November home sales leap
NEW YORK (CNNMoney.com) -- After surging 10% in October, sales of existing homes jumped again in November, growing 7.4% compared with October to an annualized rate of 6.54 million units, according to the National Association of Realtors.
"This clearly is a rush of first-time buyers not wanting to miss out on the tax credit," said NAR's chief economist, Lawrence Yun.
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During my real estate conference in Atlantic City, I attended a seminar with Mr Lawrence Yun, National Association of Realtor's chief economist, who shared some very interesting and optimistic information with us.
I will share with you my notes from this discussion with him.
He said that in a normal housing market, supply is usually at 6 months - that has been the historic average. He said that currently, we are trending down from 7 months and are very close to a normal housing market. Of course every market is different, but this is a positive sign when looking at the housing market as a whole.
He also said in a very convincing tone "the worst is over, momentum is steadily building." - Things that make you go hmmmm right? He said many times that we already hit bottom. Buyers that are waiting to see if prices will continue to go down, should buy now before news gets out and other buyer's figure it out or it will be too late soon.
He also made an interesting point and said that "home values have over-corrected." What does this mean? Well, that with prices dropping quickly and steadily over the last year or so, they have actually dipped too low according to historic trend lines. Which he also pointed out that our recession was right on schedule and we are repeating history. Because of this over-correction, he and his team made a strong case to the Obama administration regarding the extension of the home buyer tax credit and how this could help keep values from dropping further at levels that would be difficult to recover from. It seems that the home buyer tax credit is doing it's job, with a large percentage of sales across the board are from buyer's that are looking to cash in on the credit.
He also quoted that the NAR, Case Schiller, and FHFA (housing measure) all show that month to month, we are seeing price stabilization. He even felt confident enough to say that 'buyers buying today's market, are not losing money'.
We'll be seeing changes in FHA guidelines with tighter restrictions because of the large number of delinquencies in loans. They are considering raising the credit score requirement as well as lowering the loan limits as a way of preventing foreclosures in the future.
Lawrence Yun, told us that he predicts a 4% home price growth in 2010.
He predicts home mortgage interest rates to rise to 5.5% . He added that our budget deficits need to be reduced in order to keep rates low, and with Americans seeing these numbers rising not lowering any time soon.. where do you think rates will go..
When he speaks, people listen. Unfortunately he spoke so fast and went through a gazillion graphs that I was jotting down everything I could but missed some of his other points.. Like how he was explaining that if housing starts (new construction) stay low we could see a housing shortage in 2011 or 2012 - which will leave a big demand for homes.. I was interested in his interpretation of this because it could mean some lucrative opportunities should be had now by builders..
So here is some interesting information coming from a credible source, not just me and other real estate agents saying now might be the best time for you to buy. I hope this provides some new light for you - as clearly, it isn't all doom and gloom and we have crawled out of our buyers market it seems..
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