting the market. The other is that home values have fallen so much that some sellers can’t get out without bringing money to the table. Rising prices would help those trapped sellers and entice others looking to make a return.
“It is trending towards a seller’s market,” said Randy Hay, a broker with Keller Williams DTC. “Prices are going to have to go up.”
Hay said he listed a $90,000 townhouse Monday and by Thursday was courting a serious offer. Although sellers are still expected to offer buyers concessions to help with closing costs, they are getting the full asking price and multiple bids on well-maintained homes priced under $300,000.
How low is too low when it comes to inventory? Bauer said he would become concerned if the number of homes for sale in metro Denver inventories goes below 9,500.
Read more: Number of homes for sale decreases in metro Denver – The Denver Post http://www.denverpost.com/business/ci_19932734#ixzz1maqbtAi4
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Tax season is approaching. Do you know where your deductions are?
As a homeowner, you can claim a number of write-offs to lower your tax bill, among them deductions for mortgage interest, mortgage points and real-estate tax payments. But a key mortgage financing benefit quietly slipped through the floorboard cracks at the end of December. You might not have heard about it because of all the screaming and yelling in Congress about the payroll tax cut extension that was hotly debated across both sides of the aisle.
But though its demise drew little attention, it affects a lot of people, perhaps even you, and the loss of the tax deduction — plus mandatory new fees imposed by Congress on all new conventional and FHA loans — could effectively increase the costs of homeownership in 2012.
The expiration of mortgage insurance deductibility will hit many low-down-payment conventional loans originated since 2007, plus nearly all new mortgages closed this year whose down payment is less than 20 percent. Though precise numbers aren’t available, estimates range into the millions for existing owners and new buyers potentially touched by the deductibility termination. Borrowers using guaranteed veterans and rural housing loans, whose down payments can drop to zero, also are affected.
The mortgage insurance premium deduction dates to legislation enacted in 2006. It allows buyers and refinancers who use either private mortgage insurance or federal insurance or guarantees, and who itemize on their federal tax returns, to write off their premiums. Borrowers who are single or married and filing jointly with adjusted gross incomes of $100,000 or less can write off 100 percent of their annual mortgage insurance premiums. Married homeowners filing singly can write off 50 percent of premiums. Borrowers with incomes above $100,000 may qualify for partial deductions on a sliding scale.
The mortgage insurance deductibility problem might disappear, analysts say, if mortgage insurance gets included in an election-year “extender” package. But the fee increases on most new mortgages that were part of the extension of the payroll tax cut are here for the foreseeable future, so factor them into your housing budget.
WASHINGTON — The number of Americans who signed contracts to buy homes fell in December after hitting the highest level in a year and a half a month earlier.
The National Association of Realtors said its index of sales agreements fell 3.5 percent last month to a reading of 96.6. That is down from the November 2011 reading of 100.1.
But the reading is still the second-highest since April 2010, the last month that buyers could qualify for a federal home-buying tax credit. After big gains in October and November, a modest correction “was always in the cards for December,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
A reading of 100 is considered healthy.
There’s a one- to two-month lag between a signed contract and a completed deal. But in recent months, a growing number of buyers have canceled contracts at the last minute. One third of Realtors say they’ve had at least one contract scuttled in December, November and October. That’s up from 18 percent of Realtors in September.
Still, the increase in contract signings is another indication that the troubled housing market improved at the end of last year going into 2012.
Joshua Shapiro, chief U.S. economist at MFR Inc., said the recent trend was “heartening.” But he added that further gains would be needed to reduce the millions of unsold foreclosed homes sitting idle on the market.
Read more: U.S. home-sale contracts fell slightly in December – The Denver Post
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NEW YORK (CNNMoney) - Home building spiked up in November to the strongest level in almost two years, as record-low mortgage rates and a surge in apartment and condo construction lifted activity.
Housing starts shot up to an annual rate of 685,000 in the month, up 9.3% from October and 24.3% higher than a year earlier. Building activity easily topped predictions of 627,000 starts economists surveyed by Briefing.com were expecting.
Building permits, a closely-watched reading that is less affected by weather than actual starts, also shot up, rising 5.7% from October and 20.7% from the year before to 681,000 homes annually.
“By historical standards, homebuilding activity is still very depressed, but at least it appears to be on an established upward trend,” said Paul Diggle, property economist at Capital Economics.
By Chris Isidore @CNNMoney
Pending sales of US homes surged to their highest level in 19 months in November, pointing to improvement in the depressed housing market, an industry survey showed Thursday.
The National Association of Realtors said its pending home sales index rose by 7.3 percent from October to a 100.1 reading in November. It was the second straight month of strong improvement after the October reading jumped more than 10 percent. The forward-looking indicator reflects contracts but not closings on home purchases.
November’s reading at the century mark indicated a return to a “historically healthy” level, NAR said. The index base of 100 was set on average levels in 2001. The last time the NAR index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the federal government’s homebuyer tax credit.
“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” said Lawrence Yun, NAR chief economist. Yun cautioned that some of the November gains may be due to delayed transactions as buyers faced difficulty obtaining mortgages. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage,” he said.
For the year, pending home sales were up 5.9 percent from November 2011.
“The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added. The four geographical regions tracked by NAR all posted gains. The West, hard-hit by collapsed housing bubbles in California and Nevada, was the strongest gainer, with pending sales surging 14.9 percent from October and rising 2.9 percent from a year ago.
“Lower mortgage rates may be translating into stronger demand for housing,” said Michael Gapen at Barclays Capital. The average 30-year mortgage rate hit a record low of 3.91 percent last week, according to mortgage finance giant Freddie Mac.
— (AFP) WASHINGTON
Mortgage rates are expected to remain very low at least through mid-2012, while housing activity improves slightly, according to the Freddie Mac economic and housing outlook released Wednesday.
The outlook also projects fewer single-family home-loan originations but more multifamily lending in 2012. The rental market is likely to lead growth in the lending industry, though parts of the country will also benefit from increased activity in the single-family home market.
High unemployment and a glut of foreclosed properties have depressed the housing market in recent years, despite extremely low interest rates that have made borrowing more attractive.
“While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” said Frank Nothaft, Freddie Mac’s chief economist. “All told, next year will be another bumpy ride.”
Job growth must accelerate beyond the average monthly payroll gains of 130,000 seen this year through November for the unemployment to decrease significantly. Even then, the mortgage company predicted the unemployment rate will remain above 8% in 2012.
Freddie Mac predicts the U.S. economy will grow by about 2.5% next year.
More offers are coming with a contingency: The buyer wants the house but the seller has to give them more time — 30 to 60 days, possibly — to try to sell their own home before they will make the deal final, more real estate professionals are reporting.
Many sellers will continue to show homes to potential buyers during the contingency period, but since it’s listed in the multiple listing service, some buyers might be less apt to take a look.
“In a strong real estate market, it’s harder to get away with (a sell contingency),” Eric Tyson, co-author of “Home Buying for Dummies” told the Chicago Tribune. “It adds another element of uncertainty to the deal.
“Most contingency agreements contain a kick-out clause: If your dream home’s seller receives a noncontingent offer during the set time period, you typically have a day or two to rescind the contingency or risk losing the home,” according to the Tribune article.
Oftentimes, seller’s agents will want to visit the buyer’s home before agreeing to a contingent sale offer to check the home’s condition and location and see whether it’ll likely sell in the time period, the article notes. “The seller’s agent may even have a hand in setting the price or determining how long the home should be on the market before a price drop,” according to the article.
Source: “Contingency Sale Offers Becoming More Acceptable,” Chicago Tribune (Dec. 9, 2011)
