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Real Estate News by Tom Monson
June 16, 2011
My belief is that our economy is driven by the confidence of the consumer. Here is part of an article from Rasmussen: Just 23% of Adult Consumers say the U.S. economy is getting better these days, while 56% say it's getting worse. A strong majority (64%) believe the country is currently in a recession. Read the full article here.
So what does this mean to the real estate market here in Souther Oregon? This is the tale of two markets. The market for first time home buyers is brisk. Homes listed under $200,000 are selling fast (if they are priced right) while homes over $300,000 are on the market for a long time and are deeply discounted (for the most part).
I recently sent out a newsletter with local statistics and a summary. The number of lower priced homes on the market is approaching a number which we could be associated with a healthy market. That's right. For PDF copy of that report, click here. The conclusion I came to was that this is a great time to buy. No one knows how long these low interest rates will last and no one knows when the prices will start an uptick again. Click here for report.
People constantly tell me about the massive number of foreclosures in the newspaper. Certainly there are but these notices are filed from three to six months prior to that actual foreclosure. I think that the banks have figured it out that if they dump a bunch of homes on the market that the prices will fall dramatically. This would be great for the buyers but not good for the rest of teh sellers and the banks. So I believe they are going to release them a little at a time. Additionally they benefit because as long as they have it on the books they are assets at a different value than they would be. It's complicated. If you want to know more, let me know. Email Tom
For several years now, this real estate market has been in chaos. It seems to be simmering down but we still have an uphill road for the next two to four years. We will not revisit the crazy property values we experienced four and five years ago until the 2020's.
April 8, 2011
For some time, I have been telling my clients that this is the perfect storm for buying a home. The storm is about to end for two reasons.
1. Prices are soon to begin rising again. A recent article by Fortune Magazine makes an excellent case for the upcoming shortage of housing. They site the lack of new construction as the primary cause. Click here for complete story.
2. Interest rates are going to begin rising again.
U.S. Treasury Secretary Timothy Geithner said Wednesday the government should "at a deliberate pace" back away from housing market support.
In prepared remarks for the Senate Committee on Banking, Housing & Urban Affairs, Geithner said policies that shaped financial decisions for decades should be reversed.
This could mean several things. One of the reasons mortgage rates are so low right now is the federal government has been supporting the market by buying the mortgage backed bonds which keeps the rates low. When they stop this practice, which they earlier said it could be as soon as this summer, this could cause rates to rise.
"Our goal is not for every American to become a homeowner," he said. Click here for complete story.
A $200,000 loan at 5% the payments would be $1,073.64.
A $200,000 loan at 7% the payments would be $1,330.60.
Our newsletter had some great ideas and information for the local real estate market. If you would like to receive one via regular mail, please email me you name and address and I will add you to our list.
Happy tax day.
Tom
March 10, 2011 - Distressed Properties Continue Strong Influence
Spring is just around the corner. Yea!
I see it was about a year and 15% ago that Moodys called the bottom. Maybe a year from now we will be able to look back and say yea, Spring of 2011 was the bottom.
What do I think?
According to the Southern Oregon Multiple Listing Service (SOMLS) sales of distressed homes in
Sales continue to be relatively strong, with an increase in volume over the same period last year from 378 units sold in 2010 to 401 units in 2011, this is more significant in light of the fact that there is no federal tax incentive in place this year, as there was last year.
With sales remaining steady and inventories falling, there is hope that this may bring more stabilization to our housing market.
Even though prices are down, real estate is moving. We are taking listings now and if you know of anyone who wants to sell or buy a home or other property in Jackson or Josephine Counties, please email or call me at (541) 210-6698.
One thing for sure, affordability is at record levels, interest rates are at historic lows and there is a brisk flow of first-time-home buyers in the market. Why because they have to live somewhere and they can actually buy and have their mortgage payments lower than their rent. Nice thing they can paint their walls purple, green and pink if they choose. If you were ever thinking about buying a home now is a good time to consider it. If you need some help finding the right home or need to get connected with a loan broker, let me know.
I just sent out my monthly newsletter which included five important tax tips. If you would like to be added to our mailing list, just let me know.
Thanks for your time and hope this spring is the best ever for you and your family.
Best wishes,
Tom om
February 21, 2011
From just about every source I hear that we are moving up from the bottom. According to CNN Money.com by the end of the third quarter (June) 1011 the median home price is expected to fall by 2.6% (I believe the bulk of this fall happened this past December and January). By the end of the same period for 2012 the median home price is expected to rise by 8.5% for the Medford, Oregon real estate market. Unless something happens to undermine the confidence of the consumer over the next year, we may be getting some traction for our embattled economy. This may be the bottom.
According to USA Today 2010 was the worst year ever for home builders, They said the housing industry was poised to gain strength. A survey of 44 top economists showed that about half of them believe that we will see home prices hit bottom this year. About one in four believe it will be longer.
If you are selling a home, this is good news. If you are buying a home this may not be such good news. If you are selling, email me or call me at (541) 210-6698 and I can provide you with a realistic expectation of what you could expect to sell your house for in this market.
Most sources are projecting mortgage rates are going higher during the rest of 2011. When this happens the purchase power of a monthly payment drops. I also understand that the price for mortgage insurance is also going higher. These two items will lower the amount of a purchase price a potential home buyer could afford.
If you are thinking about buying a home in the near future, email me or call me at (541) 210-6698 and I can help you find a home you can afford.
If you believe, as I do, that the housing industry is a huge part of our economy, then you will find some encouragement in the fact that we are moving up off the bottom. Let's hope it goes that way.
Best wishes,
Tom
January 10, 2011
I just read an article that I thought you would like to see about what is going to happen in 2011
Freddie Mac analysts point to five features that they believe will likely characterize the 2011 housing and mortgage markets:
1. Low mortgage rates. With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market. Thirty-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates of 5/1 hybrid adjustable-rate mortgages will likely remain below 4 percent in 2011.
2. Prices have hit bottom. House prices are likely to begin a gradual, but sustained recovery in the second half of 2011.
3. Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market in the New Year, likely translating into more home sales in 2011 than in 2010.
4. Refinances will dwindle. Many eligible borrowers have already refinanced and the federal Making Home Affordable refinance program is expiring on June 30. While fixed-rate loans are likely to remain low, they will move up gradually, making it even less likely that refinances will be attractive to most home owners.
5. Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings — known as the "seriously delinquent rate" — generally crests within a year of the start of the recovery in payroll employment, and this economic recovery appears to fit within that pattern. Payrolls began to rise last January, and by the spring the seriously delinquent rate had begun to fall.
Source: Freddie Mac (12/09/2010)
December 15, 2010 - It's a long time from June to December but not much has changed. It is the time of year when we celebrate. Jan and I would like to wish you all a Merry Christmas and Happy New Year. If you don't celebrate Christmas, we would like to extend our greetings for your continued success and offer our good will and blessings.
I have been asked for my opinion of what is going on in real estate today and what the future holds for the housing market. I can tell you what is going on today but as far as what tomorrow holds I can only listen to the experts and guess. (If I knew the answer to what is going to happen, I would be sitting in the sun on MY island somewhere in the Caribbean sipping a tropical drink.)
What is going on today? Jan and I are busy finding homes for first-time home buyers and helping people who move to Medford find a good place to live. Jan and I believe that how we do is a reflection of who we are and how much of us we put into our client's needs. I always say, "I don't work for commissions, I work for my clients." There is a good inventory of affordable homes out there and in most areas there are some really great deals.
Market Conditions: One of the signs of a healthy real estate market is an inventory of about six months. As of the end of last month the Months Supply of Inventory is 8.5 which is up from a year ago when it was 8.3 months. This simply means that the market is slipping back to its old ways of too much inventory which keeps the prices down.
The Housing affordability index is 152.2 up from last year's 147. This is good for buyers because it means that a family with a median income has a greater ability to afford a home at current prices.
Pending sales are down by 7%. This simply means that there are fewer sales in the process that have not been completed.
Other relevant Jackson County statistics are the median price of Extisting Home Sales is down 10.4% from a year ago and down 42.2% from 5 years ago - just when you thought it was safe to go back into the water. For New Home Sales the median price is down 9.1% for the year and 28.3% for five years.
One final statistic that you may find interesting is the number of bank owned homes (taken back by the bank or lender) accounted for 10% of the homes on the market, the number of homes being offered as a short sale (where the bank or lender has to approve the sale) was 16.7% and the balance of approximately 73.2% were regular sales.
If you would like additional information about real estate in Jackson County or a breakdown city by city, email me and I will be happy to send you the full report.
I just heard on the news today that home prices are supposed to fall again next year.
This from www.cnbc.com: Housing prices will fall an additional 5-15 percent as mortgage rates rise moderately and foreclosure backlogs work through the system. Further home price declines will trigger more defaults and foreclosures as the percentage of underwater mortgages rises from the current level of about 25 percent. The government will be forced to address the deteriorating housing market through initiatives designed to support prices. The resolution of Freddie Mac and Fannie Mae must be included as part of any program to address the housing market.
This could be good for both buyers and sellers. Why sellers? Because common sense tells us if they sell and then buy somewhere else, they will make up for what they don't get out of the house being sold by the better deal they get in the one they buy. If they sell and then buy a more expensive home, they have the opportunity to gain more if they buy right.
What about mortgage rates? Recently we have seen rates drop to levels we have not seen since the 1950s. This trend was in part, caused because the Federal Government has been buying bonds which has had the effect of keeping the rates low. Of late, these rates have been creeping up. If you have a mortgage broker or bank, it is always a good idea to check with them to see what the current rates are. Most people buy a home based on the amount of the monthly payment and the amount they need to come to the table with to buy the house. Predictions expect mortgage rates to increase over the next year.
On the CNBC Realty Check web site there is more information about the real credit issue: Here is what the National Association of Realtors: "What is important is the access to credit. We believe that many qualified home buyers that want to stay well within their budget are being denied credit because of the overly stringent underwriting standards of today's market," said Lawrence Yun in our usual post-news release interview.
They go on to say that the real problem is that people can't get loans. Although getting a loan today is more difficult than it has been in the past, we are still able to help people find financing. In fact, Jan and I have been successful in most difficult cases.
The final topic and the question I get most is "When is the market going to improve?" This is back to me on the island but I can tell you the one who makes the most sense is the economist, Harry Dent who talks about the cycles and that the next boom will happen in about 2020 when the Baby Boomers' children, the Echo Boomers will be buying their second home. Right now for Jan and I, the prime part of our market is first-time home buyers (the Echo Boomers). Popular consensus is that the market should improve thought from 2014-2015. And besides all that, there is no more satisfying feeling than helping a deserving family find their first home.
June 4, 21, 2010 - If you are interested in local real estate statistics, this is a link to REAL VALUE (it is a PDF file and will take a little time to load). This is published by the Rogue Valley Multiple Listing Service and contains lots of useful information about the local real estate market.
Every three months Rogue Valley Multiple Listing Service releases statistics for the area and it is broken down by city. Now you can access it here. You can see Median values, number of sales and a whole lot more.
Outlook on Home Values Holds Steady in May
Thursday, June 03, 2010
Rasmussen Reports - Twenty-seven percent (27%) of U.S. homeowners now expect the value of their home to go up over the next year, according to a new Rasmussen Reports national telephone survey. That's a bit more pessimistic than a month ago but still is a higher level of confidence than was found nearly all of last year.
Twenty-one percent (21%) expect their home values to decrease within the next year, showing no change over the past two months. But in July of last year, 29% felt that way.
Fifty-two percent (52%) of homeowners expect their home values to go up in the next five years, a number that had held fairly steady over the past year. Only 14% think their home value will decrease during that time.
Moody Calls the Bottom
Moody Financial has gone on the record saying that real estate prices are going to bottom this year. Read more about it. Is this finally the end of the worst real estate market since the 1930s? (3/3/10)
March 4, 2010
Since my primary professional activity is real estate, I am constantly reading and studying trends so that I can be of greater value to my clients. The information I present here is the result of the study and collection of data and other information that I believe could be necessary for you and my clients to have if you are thinking about entering into a real estate transaction in the near future. It may also be helpful if you just want to know what is going on.
What's Going On
Here is what I believe to be an accurate description of what is going on in our real estate market. This came from the National Association of Realtors. “The close of 2009 brought a measure of relief to global economies. The worst of the recession seems over, with several measures of economic activity posting positive changes in the latter part of the year. As we stand at the start of 2010, a mood of cautious optimism is rising. However, there are signs that continue to point to a fragile recovery, fraught with volatility and potential pitfalls. Macroeconomic activity is still hampered by high unemployment, restrictive credit policies, and over the medium term, a weak national balance sheet laden with growing debt.” Posted March 1, 2010 -
Consumer Confidence
In my opinion, the key to recovery is going to be found in the way the average Joe feels about the way things are going. This is measured in consumer confidence. Consumer confidence is up 20 points from its level measured this time last year but still way below high levels of three years ago. Read more about it. This link is updated every day.
10 Cities for Real Estate Steals
Here is an article that recently appeared in U.S. News and World Report. That talked about the beating that real estate has taken. It also showed the best places to get the best deals and Medford, Oregon was listed as number three. Read more about it. (3/2/10)
I will update this as new information becomes available.
Tom Mosnon, Broker, RE/MAX Ideal Brokers, Inc.
If you have any specific questions that are not addressed here, please feel free to email me.