Wall Street Journal Video Explains Real Estate Bidding Wars
According to the Wall Street Journal pending home sales in March hit their highest level since April 2010 spurring real-estate bidding wars. View the below video from the WSJ.com website
According to the Wall Street Journal pending home sales in March hit their highest level since April 2010 spurring real-estate bidding wars. View the below video from the WSJ.com website
The Denver Post Reported today, April 27, 2012, that the Denver housing Market has hit bottom as the median home values rose to 0.7 percent in March from February and are up 1.2 percent since last quarter.
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New advice from the trenches on buying a home: Look early. Think fast. Hone your quick-draw skills with the checkbook.
The Metro Denver real estate market, not long ago a buyer domain, suddenly has shifted to a paradise for sellers, at least in some neighborhoods and price ranges.
NEW YORK (CNNMoney) It is the eternal question in real estate: Should I buy or rent?
The answer has never been clearer: Buy.
In 98 of the top 100 housing markets, buying a home is more affordable than renting, according to the online real estate company Trulia. Only Honolulu and San Francisco buck the trend.
There are several reasons. Home prices are falling. Mortgage interest rates are at historically low levels. And rents are on the rise.
Of course, many renters are not in a position to buy. For one, it’s hard to get a mortgage these days, despite low rates. And paying rent can push them further away from being able to afford to buy.
“Rising rents make it harder for people to save for a down payment, which is the biggest barrier to buying a home that aspiring homeowners face,” Jed Kolko, Trulia’s chief economist.
The nation’s cheapest buyer’s market is Detroit, where purchasing is only 3.7 times more expensive than renting.
Other top five metro areas where buying is much better than renting are Oklahoma City, Dayton, Ohio,Warren, Mich. and Toledo, Ohio.
Rankings like these, however, can obscure the factors that go into each decision.
Housing markets, even within a single metro area, typically have local submarkets. Take New York City, for example. Renting in Manhattan is more affordable than buying. But in suburban Westchester County just miles to the north, buying is the more affordable option.
The size of the home can also make a difference. In some markets, renting can be a better deal on larger homes, according to Trulia.
In San Francisco, for example, studio and one-bedroom apartments sell for 13.1 times rent, while three bedrooms or larger sell for more than 18 times rent.
The Trulia survey does not take into account home price trends, which are another factor for individuals choosing whether to buy or rent.
“People will pay more for a home if they expect prices to rise and give them a better return on their investment,” said Kolko.
Those calculations are about to change, according to Ken H. Johnson, a professor of real estate at Florida International who has studied the buy-vs-rent question extensively. He believes home prices nationally have bottomed.
“The ship has turned,” he said. “Markets should slowly start to recover. Housing will return to its traditional role of a safety investment.”
If so, that adds an incentive to buy. And investing in many of the most expensive markets may be even safer.
Kolko pointed out that places like Honolulu, San Francisco and Boston have strong long-term growth prospects. They also have little physical space to grow, a factor that tends to keep prices strong.
On the other hand, old areas that aren’t growing much — while cheap — may not return much in the long run.
“Buying is much cheaper than renting in slow-growing places with high vacancy rates and land to spare, like Detroit and Cleveland, where prices are unlikely to improve much in the future,” he said.
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The metro Denver housing market took another step toward recovery in February, with sales up and inventory levels down. Unsold homes on the market dropped sharply, with the current inventory at 10,086, down 41.9 percent from February 2011.
Properties under contract for sale totaled 4,150 in February, an increase of 12.4 percent from the same month in 2011, according to data compiled by independent real estate consultant Gary Bauer. “The momentum that started at the beginning of the year is continuing,” he said. “We’ve got a market that’s really moving.” Driving the market is a surge in the number of first-time buyers and move-up buyers targeting lower-priced homes, Bauer said.
Among single-family home sales in February, 43 percent were properties that sold for less than $200,000. For condo sales, 62 percent were priced at less than $150,000.
Sellers of the lower-priced properties are moving up to moderately priced homes, creating a bottom-up chain reaction that should eventually stimulate the sale of more expensive homes, Bauer said.
The median price of detached single-family homes that closed in February was $220,000, up 0.5 percent from January and unchanged from February of last year.
Condos and townhomes sold in February at a median price of $120,000, up 6.2 percent from January, but a decrease of 3.8 percent from February 2011.
Economist Patty Silverstein of Littleton-based Development Research Partners said that a 13.2 percent increase in home sales during the first two months of the year “demonstrates that the housing recovery remains on track in metro Denver.”
She noted that although inventory levels are down, they remain high enough that metro Denver “is still not achieving solid price appreciation.”
Housing and mortgage analyst Lou Barnes of Premier Mortgage Group in Boulder noted that two recent national reports showed ongoing weakness in the real estate market.
Case/Shiller’s home-price index dropped 3.8 percent in the last 90 days of 2011. CoreLogic reported that 27.8 percent of households valued lower than their mortgage balances.
Nobody wants to catch a falling knife. It is as simple as that. If potential buyers see continued home price erosion, they will stay parked on the sidelines. But as with everything else in this unique and historic housing market, perhaps the usual logic doesn’t apply.
“Housing is one of the great investments right now. I tell people all the time when they come up to me, they say, “What should I do, Mr. Trump?” I say go buy a house,” said Donald Trump earlier today on CNBC.
“It wouldn’t be an obvious mistake to buy a house now,” hedged Robert Shiller, barely a few hours later.
Perhaps they were just jumping off Warren Buffett’s declaration that if he had a way to manage them, he would buy a couple of hundred thousand single family homes and rent them out.
Housing appears to be rated a “buy” these days, especially among investors, who see a ripe and rising rental market and big potential for income. But is it the right time yet for what I call “organic” buyers to get in? By this I mean people buying a home to actually live in it, raise a family in it, let the dog run around in the back yard. If prices are still falling, couldn’t an even better deal be waiting down the road a bit?
No. House prices will continue to fall on a national basis at least through 2012, but you have to look past national headlines to your local market, which is likely already recovering nicely. The trouble with the national numbers is that they are heavily weighted toward the lower end of the market and to the distressed end of the market.
Around 73 percent of homes that sold in January were priced below $250,000, according to the National Association of Realtors. Forty-seven percent of homes sold that same month were considered “distressed,” which is either a foreclosure or a short sale (where the lender allows the borrower to sell for less than the value of the mortgage). With all the activity in these areas, no surprise that prices skew lower.
The $250,000 to $500,000 price range may now be the sweet spot for the market. Sales in January were up in this price range, and if you have good credit, you are within GSE and FHA loan limits in most markets. While FHA just raised its insurance premiums, which may hurt much-needed first-time homebuyer demand, it is still one of the best loan products out there today, especially for those with lower down payments.
You cannot time housing any more than you can time the stock market. True, housing moves far more slowly, but that works to its benefit, as prices don’t rise and fall on daily news or even on major events. Sales have clearly bottomed in housing, and prices always lag sales. They will lag longer this time around, no question, but they will come back. Supply and demand will eventually win out, even after an historic crash. If you can’t get a good mortgage now, then perhaps it’s not your time, but if you can, waiting may not buy you much.
Do not miss touring these spectacular homes at 170 Lafayette Street and 755 Gaylord Street, both in Denver this Sunday, February, 26th.
170 Lafayette Street Located in the Country Club Historic District • 3, 451 Sq.Ft.plus 1,127 Sq.Ft. Bsmt • 4BD/5BA • Beautifully appointed Country Club home. Meticulously renovated for modern living with historic design intact. Offered at $1,650,000
755 Gaylord Street - Located in the 7th Avenue Historic District! 4,234 Sq. Ft. • 4BD/4BA • Fully renovated in 2001 under the expertise of architect Elizabeth Metz and Capstone Construction, this beautiful Georgian on a fabulous block is a gem. Offered at $1,555,000
WASHINGTON — The housing market is flashing signs of health ahead of the spring-buying season.
Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.
Sales have risen nearly 13 percent over the past six months. While they are still well below the 6 million that economists equate with a healthy market, the gains have coincided with other changes in the market that suggest more sales are coming.
“The trend is clearly upward,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The National Association of Realtors said Wednesday that re-sales increased 4.3 percent last month to a seasonally adjusted annual rate of 4.57 million.
Single-family home sales rose 3.8 percent. And the number of first-time buyers, who are critical to a housing recovery, increased slightly to make up 33 percent of all sales. That’s still below 40 percent, which tends to signal a healthy market.
One concern is the market is still saturated with homes at risk of foreclosure, which lower broader home prices. Those rose to make up 35 percent of sales.
But the supply of homes on the market has plunged to 2.3 million, the lowest level since March 2005. At last month’s sales pace, it would take more than six months to clear those homes, consistent with a healthy housing market.
By Derek Kravitz
The Associated Press
Read more: Sales of existing homes post strong gains in past six months – The Denver Post http://www.denverpost.com/business/ci_20024001#.T0ZasVGNkVp.email#ixzz1nDnodkGI