Reno Home Blog

US Existing Home Sales (w/ graph and raw numbers)

Superb photo by: DIDS'

"The apple does not fall far from the tree."  My friend Dolores would jokingly tell me in describing how great her daughter is. 

It's the same way with the Real estate market.  What's happening in our country's real estate market has a significant effect with how our local markets would behave. 

Even in the stock market, wise investors know that when the general market is in a storm then it's probably a good idea to look for safety until it subsides.

Why follow existing home sales? Home sales reflects one of the most accurate ways to gauge market conditions.

Here's what's happening in our Country's real estate market:

Existing Home Sales--U.S

• October 2007:  5,060,000 homes

• November 2007:  5,020,000 homes

• December 2007:  4,910,000 homes

• January 2008:  4,890,000 homes

• February 2008:  4,950,000 homes

• March 2008:  4,920,000 homes

• April 2008:  4,850,000 homes

• May 2008:  4,950,000 homes

• June 2008:  4,900,000 homes

• July 2008: 4,990,000 homes

• August 2008:  4,930,000 homes

• September 2008:  5,100,000 homes

• October 2008:  4,940,000 homes

• November 2008:  4,540,000 homes

• December 2008:  4,740,000 homes

• January 2009: 4490000 homes

• February 2009:  4710000 homes

• March 2009:  4570000 homes

Graph:

 (click image to enlarge)

Notes:

• VS Last month (Feb): -3%

• VS Last month (Nov): 6.5%

• VS Last month (Oct vs Sept): -3.1%

• VS Last Year (Oct 07 vs Oct 08):  -1.6%

• I agree with what Briefing.com said, "October existing home sales fell,but the 4.98 million level is not all that bad.  It is above the June and August rates.

• "Foreclosures are boosting sales in some areas, but that reflects demand and should not be discounted."

Updated: May 19,2009

Number of updates: 3'rd
Source: Realtor.org

extremely helpful links from realtor.org!

Superb photo by: nedster78

If you want to get ahead of the real estate market it may be a good idea to check these links from Realtor.org.

                    "The apple does not fall far from the tree"

All market are best judged locally, but seeing the big picture helps us understand what's happening in our local real estate market (ex: West doing better than the Midwest).

Reports like these cost thousands of dollars as early as ten years ago.  We are extremely blessed that we don't have to pay a cent for this valuable information.

Why invest an hour browsing through these reports?

I won't be surprised if you'll know more than the real estate 'experts' on T.V. who speak opinions masked as facts.  Here you will get a firm grasp on what is really happening in the market, from pending home sales to consumer confidence.

EXISTING HOME SALES

Sales down 5.3 percent in January.  Superb graph showing U.S existing home sales history all the way from from 1990-2008.  See where the market peaked and if the market has yet to find a bottom.

PENDING HOME SALES

Pending home sales is considered a more trustworthy economic indicator.  Existing home sales could take three months before we get the final number.  Pending home sales take about a month.  Less lag time.

PHSI rose 2.11 percent to 82.10

NEW-HOME SALES

Moved into positive territory after a long trip on negative road.  Up 4.7% from last month.

HOUSING STARTS

Builders have more money to invest in market research than an average person.  We should take a second look on what they are doing, or even more important, what are they betting the market will do.  Though history has shown us that they can be foolish as well.  Use with caution.

Up a whopping 22.2%! in Feb 2009

HOUSING AFFORDABILITY

Example: Qualifying income of $47,904 could purchase a $217,400 home.  Note: use only as a guide.

GDP

Still feeling the bite of the recession. Down  6.5% from last Quarter.

CONSUMER CONFIDENCE

Gives us an idea how willing people are willing to part with their hard-earned money.  Down 32.35% from a month ago

EMPLOYMENT SITUATION

Nearing the dreaded 10% unemployment mark.  Down by 663,000 jobs.

"Existing home sales up by 5.1%--a delightful surprise"

   (click image to enlarge)

"Existing home sales up by 5.1%--a delightful surprise"

From 4,490,000 to 4,720,000--a 230,000 increase.  Most of which came from the West gaining 30,000 homes. (Reno is part of this).  This affirms the Reno existing home sales report released two weeks ago.

I don't mean to be the 'killjoy' but it may be a good idea to wait 'till this 'trend' becomes consistent.  As I write this, two of the last three months have been going up--a good sign.  But we have a long way to go before we reach 2006 (6,478,000) and 2007 (5,652,000) numbers. 

"Joe, are you saying that we have to wait for the numbers to go up to 2006 and 2007 levels for the market to bottom?"

No.  I think it would be years before we go back to those levels, (supposing we do).  And with the sub-prime crisis still fresh in our minds, loose lending standards will not be back for a very long time. 

To know if the market has indeed bottom: signs will be consistent positive sales numbers, if you want to even be ahead of the pack, check the pending home sales.

Additional resources:

• Realtor.org's Exisiting home sales

• Briefing.com's economic calendar

• Reno home blog's Demand

the best explanation I've heard about the financial crisis

Superb photo by: jenn jenn

Many are still asking about what really happened behind the scenes that led to this financial crisis.

In this radio broadcast from This American Life, they explained how it all started--from the borrowers all the way up to the world financial pool that had sixty trillion dollars to invest (they only had thirty as late as year 2000).

What intrigued me most was the psychological intricacies and human nature at work.  What were we thinking?!

• You can download the written transcript here

• Here's the radio broadcast (click "full episode")

*Thanks Dan Ariely from PredictablyIrrational.com (amazing blog) for sharing this link.

"Existing Home Sales Up Surprising 6.5% As Prices Plummet"

Superb photo by: cortniemarie

This morning I was greeted by this headline:

"Existing Home Sales Up Surprising 6.5% As Prices Plummet"       

At first glance, this does not make sense.  How could this take place while we're in arguably the worst financial recession in fifty years.  My first thought was, where did these people get financing to buy these homes?

Even as I study the market every single day, I realize I'm still prone to telling what the market should do--the insatiable human urge to control, not the other way around.  Brutal reality is we are at the mercy of the market--that it does not care whether we're a priest or a pauper, it will do what it pleases. 

So what do we do? We listen.  We observe.

"People fear when they should hope, and hope when they should fear."

Will I go full blast on my personal investment? Maybe not.  But you can be sure that I will be closely looking at the market for opportunities.  History tells us that the real estate market rebounds just when the majority feels financially depressed.

Look out for sustained positive numbers(as of now, it's just one month. See "P.S").  Because if this continues, prices will cease going South.

P.S-  It might be a good idea to check the U.S Existing home sales numbers for the whole year.  To see a better perspective on the bigger picture.

US Government Bails Out Fannie and Freddie

It's a very complex problem/solution depending on how you see it.

• Taxpayers are gravely skeptical, and with good reasons ("Uh, why can't they be allowed to fail?" Said one reader):  Robert Reich's blog

• Europeans and the many of the world's stock markets seem to like the idea: Freddie and Fannie give Europe a lift

• Even our stock market advance on the bailout news: USA Today

    "Stocks advanced Monday as investors placed bets that a recovery in the financial and housing sectors is    
    more likely to occur following the U.S. government's move to bail out mortgage giants Fannie Mae and
    Freddie Mac. The Dow Jones industrials gained more than 290 points"

In my opinion, our frustrations (taxpayer's) over our money being used to save corporation's faces are founded on solid ground.  But for our country to lose Fannie and Freddie along with the 6 trillion dollars they own and back up will be nothing short of a disaster as Dave Rovelli puts it, "It saves Armageddon from happening".

We can go on and on about this but the question we should be asking is: How did we get to this point? Where have all the leaders gone?

Positive news from S&P/Case-Shiller Housing Pricing Index

Superb photo by: oceano mare 

I  received refreshing housing news  from S&P/Case-Shiller this morning. 

I don't know why but the mere mention of that name connotes 'complicated stuff', but don't fret friends it's just a neat housing health checker for the nation.  It tracks the national housing market through the eyes of the top twenty cities in the country (Las Vegas, L.A, Florida etc):

"Data out Tuesday offered some hope that the two-year housing slump is coming to an end."

It goes on to say that more people bought new homes in July than in June (2.4% more) and the number of unsold new homes fell 5.2%, the biggest drop since 1963.  But they also mentioned that "it will still take 10.1 months to clear the inventory of homes" if we base it from the current sales trend.

I welcome good news from the real estate market like how my children greets me coming home from work. I love it.  But I also have to remind myself that I have to give my kids equal individual attention.

I can't cherry pick the market.  If I welcome the good I also need to be wise enough to accept the not-so-good. 

"We may be starting to find a bottom. I'm not convinced of that completely yet but we may be getting close to it," said Nigel Gault, chief U.S. economist at Global Insight.

That's what I feel now.  Hopefully the market will go consistently in this positive direction. 

Here's the rest of the article: On The Home Front (investor's business daily)

You can find the S&P raw housing numbers here

Is it over or is it going to get deeper? A tale of two stories-you decide

Photo from: IBD


I want to share this article to you guys.  It is hard to find real estate reports like this-balanced, fact based and easy to read. 

Housing slump may be nearing its end

"New-home sales fell less than expected in June and inventories dropped to a 3 1/2-year low, the government said Friday, fueling hopes that the worst of the housing slump is over. Meanwhile, durable goods orders and consumer sentiment unexpectedly rose"

Wait,it may take longer

"Stronger sales and falling inventories are hopeful signs. But the housing and mortgage markets remain deeply troubled.

Existing-home sales fell 2.6% to a new low in June, the National Association of Realtors said Thursday. The supply of homes rose to 11.1 months' worth as banks unload foreclosed properties."

*Read the rest of the article here

FHA Loans: A hot subject (guest post)

(This is a guest post by Aaron Dehart, mortgage planner at Morgan Financial. 
You can send him an email for additional questions regarding FHA: Aaron.DeHart@wjbradley.com)

FHA Pricing has been a hot subject as of late.

Although interest rates are still great when it comes to Government Loans, the volatility of the Market Place and the recovery of the Sub prime mess are still rearing its ugly head. As a result, every lender has gone to a risked base pricing system when it comes to Government loans.

Now this does not mean that FHA/ HUD have gone to this but it is the individual banks that are protecting their own interests. For example many banks are requiring a minimum Credit Score of 580 now for them to insure the FHA Loan; others are even higher with a 600 FICO score requirement.

Now this does not mean that someone can not still qualify for an FHA Loan because FHA uses what is called a total score card. Meaning they look at the big picture, this not only includes the credit score, but also takes into consideration time on current, credit history for the past two years, debt to income ratio, loan to value, amount of reserves, etc.

What does all this mean? Obviously the stronger the candidate, good credit, good job history, lower debt to income ratio, good reserves in the bank, will be rewarded with an excellent interest rate.

For example if you have a credit score of say 700, 3 months of reserves and good job history, then you are rewarded with an interest rate of between 6 and 6.25% depending on market conditions when you lock of course. If your score is below 600 and depending on if you get an automated approval, (Automated Underwriting) we will discuss what that is later. Then the banks are going to charge you the selling premium, very simple the higher a risk the more banks have to pay to sell your loan on the secondary market.

The money has to come from somewhere so the banks are going to charge that upfront in pricing to ensure they have a loan that can be sold. Also it is important to point out that if a couple is married, the spouse’s debts must be used in qualifying. The lower mid credit scores of the two borrowers is being used. Example Husband 680, wife is a 575, the 575 score would be used for pricing. It is possible to remove the lower fico if the individual borrower can qualify on their own, however, the debts of the spouse will still be used in qualifying.

So you can see that FHA can fluctuate from having a right at market rate to having a higher than market rate determined by the overall scoring factor that FHA has. FHA are still the best loans to get for someone who has below a 680 FICO score, limited reserves and little or no money down for the transaction, especially if the property is located in a declining market area. The pricing adjusters are far more extreme on Conventional loans if you do not fit into those categories.

Good posts

photo by: .krish.Tipirneni.

1.   I never was passionate about the whole issue of Trulia, Red Fin and those companies 'stealing' our business.  I always believed that these companies were inevitable creations by the Internet age we live in and ultimately it was up to us agents how we will innovate and thrive on the new trends.  But Ryan Ward of  Atlanta Real Estate blog made some good points against it:

See: Atlanta Real Estate

    2.   This will be the most Top 5's I will ever see in my life.

           See: Newsome.org

    3.   What would you do if you got a vicious attack on your computer by a trojan virus that              left you feeling like a deer-staring-at-headlights? (It has happened to me three         
            times)

           Well, according to Diego Orjuela you can call his tech company and be helped for $0.99/minute  and if they can't solve it-it's free! Phil Gerbyshak share his interview with Diego.

See: MinuteFix interview

    4.  Stephen J. Dubner of freakonomics has an interesting link about some people against some practices of NAR(National Association of Realtors).  Ouch, I'm a member of course but maybe we can learn something from this article.

          See: Freakonomics

   

    5. Dustin Luther (he started this site that became the gold standard for real estate bloggers ) freely expresses his thoughts about our real estate industry.

          See: authentic real estate management