Lending Standards Dampen Existing-Home Sales

Sales of existing homes declined in April, largely the result of tighter lending standards and a drop in the number of subprime mortgage products available to consumers, according to the NATIONAL ASSOCIATION OF REALTORS®.

Total existing-home sales — including single-family, townhomes, condominiums and co-ops — fell 2.6 percent to a seasonally adjusted annual rate of 5.99 million units in April from an upwardly revised level of 6.15 million in March. Sales are 10.7 percent lower than the 6.71 million-unit pace in April 2006.

“We’ve been anticipating slower home sales because many subprime loan products are no longer available,” says NAR Senior Economist Lawrence Yun. “In addition, increased scrutiny by lenders is stopping risky mortgage origination, which is good for both consumers and the lending community. Fortunately, a wide availability of conventional mortgage products and the 4.5 million jobs created over the past 24 months will help to stabilize the market going forward."

Interest Rate Outlook

NAR President Pat V. Combs says historically low mortgage interest rates continue to support the housing market. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.18 percent in April, up from 6.16 percent in March; the rate was 6.51 percent in April 2006.

“Long-term financing remains favorable, but interest rates are rising,” says Combs. This week, Freddie Mac reported the fixed rate jumped to 6.37 percent. “Although some buyers have a wait-and-see attitude regarding home prices, they should consider that rising interest rates later this year could offset a lower sales price when you get down to the monthly payments.” But Combs notes all real estate is local so conditions can vary widely.

April Snapshot

The national median existing-home price for all housing types was $220,900 in April, down 0.8 percent from April 2006 when the median was $222,600. The median is a typical market price where half of the homes sold for more and half sold for less. However, there is a downward skew in the current national comparison because sales have shifted away from many high-cost areas during the last year, according to NAR.

Here are some other NAR findings:

• Single-family homes: sales declined 2.4 percent to a seasonally adjusted annual rate of 5.22 million in April from an upwardly revised 5.35 million in March. Median home price: $220,500 — 0.9 percent below a year agoApril 2006 comparison: 5.88 million — an 11.2 percent drop from last year
• Existing condo and co-ops: sales fell 3.8 percent to a seasonally adjusted annual rate of 770,000 units in April from a level of 800,000 in March. Median existing condo price: $223,700 — up 1 percent from 2006March 2006 comparison: 834,000 — 7.7 percent lower than last year
• Housing inventory: rose 10.4 percent at the end of April to 4.20 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace. That number is up from a 7.4-month supply in March.

Regional Sales

Here’s what happened across the United States with existing-home sales:

• Midwest: sales eased by 0.7 percent in April to a level of 1.38 million; 11.5 percent below a year ago. Median price: $166,600 — 1.9 percent rise from April 2006
• South: sales slipped 1.2 percent to an annual sales rate of 2.38 million in April; 8.8 percent below April 2006. Median price: $181,100 — down 0.3 percent from a year ago
• West: sales declined 1.7 percent in April to an annual pace of 1.19 million; 15.6 percent below a year ago. Median price: $338,200 — 2.1 percent lower than April 2006
• Northeast: sales dropped 8.8 percent to a level of 1.04 million in April; 8.8 percent lower than April 2006. Median price: $283,600 — 0.6 percent below a year ago

— REALTOR® Magazine Online

Green is All the Rage

With last month's anniversary of Earth Day (coinciding nicely with spring), everything is turning green, and real estate is no exception. Worldwide, buyers are increasingly looking to buy or build homes that are good for the environment. According to Time Magazine, homes in London account for 44% of the city's carbon emissions. In response builders plan to open the city's first large-scale zero-carbon housing development to be located in London's Docklands. All 200+ homes will hook up to a combined heat and power plant that turns wood chips into electricity and hot water. Solar panels and wind will provide additional power. The project will have organized car and bike clubs to reduce commuting emissions. And the cost? Just 5% higher than a traditional housing development. Read more about how to reduce your "carbon footprint" with Time's Green Guide to an Earth-Friendly Home. Use the "drag" tool to examine options to cut carbon emissions on a room-by-room basis.

Taken from the NAR International News Report for May

Unpleasant Discovery During Home Tour

Did you read about this in the local news? If not here's the article.

A Janesville, Wis., real estate practitioner heard a client scream while she was touring them through a home.

“I thought it was a dead mouse,” says Linda Chabucos-Galow, who went to investigate and discovered her clients staring at the owner of the home, who was lying dead on the bed.

An autopsy determined home owner Linda L. O'Leary, 55, had been dead for two to three weeks, Rock County Coroner Jenifer Keach said Wednesday. The cause of death remained under investigation, but O'Leary appeared to have died of natural causes and no foul play was suspected, the coroner said.

Chabucos-Galow says she set up the showing without knowing the home owner's identity. After entering the home, she noticed a faint odor but thought it was from the mess in the house or the countertop full of dishes.

Gale Kent, the Coldwell Banker First United Realty agent who listed the house, says the property was on the market "for a while," but didn't say how many times it had been shown in recent weeks.

Source: Associated Press (05/02/07)

I guess this is just another good reason to make sure as an agent, we're checking in with our sellers on at least a weekly basis.

Zero-Down Mortgages Get Harder to Find

Countrywide Financial Corp. has instructed its brokers to no longer offer zero-down mortgages as an option for borrowers, the Wall Street Journal reports.

That's because such loans are among the biggest reasons for a recent and sharp increase in the level of delinquencies at U.S. home lenders. Countrywide joins such other companies as General Electric Co.'s WMC Mortgage and Washington Mutual Inc. in requiring that loan applicants have at least a 5-percent stake in their homes.

Previously, "if you breathe and have a Social Security number . . . you were going to get a house," notes Mark Cady of Market Street Mortgage in Houston. Now, lenders are demanding that applicants have higher credit scores and contribute a bigger down payment, among other requirements.

While the flow of money available to the subprime borrower community is likely to slow considerably as a result of this trend, observers note that lenders not subject to federal regulation will continue to offer higher-risk products such as 100-percent financing and interest-only loans.

Sources: Wall Street Journal, Houston Chronicle