According to the June 2008 Case-Shiller Home Price Index, home prices in 15 of the 20 largest U.S. real estate markets either improved, or showed growth from the month prior.
This is the fourth straight month in which that happened which means that a national housing recovery may already be underway.
Now, it's worth stating that all real estate is local and that there's no such thing as a "national real estate market", but for home buyers looking to to maximize their negotiation power to get the best possible "deal", spotting trends like this before the media does is a good thing.
So far, only Bloomberg and a few others have chosen to highlight the positives from the otherwise-negative Case-Shiller report. By contrast, most publishers are focusing on annual home price figures which show a hefty drop of 15.9 percent.
We shouldn't dismiss annual trends because they're helpful in the theoretical sense, but for real, live home buyers trying to identify trends and market bottoms, it's the month-to-month data that matters most.
After looking at 4 consecutive months of Case-Shiller data, the month-to-month data appears to show that home prices have stabilized in most major markets. And, in some, they've already started to recover from their lows.
Source
U.S. House-Price Slide Eases, S&P/Case-Shiller Shows
Courtney Schlisserman
Bloomberg.com, August 26, 2008
When a homeowner buys a new home, he has 3 options of what to do with his current residence:
The most common action plan is the first one -- sell the home and pay off the mortgage. However, with home prices poised to rebound, some savvy homeowners are trying to avoid "selling low".
Unfortunately -- as of August 1, 2008 -- waiting out the market won't be so easy.
Burned by foreclosures and wary of risk, Fannie Mae issued new conforming mortgage guidelines that specifically apply to home buyers planning to convert an existing primary residence into a second home or investment property.
Among the highlights of Fannie Mae's changes:
Selling the primary residence
If the new home being purchased closes prior to the existing home's sale, both payments must be used to qualify the buyer for the new mortgage.Converting to a second home
If the home has less than 30 percent equity in it, the home buyer must show 6 months of PITI reserves for both properties to qualify for the new mortgage.Converting to an investment property
If the home has less than 30 percent equity, its rental income may not be used to help the buyer qualify for the new mortgage.
If it seems like mortgage rules are getting strict, that's because they are. And they're expected to get tougher, too. With each foreclosure and high-profile bank collapse, mortgage lenders tighten up their guidelines just a bit, freezing out the "fringe" borrower from access to mortgage money.
Mortgage rates may rise through 2009, or they may fall. We don't know. But what we do know is that borrowing money to buy a home will be tougher.
If you plan to buy a home in the next 12 months, consider moving up your timeframe or -- at least -- planning ahead. Understanding the mortgage rules and how they can change may be the difference between getting approved for a home loan, or getting turned down.
According to the latest Zillow Real Estate Market Report, home values in Simpsonville increased 1.40%% in the second quarter of 2008, compared to the second quarter of 2007. Nationally, home values decreased 9.9% during this same period. Further proof all markets are local.
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Momentum carried mortgage markets through a week of low trading volume and few economic releases. Rates were volatile, but ended the week unchanged overall.
Don't let the word "unchanged" fool you, however.
From day-to-day last week, mortgage rates covered a huge range and it was only coincidence that Friday ended where Monday began.
And it's the second week in a row that that happened.
Lately, mortgage rates have been highly sensitive to both inflation data and to the U.S. dollar. Lucky for rate shoppers, both were given a boost of support last week by high-profile Americans:
Comments from both of these men attracted buyers to the mortgage market, propping up prices and offsetting those that fled because of lingering trouble at Fannie Mac and Freddie Mac and skyrocketing wholesale prices.
But, for Americans in need of a home loan, know this: As long as there is uncertainty about the U.S. economy, mortgage rate volatility will continue.
And, this week, volatility will get an extra boost because of Labor Day.
Starting mid-day Thursday, trading volume will start to thin and will lead to larger-than-normal movements in mortgage bond pricing. This should cause fits for mortgage rate shoppers because rates will jump heading into weekend.
If you're currently comparing lenders, consider getting your rate locked in early in the week instead.
Stories on TV about the national real estate market are misleading to Americans.
This is because there is no such thing as a "national real estate market".
Consider the latest American Housing Survey. It found that there are 124,377,000 homes in America spread across:
And yet, the media repeatedly groups all 124 million homes into one giant lump and then gives an analysis. No matter how you slice and dice the data, a home in Oregon can't be compared to a home in Mississippi.
This is why national real estate statistics are somewhat useless.
To get real estate analysis that matters, look local instead. And I don't mean stats from your state -- I mean stats from your neighborhood. It's the only way to know what's driving home prices on your street.
Unfortunately, finding local data like this isn't easy; it's far too narrow to be covered by the press. So, the best place to get local real estate data is from a local real estate agent or from somebody else with access to raw real estate data in and around your neighborhood.
By talking to "in the market" professionals that know your backyard, you'll get a much clearer picture of your local market -- good or bad -- than the national media could ever provide.
Real estate is a local market so your real estate data should be local, too.
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