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Adrienne Kessler

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Supply and Demand: Correcting the Imbalance

03-05-12
Adrienne Kessler
I love when business concepts like supply and demand get to prove themselves. Inventories of homes listed for sale in January dropped by 6.6% from December to 1.77 million, the eighth straight month that listings have declined. For-sale listings are 23.2% below year-earlier levels and at the lowest point since the housing bust accelerated five years ago, according to data fromRealtor.com. So, do the principles of supply and demand come into play right now? Do costs go back up?
Housing inventories typically rise heading into the spring selling season, but only four markets saw inventories increase from December, none of them in California.
There were nearly 2.31 million homes for sale at the end of January, a 21% decline from one year earlier. At the current pace of sales, it would take 6.1 months to clear that inventory, the lowest level since April 2006, before home prices began falling.
Low inventories are a prerequisite for any housing recovery because a glut of unsold homes has been one factor pulling down prices. Declines, in this manner, are a positive for the housing market.
Inventories typically jump in January after a seasonally slow home-shopping period during the December holidays. But this year, the supply is lower which should only help recover home prices. Correcting the imbalance between supply and demand is an amazing start to a full-blown housing recovery.
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Your Market News:

02-13-12
Adrienne Kessler
Your Market News:
2012 is off to a promising start. Mortgage rates continue to drop and have remained under 4% for nearly two months. Home sales are strengthening and pending home sales, a measure to gauge future sales, are at their highest levels since March 2010.
Job growth has been increasing for most of 2011, with unemployment dropping to 8.4%. As more people are getting jobs, consumer confidence has also been increasing.
Even with substantial national improvements, this continues to be a "one neighborhood at a time" recovery. Payroll jobs are up in 25 states. Global factors such as the European debt crisis are also complicating a more robust recovery. Strong guidance is needed from local and global leaders to continue this growth, as well as allow for business to maintain momentum toward building and expanding upon the opportunities that exist.
Existing Home Sales
Existing home sales continued their rise, up 5% in December, to a seasonally adjusted rate of 4.61 million. The pattern of home sales in recent months demonstrates a market in recovery. Record-low mortgage interest rates, job growth, and bargain home prices are giving more consumers the confidence they need to enter the market.
Home Prices
Homes prices for December were down 2.6% from a year ago. One factor contributing to lower prices has been the high level of distressed properties being sold. In December, these properties began to show signs of price stabilization and increase. Foreclosures were selling at 22%, a 2% increase from a year ago, and average prices for short sales prices had risen by 3%.
Inventory
The housing inventory dropped 9.2% in December to a 6.2-month supply, or 2.38 million homes, at the current level of sales. These are the lowest inventory levels of homes for sale since March of 2005. The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future.
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2012 -- Year of the Political Economy

01-23-12
Adrienne Kessler

Fannie issued an article about how 2012 is the year of the political economy. Stating that the rise and fall of our housing market would be based entirely on how the economy itself fares this year. And so far so good. The housing sector is showing improvement due to gains in employment.

Not only that but Fannie believes the second half of this year will be great for the housing market because of positive consumer behavior. The global economy is to be considered when trying to make a housing forecast. But the Brightside of 2012 will show growth because of predictions for our domestic economy and thus the housing sector. I don’t love politics and relying on a political economy isn’t my favorite plan. But good news is good news. So I like it.

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Breaking Mortgage Records

01-16-12
Adrienne Kessler

Mortgage rates sunk to record lows again this week.

The average rate on the 30-year fixed mortgage fell to 3.94%, matching the all-time low hit in early October, according to Freddie Mac's weekly mortgage rate survey. Meanwhile, 15-year fixed-rate loans hit a new record low of 3.21%, surpassing the record set on October 6.

Five-year adjustable rate mortgages also plumbed new depths, hitting 2.86% for the week

Low-interest mortgages will be available at least through mid-2012, according to Freddie Mac's chief economist, Frank Nothaft.

The low rates can translate into big savings for home buyers. Five years ago, a home buyer would have been lucky to land a 5% rate on a 15-year loan. Now 3.25% is common.

If you’re not in the buying mood, it might interest you to know that last week, mortgage applications climbed 4.1%, driven by a surge of home buyers trying to refinance to record-low rates. It’s a great time refinance! According to the Mortgage Bankers Association's latest Market Composite Index, close to 80% of loan applications were to refinance existing loans.

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Make your Move

12-12-11
Adrienne Kessler

The average rate on the 30-year fixed mortgage hovered above its record low for a sixth straight week. Which begs the question, why isn’t everyone taking advantage of this?

Freddie Mac said Thursday the rate on the 30-year home loan ticked down to 3.99 percent from 4 percent the previous week. It dropped to a record low of 3.94 nine weeks ago, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage was edged down to 3.27 percent from 3.30 percent. Nine weeks ago, it too hit a record low of 3.26 percent.

Rates have been below 5 percent for all but two weeks this year.

It’s the time to strike. Sales of previously occupied homes are ahead of last year's sales figures. The amazing advantage these low rates offer are obvious and people are taking advantage.

Some lenders say they are also seeing an increase in applications through the Obama administration's refinancing program, which was broadened in October to allow up to 1 million more homeowners lower their monthly mortgage payments.

What are you waiting for? Make your move.

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