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Pricing a Home to Sell

by Desi Sowers

 

Did you know the best chance for selling your property is within the first seven weeks?

It's true.

Studies show that the longer a property stays on the market, the less the seller will net upon the sale. It is very important to price your property at a competitive market value at the signing of your listing contract. The market is so competitive that even over-pricing by a few thousand dollars could mean that your house will not sell.

An Overpriced Home:
· Minimizes offers
· Lowers agents response
· Limits qualified buyers
· Lowers showings
· Lowers prospects
· Limits financing
· Wastes advertising dollars
· Nets less for the seller

When you are ready, contact me today for a personal market value analysis of your home. No hassles or obligation - just honest advice on how to get top dollar for your home!  It's easy to get started at www.HomeValuesNRV.com

With Affordability Up, Home Buyers Return to the Market

by submitted by Desi Sowers

Thanks to record low mortgage rates and declining home prices, 55 million families - or half of all U.S. households - can afford today’s $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB). “That’s an increase of 17 million households from conditions just two years ago and the best housing affordability number we have seen in years,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “We are now seeing the first signs that buyers are returning to the

marketplace.”

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.

“With affordability up dramatically, reports from our builders in the field indicate that foot traffic in new homes is on the rise and consumer interest is increasing with each passing day. These are encouraging signs that the housing market may be finally reaching a bottom,” said Robson.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.

Single-family permits were up 11% in February 2009, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down. In a survey for Century 21 Real Estate last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority - 78% - said that now is a good time to buy a home. Of those responding to the online poll, 68% said that now is a better time to buy than six months ago.

Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March 2009, 1.5 million visitors logged on to NAHB’s consumer website, www.federalhousingtaxcredit.com, to learn more about the tax credit. Further, a new survey commissioned by Move, Inc. found that nearly 20% of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.

“With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5%, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market,” said Robson.

Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.

Construction of an additional 500,000 single-family homes - the difference between today’s anemic construction rate and one that would move closer to meeting the underlying demand for housing - would generate 734,000 jobs and $35 billion in wages in the construction industry and another 790,000 jobs and $37.7 billion wages in manufacturing, trade, and service sector jobs, he noted.

Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations.

“Clearly, housing will be central to any economic recovery we experience in the months ahead,” said Robson.

For more information, visit www.nahb.com.

RISMEDIA, April 11, 2009

Very Important Housing Indicator

by Desi Sowers

Here is an  important indicator of where housing is headed.  Last week,  new mortgage applications for home purchases and refinances suddenly surged as they hadn't in months.

Applications for FHA loans to buy houses were up by 10.4 percent. And overall home purchase applications jumped by 7.1 percent.

Meanwhile mortgage interest rates dropped to their second lowest level in nearly two decades, according to the Mortgage Bankers Association. Thirty year fixed rates averaged 4.96 percent and fifteen year rated dropped to just 4.5 percent.

Why's this important? New financing applications to buy homes obviously point to rising purchase contracts and closed sales in the months ahead. They also suggest that prices have hit a level in many markets that is attracting once-hesitant buyers off the sidelines.

If you are waiting to "time the market" the only way to know if home prices have bottom is to see prices go back up and then you missed bottom - not a good strategy!

ZIP Codes Where Housing Sales Are Increasing

by posted by Desi Sowers

Housing sales are improving significantly in key ZIP codes around the country where prices have moderated, according to information compiled for BusinessWeek.com by First American CoreLogic.

ZIP codes in California, Florida, Arizona and Nevada dominated the list, but there were also ZIP codes on the
top 25 most-improved sales list from the suburbs around Detroit and Minneapolis and in the metro areas of Atlanta and Chicago.

Inventories are shrinking and prices are stabilizing in several markets, according to the survey. Here are the top 10 ZIP codes with improved home sales:

  1. 94533, Fairfield, Calif. (Fresno)
  2. 92376, Rialto, Calif. (Riverside-San Bernardino-Ontario)
  3. 91342, Slymar, Calif. (Los Angeles-Long Beach-Santa Ana)
  4. 92126, San Diego, Calif.
  5. 33914, Cape Coral, Fla. (Fort Meyers)
  6. 93065, Simi Valley, Calif. (Oxnard-Thousand Oaks-Ventura)
  7. 95123, San Jose, Calif.
  8. 85379, Surprise, Ariz. (Phoenix-Mesa-Scottsdale)
  9. 93722, Fresno, Calif. (Madera)
  10. 95624, Elks Grove, Calif. (Sacramento-Arden-Arcade-Roseville)


Source: BusinessWeek.com, Prashant Gopal (03/05/2009)

What's In the Foreclosure Prevention Plan

by posted by Desi Sowers

The Obama administration yesterday released its long-awaited plan to stem foreclosures. It's organized into three categories:

1) Help for homeoners making their payments but at risk of default and foreclosure. Homeowners with a Fannie Mae or Freddie Mac loan would be eligible to refinance as long as their mortgage doesn't exceed 105 percent of the home's current market value. Currently owners need to have at least 20 percent equity. Potential impact: 4-5 million households.


2) Help for homeowners already in default and in need of loan modification. For lenders that voluntarily agree to lower a borrower's payment so that it makes up no more than 38 percent of the borrower's income, the government would share the cost of lowering the mortgage burden to 31 percent of income. Incentives to lenders to participate include a $1,000 payment. Borrowers can receive up to $1,000 as an incentive to stay current on their new mortgage. Still in the works is a proposed provision that would allow bankruptcy judges to require loan modification (known as a cramdown) as part of a household's restructuring. That provision requires legislation by Congress. Estimated potential impact: 3-4 million households.

3) Doubled resources to Fannie Mae and Freddie Mac. To encourage investors to buy the secondary market companies' mortgage-backed securities, the government explicitly backstops them to up to $400 billion, twice the current amount.

The plan does not provide help to investors or to homeowners who are in trouble with a second home, nor does it apply to homeowners whose mortgage is part of a private-label mortgage security that is not backed by Fannie Mae or Freddie Mac.

"The administration's proposed plan, combined with provisions like the $8,000 first-time home buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values, and move the country closer to an economic recovery," says NAR President Charles McMillan.

Source: REALTOR® Magazine Online

Homeowner Perception Changing: Most No Longer in Denial about U.S. Housing Slide

by posted by Desi Sowers

American homeowners’ perceptions of the value of their own homes moved more in line with reality at the end of 2008, at least when it came to hindsight. More than half (57 percent) believe their own home lost value during the year, according to the Zillow Q4 Homeowner Confidence Survey[1]. This is markedly more than the 38 percent who believed their home’s value was declining when asked during the second quarter of 2008.

In reality, 76 percent of all U.S. homes lost value in 2008, according to analysis of the Zillow Q4 Real Estate Market Reports. With these new findings, Zillow’s Home Value Misperception Index[2] shrunk to 10 in the fourth quarter, from 16 in the third and 32 in the second quarter. An index of zero would mean homeowners’ perceptions were in line with actual values.

Homeowners May Believe a Bottom Has Been Reached

However, when asked what the near future will bring for their homes, most homeowners expressed optimism, and appear to believe that the worst may be over. According to the survey, more than two-thirds (70 percent) of homeowners believe their home’s value will either increase or stay the same in the first six months of 2009. Only 30 percent believe it will decrease.

“It’s clear that the ‘not my house’ sentiment that was so prevalent in earlier surveys is waning, and homeowners are opening their eyes to the unfortunate reality of significant losses in home values across most of the country,” said Dr. Stan Humphries, Zillow’s vice president of data and analytics. “That said, there’s a curious optimism for homeowners when asked about the future - most seem to believe we’ve hit a bottom and the worst has passed. Unfortunately, the data tells another story. With year-over-year home value losses continuing to accelerate, most areas of the country will see housing values get worse before they begin to stabilize.”

Meanwhile, homeowners’ optimism for the future does not extend to their neighbors’ homes. While 70 percent of homeowners think their own homes’ values will increase or stay the same in the first half of 2009, only 52 percent believe home values in their local market will increase or stay the same during the same time period. Nearly half (48 percent) think values in their local market will decrease, but only 30 percent believe the same will happen to their own homes.

Homeowners are still more optimistic about their local market than in the third quarter, however, when more than half (57 percent) said values in their local market would decrease in the next six months.

Homeowner Perception by Region

 Homeowner Perception of Home Value Change in Past Year by Region US 2008 Northeast Midwest South West
My Home’s Value Has Decreased 57% 58% 58% 47% 70%
My Home’s Value Has Stayed the Same 18% 20% 20% 20% 11%
My Home’s Value Has Increased 25% 23% 22% 33% 19%
Market Reality: Homes Reporting Year-over-Year Value Changes in Q4, according to Zillow
Actual Percent of Homes that Decreased 76% 71% 73% 70% 90%
Actual Percent of Homes that Stayed the Same (+/-1%) 4% 6% 5% 5% 2%
Actual Percent of Homes that Increased 20% 24% 22% 25% 9%
Q4 Home Value Misperception Index 10 3 5 14 13
Q3 Home Value Misperception Index 16 20 15 13 13
Q2 Home Value Misperception Index 32 29 31 36 23
Homeowner Perception of Own Home’s Value in Next Six Months
My Home’s Value Will Decrease 30% 30% 30% 26% 37%
My Home’s Value Will Stay the Same 43% 43% 46% 45% 38%
My Home’s Value Will Increase 27% 27% 24% 29% 25%

(NOTE: Column percentages may not total 100 percent due to rounding)

Northeasterners Have Firmest Grasp on Realities of 2008’s Housing Market

With a Misperception Index of only 3 - down from 20 in the third quarter - the perception of homeowners in the Northeast was closest to reality. Well over half (57 percent) of Northeastern homeowners believe their own home’s value declined during 2008, while 20 percent believed it stayed the same. According to Zillow’s fourth quarter data, 71 percent of homes in the Northeast declined in value during 2008.

Homeowners in the West, where values were hardest-hit, lost some of their optimism in the fourth quarter, but home values continued to edge downward, leaving Western homeowners’ perceptions among the farthest from reality with a Misperception Index of 13 (the same as last quarter). Southerners’ perceptions were farthest from reality, with a Misperception Index of 14.

RISMEDIA, February 12, 2009

9 Architecture Projects That Stand Out

by Daily Real Estate News | January 12, 2009

The American Institute of Architects has selected nine projects for the 2009 AIA Institute Honor Awards for Architecture.

The types of projects range from cathedrals to trend-setting residential projects, but all of them have a tremendous impact on the social and physical fabric of the communities they serve, AIA says.

Here’s a list of the 2009 winners:

Project: Basilica of the Assumption, Baltimore
Architecture Firm:
John G. Waite Associates, Architects PLLC
Details: Restoration of the Basilica of the Assumption (also known as the Baltimore Cathedral), a major architectural landmark and masterpiece of the Federal style, removes a century and a half of obscuring alterations to bring back Benjamin Henry Latrobe’s concept of luminosity and spatial configuration. The now fully functioning cathedral again serves the people of Baltimore while reclaiming one of America’s most brilliant architectural designs, by its first professional architect; one that greatly influenced the development of the country’s architecture.

Project: Cathedral of Christ the Light, Oakland, Calif.
Architecture Firm:
Skidmore, Owings & Merrill LLP
Details: The Cathedral of Christ the Light resonates as a place of worship and conveys an inclusive statement of welcome and openness as the community’s symbolic soul. The glass, wood, and concrete structure ennobles and inspires through the use of light, material, and form.

Project: Charles Hostler Student Center, Beirut, Lebanon
Architecture Firm:
VJAA
Details: The Hostler Center integrates social gathering spaces for students and faculty with sports facilities, a theater, and underground parking. Challenging the idea of a single large-scale building and similarly scaled open plaza, the project instead proposes multiple building volumes interconnected into a continuous field of habitable space by its gardens and green roofs.

Project: The Gary Comer Youth Center, Chicago
Architecture Firm:
John Ronan Architects
Details: This 74,000-square-foot youth center, located in one of Chicago’s poorest neighborhoods, demonstrates a commitment to social progress in providing a constructive environment for area youths to spend their after-school hours. The center provides support for the programs of a 300-member drill team/performance group for children of ages 8 to 18 and provides space for various youth educational and recreational programs for disadvantaged children to better their chances of success in life.

Project: Horno³: Museo del Acero, Monterey, Mexico
Architecture Firm:
Grimshaw Architects
Details: Horno3: Museo Del Acero comprises a full restoration of a once-derelict 1960s blast furnace. The abandoned furnace structure and cast hall are the centerpiece of the museum, housing an interactive exhibit that brings the old furnace to life, allowing visitors the unique experience of touring inside this piece of industrial history.

Project: The Lavin-Bernick Center for University Life, New Orleans
Architecture Firm:
VJAA
Details: The challenge was to transform a rigidly compartmentalized and environmentally inefficient building into a dynamic, sustainable new university center. Only the existing concrete structure was retained, saving roughly $8 million in construction cost. The project was successfully completed for $189/SF, 14 months after Hurricane Katrina. Many of the sustainable design strategies used (canopies, shutters, balconies, and fans) were adapted from climate-responsive architecture traditional to New Orleans.

Project: The New York Times Building, New York City
Architecture Firm:
Renzo Piano Building Workshop and FXFowle Architects
Details: The New York Times Building incorporates many transcendental themes in good architecture—volume, views, light, respect for context, relationship to the street—with a design that is open and inviting, providing its occupants with a sense of the city around them.

Project: Plaza Apartments, San Francisco
Architecture Firm:
Leddy Maytum Stacy Architects
Details: Located on a prominent corner in an improving San Francisco redevelopment area, this new, mixed-use project provides permanent housing for the chronically homeless as a pilot project of Mayor Gavin Newsom and the Dept. of Public Health’s “Housing First” program, which is a cornerstone of the city’s 10-year plan to end homelessness. The sustainably designed 9-story building provides 106 highly efficient studio apartments with on-site mental and physical health services for the residents.

Project: Salt Point House, Salt Point, New York
Architecture Firm:
Thomas Phifer and Partners
Details: Constructed of elegantly efficient and economical materials, this 2,200-square-foot house in New York’s Hudson Valley is sited on a meadow with views to a small private lake. The house is carefully sited to take advantage of the prevailing summer breezes. Strategically placed operable windows and ventilating skylights allow the breeze to flow through the home.

10 Real Estate Predictions for 2009

by Desi Sowers

2009 is likely to be a year of continuing adjustment to a changing real estate marketplace. Prepare yourself and your business with these predictions from HGTV’s FrontDoor.com Web site.

  • Sellers will continue to face falling home values in the new year because they’ll be competing with banks and builders who are slashing prices to sell off the still-huge inventory of foreclosures and new homes.
  • The Obama administration will act on its plan to crack down on abusive lending practices.
  • Mortgage holders in danger of losing their homes will receive more assistance from a variety of programs since the Senate's Joint Economic Committee has predicted two million foreclosures in 2009.
  • Banks' restructuring should bring increasing calm, making loan modifications and short sales easier to obtain. Eventually this will lead to a decrease in the number of bank-owned properties on the market.
  • Mortgage applications will continue to receive a comprehensive review, requiring borrowers to provide extensive income and debt documentation. Those with the best credit will get the best rates.
  • The foreclosure crisis has created wiser consumers, with a deeper understanding of real estate, mortgages, and credit enabling better decision-making going forward.
  • Green is good with increasing numbers of buyers opting for smaller homes that are within walking distance of school and work.
  • Buyers and sellers will be more and more tech savvy, relying on tools like video, webcasts, and mobile search. Consumers and practitioners will benefit from being ahead of the curve.
  • Prices will be low as will interest rates, creating great buying opportunities, and likely, inspiring reluctant buyers to make their move.
  • The recession will end and buyers will regain confidence in the market.


Source: Frontdoor.com (12/03/08)

NAR: Latest Housing Report on Sales, Prices

by National Association of REALTORS

Daily Real Estate News  |  November 18, 2008  

Four out of five metropolitan areas recorded lower home prices in the third quarter from a year earlier, while existing-home sales fell in 32 states from the second quarter, according to the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®.

In the third quarter, 28 out of 152 metropolitan statistical areas showed increases in median existing single-family home prices from the same quarter in 2007; four were unchanged and 120 metros experienced declines. NAR’s track of metro area home prices dates back to 1979.

NAR President Charles McMillan said price comparisons in many areas are like apples and oranges.

“A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago,” McMillan says. “It’s very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition."

Foreclosure Impact

Distressed sales — foreclosures and short sales — accounted for 35 to 40 percent of transactions in the third quarter, pulling down the national median existing single-family price to $200,500, which is 9 percent lower than the third quarter of 2007.

A year ago, when there were significantly fewer distressed transactions, the median price was $220,300. The median price is where half of the homes sold for more and half sold for less.

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 5.04 million units in the third quarter, up 2.6 percent from 4.91 million units in the second quarter, but remain 7.7 percent below the 5.46 million-unit pace in the third quarter of 2007.

Lawrence Yun, NAR chief economist, says conditions continue to range widely.

“A pattern of sharply higher sales in areas with large price declines is well established,” Yun says. “Affordability conditions have consistently been a major factor in driving sales. Historically during recessions, buyers have responded to incentives and it’s important for government to keep that in the forefront of stimulus decisions.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.32 percent in the third quarter from 6.09 percent in the second quarter; the rate was 6.55 percent in the third quarter of 2007. Last week, Freddie Mac reported the 30-year fixed fell to 6.14 percent.

Strongest Sales Gains

The largest sales gain during the third quarter was in Arizona, up 28.3 percent from the second quarter, followed by California which rose 28.1 percent and Nevada, up 26.2 percent.

The steepest declines in single-family home prices in the third quarter were in three California markets: the Riverside-San Bernardino-Ontario area, where the median price of $227,200 dropped 39.4 percent from a year ago, followed by Sacramento-Arden-Arcade-Roseville at $212,000, down 36.8 percent from the third quarter of 2007, and San Diego-Carlsbad-San Marcos, where the price dropped 36 percent to $377,300.

“These areas have seen some of the strongest sales gains with some reports of multiple bidding,” Yun says.

The largest single-family home price increase in the third quarter was in the Elmira, N.Y., area, where the median price of $105,000 rose 12.5 percent from a year ago. Next was Decatur, Ill., at $93,400, up 8.7 percent from the third quarter of 2007, followed by the Bloomington-Normal, Ill., area, where the third-quarter median price increased 8.1 percent to $168,400.

The typical seller purchased their home six years ago and is experiencing net equity gains. The national increase in value since the third quarter of 2002 is 18.3 percent, which is a median gain of $31,000. Even with the current downward price distortion, 90 percent of metro areas are showing six-year price gains.

Median third-quarter metro area single-family home prices ranged from an affordable $65,800 in the Saginaw-Saginaw Township North area of Michigan to $650,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area was San Francisco-Oakland-Fremont, at $615,700, followed by Honolulu at $615,000.

Affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $74,300, and South Bend-Mishawaka, Ind., at $88,000.

The Condo Market

In the condo sector, metro area condominium and cooperative prices – covering changes in 57 metro areas – showed the national median existing-condo price was $210,800 in the third quarter, down 7.1 percent from $227,000 in the third quarter of 2007. Sixteen metros showed annual increases in the median condo price and 41 areas had price declines.

The strongest condo price increases were in the Dallas-Fort Worth-Arlington area, where the third quarter price of $149,900 rose 11.1 percent from a year earlier, followed by Bismarck, N.D., at $148,000, up 11 percent, and the Houston-Baytown-Sugar Land area, where the median condo price of $134,100 rose 8.1 percent from the third quarter of 2007.

Metro area median existing-condo prices in the third quarter ranged from $112,600 in the Greensboro-High Point, N.C., area to $456,300 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was the New York-Wayne-White Plains area of New York and New Jersey at $324,000, followed by Honolulu at $322,000.

Other affordable condo markets include the Indianapolis area at $113,500 and the Cincinnati-Middletown area of Ohio, Kentucky and Indiana, at $117,300 in the third quarter.

Market Snapshot by Region

Here's how existing-home sales fared across the country:

  • West: rose 13.1 percent in the third quarter to an annual rate of 1.15 million and are 12.4 percent above a year ago. The median existing single-family home price in the West was $266,300 in the third quarter, which is 21.4 percent below the third quarter of 2007. The only reported metro price increase in the West was in Farmington, N.M., at $193,600, up 1.7 percent from a year ago.
  • Midwest:existing-home sales rose 2.7 percent in the third quarter to a pace of 1.15 million but remain 10.6 percent below a year ago. The median existing single-family home price in the Midwest declined 5.5 percent to $159,900 in the third quarter from the same period in 2007. After Decatur and Bloomington-Normal, the next strongest metro price increase in the Midwest was in the Wichita, Kan., area, where the median price of $125,300 was 5.5 percent higher than a year ago, followed by Champaign-Urbana, Ill., at $146,400, up 2.7 percent.
  • South: sales slipped 1.4 percent in the third quarter to an annual rate of 1.87 million and are 13.8 percent lower than the same period in 2007. The median existing single-family home price in the South was $174,200 in the third quarter, down 3.7 percent from a year earlier. The strongest price increase in the South was in the Tulsa, Okla., area, at $139,800, up 5.1 percent from a year ago, followed by Amarillo, Texas, with a 4.2 percent gain to $128,300, and the New Orleans-Metairie-Kenner area of Louisiana at $166,800, up 4.1 percent.
  • Northeast: sales declined 1.6 percent in the third quarter to a level of 863,000 units and are 11.7 percent below a year ago. The median existing single-family home price in the Northeast fell 6.5 percent to $267,700 in the third quarter from the same period in 2007. After Elmira, the strongest price increase in the Northeast was in the Trenton-Ewing, N.J., area, at $342,500, up 4.2 percent from the third quarter of 2007, followed by Buffalo-Niagara Falls, N.Y., with a median price of $114,200, up 3.0 percent.

NAR: Latest Housing Report on Sales, Prices

by National Association of REALTORS

Daily Real Estate News  |  November 18, 2008  

Four out of five metropolitan areas recorded lower home prices in the third quarter from a year earlier, while existing-home sales fell in 32 states from the second quarter, according to the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®.

In the third quarter, 28 out of 152 metropolitan statistical areas showed increases in median existing single-family home prices from the same quarter in 2007; four were unchanged and 120 metros experienced declines. NAR’s track of metro area home prices dates back to 1979.

NAR President Charles McMillan said price comparisons in many areas are like apples and oranges.

“A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago,” McMillan says. “It’s very challenging to understand proper valuation, given the differences between distressed sales and a larger share of traditional homes in sound condition."

Foreclosure Impact

Distressed sales — foreclosures and short sales — accounted for 35 to 40 percent of transactions in the third quarter, pulling down the national median existing single-family price to $200,500, which is 9 percent lower than the third quarter of 2007.

A year ago, when there were significantly fewer distressed transactions, the median price was $220,300. The median price is where half of the homes sold for more and half sold for less.

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 5.04 million units in the third quarter, up 2.6 percent from 4.91 million units in the second quarter, but remain 7.7 percent below the 5.46 million-unit pace in the third quarter of 2007.

Lawrence Yun, NAR chief economist, says conditions continue to range widely.

“A pattern of sharply higher sales in areas with large price declines is well established,” Yun says. “Affordability conditions have consistently been a major factor in driving sales. Historically during recessions, buyers have responded to incentives and it’s important for government to keep that in the forefront of stimulus decisions.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage rose to 6.32 percent in the third quarter from 6.09 percent in the second quarter; the rate was 6.55 percent in the third quarter of 2007. Last week, Freddie Mac reported the 30-year fixed fell to 6.14 percent.

Strongest Sales Gains

The largest sales gain during the third quarter was in Arizona, up 28.3 percent from the second quarter, followed by California which rose 28.1 percent and Nevada, up 26.2 percent.

The steepest declines in single-family home prices in the third quarter were in three California markets: the Riverside-San Bernardino-Ontario area, where the median price of $227,200 dropped 39.4 percent from a year ago, followed by Sacramento-Arden-Arcade-Roseville at $212,000, down 36.8 percent from the third quarter of 2007, and San Diego-Carlsbad-San Marcos, where the price dropped 36 percent to $377,300.

“These areas have seen some of the strongest sales gains with some reports of multiple bidding,” Yun says.

The largest single-family home price increase in the third quarter was in the Elmira, N.Y., area, where the median price of $105,000 rose 12.5 percent from a year ago. Next was Decatur, Ill., at $93,400, up 8.7 percent from the third quarter of 2007, followed by the Bloomington-Normal, Ill., area, where the third-quarter median price increased 8.1 percent to $168,400.

The typical seller purchased their home six years ago and is experiencing net equity gains. The national increase in value since the third quarter of 2002 is 18.3 percent, which is a median gain of $31,000. Even with the current downward price distortion, 90 percent of metro areas are showing six-year price gains.

Median third-quarter metro area single-family home prices ranged from an affordable $65,800 in the Saginaw-Saginaw Township North area of Michigan to $650,000 in the San Jose-Sunnyvale-Santa Clara area of California. The second most expensive area was San Francisco-Oakland-Fremont, at $615,700, followed by Honolulu at $615,000.

Affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $74,300, and South Bend-Mishawaka, Ind., at $88,000.

The Condo Market

In the condo sector, metro area condominium and cooperative prices – covering changes in 57 metro areas – showed the national median existing-condo price was $210,800 in the third quarter, down 7.1 percent from $227,000 in the third quarter of 2007. Sixteen metros showed annual increases in the median condo price and 41 areas had price declines.

The strongest condo price increases were in the Dallas-Fort Worth-Arlington area, where the third quarter price of $149,900 rose 11.1 percent from a year earlier, followed by Bismarck, N.D., at $148,000, up 11 percent, and the Houston-Baytown-Sugar Land area, where the median condo price of $134,100 rose 8.1 percent from the third quarter of 2007.

Metro area median existing-condo prices in the third quarter ranged from $112,600 in the Greensboro-High Point, N.C., area to $456,300 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was the New York-Wayne-White Plains area of New York and New Jersey at $324,000, followed by Honolulu at $322,000.

Other affordable condo markets include the Indianapolis area at $113,500 and the Cincinnati-Middletown area of Ohio, Kentucky and Indiana, at $117,300 in the third quarter.

Market Snapshot by Region

Here's how existing-home sales fared across the country:

  • West: rose 13.1 percent in the third quarter to an annual rate of 1.15 million and are 12.4 percent above a year ago. The median existing single-family home price in the West was $266,300 in the third quarter, which is 21.4 percent below the third quarter of 2007. The only reported metro price increase in the West was in Farmington, N.M., at $193,600, up 1.7 percent from a year ago.
  • Midwest:existing-home sales rose 2.7 percent in the third quarter to a pace of 1.15 million but remain 10.6 percent below a year ago. The median existing single-family home price in the Midwest declined 5.5 percent to $159,900 in the third quarter from the same period in 2007. After Decatur and Bloomington-Normal, the next strongest metro price increase in the Midwest was in the Wichita, Kan., area, where the median price of $125,300 was 5.5 percent higher than a year ago, followed by Champaign-Urbana, Ill., at $146,400, up 2.7 percent.
  • South: sales slipped 1.4 percent in the third quarter to an annual rate of 1.87 million and are 13.8 percent lower than the same period in 2007. The median existing single-family home price in the South was $174,200 in the third quarter, down 3.7 percent from a year earlier. The strongest price increase in the South was in the Tulsa, Okla., area, at $139,800, up 5.1 percent from a year ago, followed by Amarillo, Texas, with a 4.2 percent gain to $128,300, and the New Orleans-Metairie-Kenner area of Louisiana at $166,800, up 4.1 percent.
  • Northeast: sales declined 1.6 percent in the third quarter to a level of 863,000 units and are 11.7 percent below a year ago. The median existing single-family home price in the Northeast fell 6.5 percent to $267,700 in the third quarter from the same period in 2007. After Elmira, the strongest price increase in the Northeast was in the Trenton-Ewing, N.J., area, at $342,500, up 4.2 percent from the third quarter of 2007, followed by Buffalo-Niagara Falls, N.Y., with a median price of $114,200, up 3.0 percent.

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Photo of Desi Sowers,  Associate Broker,  Real Estate
Desi Sowers, Associate Broker,
Certified Residential Specialist at REMAX 8
1344 N. Main Street
Blacksburg VA 24060
Phone: (540) 320-1328

Each Office Independently Owned and Operated