Many believe that very few houses are selling and that almost no one can get a mortgage. We want to let everyone know that neither of these assumptions is true. Recently, the National Association of Realtors (NAR) released their Existing Homes Sales Report. According to the report there are, on average, 12,109 homes selling in the United States EACH and EVERY DAY! That means that approximately 12,000 houses sold yesterday, approximately 12,000 will sell today and approximately 12,000 will sell tomorrow. So the thinking that homes aren’t selling just isn’t true.

Another interesting fact in the report was that 72% of these transactions were accompanied by a mortgage. That means that approximately 8,719 people qualify for a mortgage on a daily basis in this country.

There are over 12,000 homes sold and over 8,000 mortgages granted every day. The real estate market is doing better than many believe.

The KCM forecast hits on certain expected outcomes.  Real Estate is extremely local and I believe we’ll see  opportunities in our market in 2012 that may not be reflected in the national trends.   In Southern California’s  South Bay area, for example,  home sales over a million dollars are dropping below the demand.  Normally this is the beginning of a turnaround.  Even if the prices soften a bit in the first half they will hit bottom and turn up, as history has shown, because of the pent-up demand. We may begin seeing this trend in more locations as consumer confidence continues to grow.  Overall, I feel confident that we are headed in the right direction.

By the KCM Crew:

Predicting trends during the most volatile housing market in American real estate history is no easy task. We strongly believe these are the five real estate items we should keep an eye on in 2012:

1. Buyers Will Return

In 2011, a lack of consumer confidence in the overall economy dramatically impacted the housing market. Buyers were afraid to make a purchasing decision on any big ticket item. By the end of 2011, consumer confidence began to return and sales increased. Economic conditions will continue to improve throughout 2012 and consumer sentiment will solidify. Once that happens, home buyers will realize that now is the time to buy.

2. Foreclosures Will Increase

The ‘shadow inventory’ of foreclosures which has been growing since the robo-signing challenges of late 2010 will finally be introduced to the market. Distressed properties sell at discounted prices. They will impact the housing values of the non-distressed homes in the area.

3. Prices Will Soften

As more and more foreclosures come to market, there will be greater downward pressure on the values of houses in the region. Foreclosures impact values of non-distressed properties in two ways:

• They will eat up some of the buyer demand in the market.
• They will impact the appraisal on ALL transactions in the area.

An increase in foreclosures will have a negative impact on values. This will cause more homes to be underwater.

4. Short Sales Will Increase

As mentioned above, we strongly believe that home prices will soften through at least the first half of 2012. Falling prices will force more homeowners into a position of negative equity. Negative equity is one of the triggers that cause people to strategically default on their mortgage obligations. If this happens, there could be an increase in the number of foreclosures. However, we predict that banks will take preventative measures which will help many of these homes avoid foreclosure by easing the requirements in the short sale process for both homeowners and real estate professionals.

5. Great Agents Will Be VERY Successful

Real Estate professionals who have invested the money, time and energy to truly understand what is happening and why it is happening will separate themselves from their competition and do very well this year.

Those who take that next step of learning how to simply and effectively communicate the market to their clients will be seen as industry leaders. These experts will dominate their markets.

By Inman News, Thursday, December 29, 2011.

Inman News®

Mortgage rates surveyed by Freddie Mac bounced back from historic lows this week, but aren’t expected to soar in the New Year.

Rates on 30-year fixed-rate mortgages averaged 3.95 percent with an average 0.7 point for the week ending Dec. 29. That’s up from 3.91 percent last week — an all-time low in records dating to 1971 — but still well below the 2011 high of 5.05 percent seen in February.

The 30-year fixed-rate loan has averaged at or below 4 percent for the past nine consecutive weeks, Freddie Mac noted in releasing the results of its Primary Mortgage Market Survey.

Rates for 15-year fixed-rate mortgages averaged 3.24 percent with an average 0.8 point. That’s up from 3.21 percent last week, an all-time low in records dating to 1991, but down from the 2011 high of 4.29 percent registered in February.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.88 percent with an average 0.6 point. That’s up from 2.85 percent last week, an all-time low in records dating to 2005, but down more than 1 percentage point from the 2011 high of 3.92 percent seen in February.

Rates on 1-year Treasury-indexed ARM loans averaged 2.78 percent with an average 0.6 point. That’s up from 2.77 percent last week, an all-time low in records dating to 1984, but  down from a 2011 high of 3.4 percent in February.

Freddie Mac’s rate survey is based on loans offered to borrowers with good credit scores who will be making down payments of at least 20 percent. Borrowers with damaged credit or making smaller down payments can expect to pay higher rates.

Mortgage rates are largely determined by demand for mortgage-backed securities (MBS), bonds that fund the vast majority of home loans.

The Federal Reserve helped push mortgage rates down in 2009 and 2010 by buying $1.25 trillion in MBS. Since then, the European debt crisis has helped keep mortgage rates down, as investors seek the relative safety of government-backed mortgage bonds, whose payments are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

In a Dec. 20 forecast, economists at Fannie Mae project that rates for fixed-rate mortgages will average 4.0 percent in 2012 and 4.3 percent in 2013, down from 4.5 percent this year and 5 percent in 2009.

The Mortgage Bankers Association predicts rates on 30-year fixed-rate loans will average 4.2 percent in 2012 before rising to 4.7 percent in 2013. The National Association of Realtorsprojects rates on 30-year fixed-rate loans will hold steady at 4.5 percent in 2012.

Image via Reji/Shutterstock

Inman News®

NAR index hits highest level since April 2010

A monthly index that tracks pending sales of U.S. existing homes rose to its highest level in 19 months in November, according to a report released today from the National Association of Realtors.

NAR’s Pending Home Sales Index, which is based on purchase contracts signed but not yet closed, jumped 7.3 percent from an upwardly revised 93.3 in October and 5.9 percent compared to November 2010, to 100.1. That’s the highest index score since April 2010, just before the deadline for a federal homebuyer tax credit program, when the index was at 111.5, NAR said.

The index is not affected by the trade group’s recent “rebenchmarking” of existing-home sales figures because it uses a different methodology based directly on contract signings and the index is adjusted for seasonality, the trade group said.

The index typically represents about 20 percent of all existing-home transactions. An index score of 100 is equal to the average level of sales contract activity in 2001, which was the first year examined by the trade group and a robust year for existing-home sales.

The index rise may be partially due to delayed transactions resulting from “unusually high” contract failures, said Lawrence Yun, NAR’s chief economist, in a statement.

“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,” Yun said.

“November is doing reasonably well in comparison with the past year. 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 index rose month to month in all four U.S. regions and year over year in all except the Northeast where it remained essentially flat. The Midwest saw the biggest annual increase (9.5 percent) to 91.6, followed by the South, which saw an increase of 8.7 percent to 103.8.

In the West, the index rose 2.9 percent to the highest level among the regions, 121.2. The Northeast had the lowest index level in November, 77.1, dipping a slight 0.3 percent from November 2010.

In its latest economic outlook, also out today, NAR released its first forecast figures for 2013. NAR projects new-home sales fell 5.9 percent in 2011 to 303,000, but will rise 16.2 percent in 2012 to 352,000 and jump a whopping 53.4 percent in 2013 to 540,000.

This year’s median price for new-home sales was an estimated $222,800, a slight 0.8 percent rise from 2010. NAR expects the median will rise 1.9 percent to $227,000 in 2012 followed by a projected 3.3 percent increase to $234,500 in 2013.

Existing-home sales fell 3.7 percent in 2010 from 2009 to 4.18 million units, according to NAR’s rebenchmarked figures. In 2011, sales are expected to rise 1.7 percent to 4.25 million. In 2012, NAR predicts sales will jump 4.7 percent to 4.45 million with a further 5.2 percent increase to 4.68 million in 2013.

The trade group expects the median price for existing homes to drop 4.4 percent this year, to $165,200. Nevertheless, NAR predicts prices will subsequently rise 2 percent in 2012 to $168,500 and another 2 percent in 2013 to $171,800.

For the first time, NAR forecasts rent inflation, predicting rents have risen 2 percent from 2010 this year and will rise 3 percent and 3.5 percent, respectively, in 2012 and 2013.

As in last month’s outlook, the trade group expects this year’s real gross domestic product growth rate to be 1.7 percent with a 2.5 percent rise in 2012. For 2013, NAR projects a 3.1 percent growth rate, back to historical norms.

NAR expects this year’s unemployment rate to average 9 percent, with a drop to 8.4 percent in 2012 and 8 percent in 2013.

The 30-year fixed mortgage rate averaged 4.5 percent in 2011 and will fall slightly in 2012 to 4.3 percent before rising to 4.9 percent in 2013, according to NAR’s projections.