November 29, 2011

'Tis The Season To Be Spending

Black Friday has arrived and that means that the Holiday spending frenzy has begun. This season is a very important measure of the health of the economy every year. This year, the results could be even more important. In our prolonged struggle to recover from the severe recession, we have encountered many obstacles. Initially, the housing crisis certainly put a major dent in the pace of consumer spending. The good news is that over the painful years of the recovery, consumers have been saving and this puts them in better shape to return to more "normal" spending habits. Indeed, retail sales growth has been strong for the majority of this year. But nothing is more important than the spending that occurs in the last quarter of the year.

Keep in mind that we still face obstacles. The European debt crisis is in the headlines every day and the fear is that a meltdown in Europe will be felt at home. Congress seems to be getting nowhere with regard to deficit reduction while state and local governments have been laying off workers for the better part of two years. The shadow inventory of foreclosures is holding the important real estate sector back. Where does that leave us? We need the consumer to lead the recovery right now. If consumer spending continues to be strong then the housing recovery will follow more quickly. Companies which are flush with cash will be more likely to hire. The November employment report to be released early in December will be a good gauge of business optimism going into the Holiday season. Our best hope? Everyone has a great Holiday season and gets the gifts they want and we have momentum going into the New Year.

The Markets. Rates were stable again at record lows in the past week. Freddie Mac announced that for the week ending November 23, 30-year fixed rates averaged 3.98%, down slightly from 4.00% the previous week. The average for 15-year fixed was also down slightly to 3.30%. Adjustable rates fell more sharply, with the average for one-year adjustables decreasing to 2.79% and five-year adjustables falling to 2.91%. A year ago 30-year fixed rates were at 4.40%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, "Rates eased slightly this week with fixed-rate loans hovering above all-time lows and ARMs reaching a new nadir. The high-degree of home-buyer affordability in recent months translated into a 1.4 percent pickup in existing home sales during October, according to the National Association of Realtors (NAR). The NAR also reported that contract cancellations were up in October as well, which restrained sales from achieving a stronger rebound." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated November 25, 2011

Minorities and immigrants will drive growth in housing demand in coming years, a new study reveals. Within the next 15 years, researchers say they expect this population segment to drive demand for condominiums, smaller starter homes, and first trade-up homes. Also, this growing demographic is expected to represent a rapidly growing segment of the middle and middle-upper markets for housing, finds a new report, “The State of Hispanic Homeownership,” by the National Association of Hispanic Real Estate Professionals. “The Latin boom has been forecasted for years but we are now seeing the front edge of it and it has the potential to help the nation’s housing system get back on track if we can create a safe credit environment for new buyers to get into the market,” says Carmen Mercado, NAHREP president. Hispanics make up the largest minority group in the country and represent a significant portion of the 26 to 46 age group most involved in home sales. Plus, Hispanics tend to value home ownership more than other demographics. For example, according to a recent study, 57 percent of Hispanics say they consider owning a home a symbol of success compared to 33 percent of all Americans. Source: RISMedia

Homebuyers scooped up more previously owned homes in October, slowly putting a dent in the huge inventory on the market, an industry report showed. Sales of existing homes rose 1.4% last month to an annual rate of 4.97 million homes, up from a downwardly revised 4.90 million homes in September, the National Association of Realtors reported. That was higher than expected. Economists polled by Briefing.com had expected an annual rate of 4.85 million homes in October. Compared to a year ago, the rate of existing home sales has jumped 13.5%, from 4.38 million units. Continued gains in home sales have lightened up the inventory of homes on the market, the report showed. Total housing inventory at the end of October slipped 2.2% to 3.33 million existing homes for sales, representing an 8-month supply at the current sales pace. That's down from an 8.3-month supply in September, and continues an ongoing downward trend since hitting a record high of 4.58 million in July 2008. Source: CNN/Money

Traditionally, the time from Thanksgiving to New Year's Day can be some of the slowest time of the year for home buying due to the holidays and the often less-than-perfect weather. But that doesn’t mean sellers can’t sell during the winter months. In fact, with decreased inventories, sellers may have a better chance to standout and face a buyer pool with more urgency to settle down. Experts offer some of the following tips for selling a home in the winter:

• Stage it. Stagers can arrange furniture so that selling-points in a home don’t get overlooked, paint rooms inviting colors, and have the know-how to give a home a cozy winter feel. Display photos of the home that also show it in warmer summer months. And don’t forget to turn up the thermostat in the home so buyers are comfortable from the moment they step through the door."If you have a vacant house in winter with the heat turned down to 50, chances are someone will make a very low offer," Loren Keim, a real estate broker, told the Associated Press.
• Price it right. "If it's priced properly, it will sell any day of the year," Katie Severance, a broker for RE/MAX in Upper Montclair, N.J., told the Associated Press.
• Show the way. Keep sidewalks and driveways clear of snow, ice, and leaves--giving potential buyers a clear path to your listing’s front door.
• Light it up. There’s less daylight in the winter months so it’s even more important to keep all the lights on as well as open blinds and drapes for natural light. Keep the home well-lit even when you’re not there so the home still looks inviting to passersby who drive by in the evenings after work. Source: The Associated Press

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