August Existing-Home Sales Rise Despite Headwinds, Up Strongly from a Year Ago

WASHINGTON (September 21, 2011) – Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors®. Monthly gains were seen in all regions.


Total existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.


Lawrence Yun, NAR chief economist, said there are some positive market fundamentals. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” he said. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”


Investors2 accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.


All-cash sales accounted for 29 percent of transactions in August, unchanged from July; they were 28 percent in August 2010; investors account for the bulk of cash purchases.


“We had some disruptions from Hurricane Irene in the closing weekend of August, when many sales normally are finalized, along the Eastern seaboard and in New England,” Yun said. “As a result, the Northeast saw the smallest sales gain in August, and some general impact is expected in September with widespread flooding from Tropical Storm Lee. Aberrations in housing data are possible over the next couple months as markets recover from disrupted closings and storm damage.”


Yun said an extremely important issue currently is the renewal and availability of the National Flood Insurance Program, scheduled to expire at the end of this month. “About one out of 10 homes in this country need flood insurance to get a mortgage, and we would see significant negative market impacts without it,” he said.


According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.27 percent in August, down from 4.55 percent in July; the rate was 4.43 percent in August 2010. Last week, Freddie Mac reported the 30-year fixed rate fell to a record low 4.09 percent.


NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the market is remarkably affordable for people with secure jobs, good credit and long-term plans. “All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation,” he said.


“The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price. Buyers may be able to find more favorable credit terms with community and small regional banks, and Realtors® can often give buyers advice to help them overcome some of the financing obstacles,” Phipps said.


Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price – were reported by 18 percent of NAR members in August, up from 16 percent July and 9 percent in August 2010.


The national median existing-home price3 for all housing types was $168,300 in August, which is 5.1 percent below August 2010. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 31 percent of sales in August, compared with 29 percent in July and 34 percent in August 2010.


Total housing inventory at the end of August fell 3.0 percent to 3.58 million existing homes available for sale, which represents an 8.5-month supply4 at the current sales pace, down from a 9.5-month supply in July.


Single-family home sales rose 8.5 percent to a seasonally adjusted annual rate of 4.47 million in August from 4.12 million in July, and are 20.2 percent above the 3.72 million pace in August 2010. The median existing single-family home price was $168,400 in August, which is 5.4 percent below a year ago.


Existing condominium and co-op sales increased 1.8 percent a seasonally adjusted annual rate of 560,000 in August from 550,000 in July, and are 8.3 percent higher than the 517,000-unit level one year ago. The median existing condo price5 was $167,500 in August, down 3.3 percent from August 2010.


Regionally, existing-home sales in the Northeast increased 2.7 percent to an annual pace of 770,000 in August and are 10.0 percent above a year ago. The median price in the Northeast was $244,100, which is 5.1 percent below August 2010.


Existing-home sales in the Midwest rose 3.8 percent in August to a level of 1.09 million and are 26.7 percent above August 2010. The median price in the Midwest was $141,700, down 3.5 percent from a year ago.


In the South, existing-home sales increased 5.4 percent to an annual pace of 1.94 million in August and are 16.9 percent higher than a year ago. The median price in the South was $151,000, which is 0.8 percent below August 2010.


Existing-home sales in the West jumped 18.3 percent to an annual pace of 1.23 million in August and are 20.6 percent higher than August 2010. The median price in the West was $189,400, down 13.0 percent from a year ago.


The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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NOTE: NAR also tracks monthly comparisons of existing single-family home sales and median prices for select metropolitan statistical areas, which is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of Realtors®.






1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample – more than 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.


The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.


Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.






Benchmark Revisions: All major statistical data series go through periodic reviews and revisions to ensure that sampling and methodology keep up with changes in the market, such as population changes in sampled areas, to ensure accuracy. NAR began its normal process for benchmarking sales at the beginning of this year in consultation with government agencies, outside housing economists and academic experts; there will be no change to median prices. Although there will be a downward revision to sales volume, there will be no notable change to previous characterizations of the market in terms of sales trends, monthly percentage changes, etc.


In the past NAR has benchmarked to the decennial Census, most recently to the 2000 Census, because it included home sales data. However, the data are no longer included in the Census, so we’ve had to develop a new approach with an independent source to improve methodology and to permit more frequent revisions.


Preliminary data based on the new benchmark is undergoing review by professional economists. This process is expected to take some time before finalized revisions can be published to address any issues that may surface in the review process and to update monthly seasonal adjustment factors; NAR is committed to providing accurate, reliable data. Publication of the revisions is expected in several months, and we will provide a notice several weeks in advance of the publication date.






2 Investors, first-time buyers, all-cash transactions, contract failures and distressed sales are from a monthly survey for the Realtors® Confidence Index, posted at Realtor.org.






3The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.






4Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, condos were measured quarterly while single-family sales accounted for more than 90 percent of transactions).






5Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.






The Pending Home Sales Index for August will be released September 29, and existing-home sales for September is scheduled for October 20; release times are 10:00 a.m. EDT.






Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.


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August 2011 Michigan Real Estate Market Update

August brought us another month of good numbers in terms of homes sales and home values in Michigan. They both continue their (seasonally adjusted) upward trend in most all markets and price ranges. The chart below shows the average price per square foot for South East Michigan (bars) and the value change in price per SF compared to the same month a year ago (line), The bars show a steady rise for the last four months and the line (value rise over last year) does as well. The value line is a bit misleading; the downward trend is still in positive territory (save for April) with a strong upward movement in the last four months. Last August was the strongest value month of 2010, but this August still beat it by 6%.

SE Michigan Price Per Sq Ft Value Trends                     

Value Trends by price range also show the same positive movement. Since values do jump month to month, this chart is an average of the past 90 days price per square foot by price category. You can see that all but one price range showed positive numbers. With fewer listings available in the $0-99 category, it is not surprising to see buyers move to the lower end of the next price range ($100-199), thereby keeping the average value increase flat.

The Michigan real estate market is still divided between those homes selling quickly and the 60% that have been on the market for months to years (42% of sold listings were on the market less than 30 days and 47% sold for equal or more than asking price). So although we have some great signs of market activity and appreciation, it is appreciation for homes in good condition and priced well with values based on current solds, not asking prices, so Sellers still need an aggressive view on pricing.

One strange result of our housing recession is that the lack of homeowners’ equity is actually helping our recovery. With so many homeowners upside down and not able to sell, there are not enough salable homes on the market to satisfy buyer demand. This is actually speeding up our recovery since, with fewer homes on the market, demand is beginning to exceed supply. With each uptick in values, a few more Sellers will be able to sell, releasing a few more listings to the market. It is likely to follow a reasonably steady recovery pattern over the next few years. The wild card is interest rates. We know that rates are artificially low to some degree via Federal Reserve intervention, which is creating some level of excess (or borrowed forward) demand. So a significant rise in rates without a significant economic recovery boost could set us back again. For Southeast Michigan, another factor that could potentially hold up our recovery is that for once, in terms of housing, we are an economic bright spot in the country (and the state), so until the rest of the country starts to catch up, we are vulnerable if they sneeze.

If you just looked at the current market activity, inventory levels and general economic news (locally), all signs lead to a housing recovery that is coming faster that anyone had predicted. The problem with that is we have been down so long, none of us (even me) are quite ready to really believe it. I think if we can sustain these activity levels (seasonally adjusted) through the winter months and into next spring, we will have no choice but to become permanent optimists, until then the word “cautiously” will remain in front of “optimistic”.

For Company news, over the last five years we have emerged as the only broker in the state with a fully integrated real estate transaction experience for our clients (combining Brokerage, Mortgage, Title, Home Insurance and Home Services). That integration has been talked about for years as the coming consumer trend, but it looks like it is beginning to become an expectation of the next generation of homeowners. Although it is usually a lot of “little things” done well that makes a company or agent stand above the rest, providing an integrated one stop experience can be a “big thing” that moves us along way with our future clients.




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Wall Street Journal Names Top Agents

The Real Estate One Family has 11 WSJ/RT Top Agents.


The annual national rankings for sales associates put out by The Wall Street Journal and Real Trends just came out this week. We are privileged to have 11 members of our family that qualified for the lists this year, a record number and certainly the most of any Michigan broker. In fact, we had the third highest number of Associates on the list among all the brokers across the nation!!

We have the 3rd Highest Number of Agents on the List of National Brokers.

Please join me in congratulating each of our distinguished National Top Realtors!

Kathy Broock-Ballard - Birmingham
Mike Shannon Team - Dearborn
Mike Fayz - Dearborn Heights
McNeal - O'Brian Team - Southfield
Dennis Dickstein - West Bloomfield
Christian Grothe - Birmingham
Chris Pero - Birmingham
Karen Wilson - Troy
Cindy Sienkiewicz - Clinton Twp.
Ken Ritter - Shelby Twp.
Jeannie Proffitt - Southgate

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Choose to Cruze!

The Real Estate One Charitable Foundation and Gordon Chevrolet are sponsoring a fundraising raffle to benefit Special Olympics of Michigan! Only 2,500 tickets will be sold for the chance to win a Chevy Cruze + $3000.  Tickets are $20 and may be purchased at the front desk of your nearest Real Estate One, Johnstone and Johnstone or Max Broock Office. The drawing will be held at the REOFamily Corporate office in Southfield on 11.11.11 at 11am.  For more info please call: 248.208.2900.

 

Winner need not be present to win. if 2,500 tickets are not sold, the drawing will revert to a 50/50 raffle.  Raffle participants must be 18 years of age or older at the time of entry. Payment of all applicable federal, state and local taxes, fees and surcharges are the responsibility of the winner.  Winner will be issued an IRS W2G stating the value of their prize. Prize will be awarded Nov 11, 2011. No cash alternatives. Prize is non-transferable. State of MI Raffle Licenseno. R13150

 

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New Rules for Appraisers

The Ann Arbor Area Board of REALTORS®  sent out an interesting article today addressing the New Uniform Appraisal Dataset (UAD) which goes into effect TODAY (Sept 1, 2011). I've copied the article here and there is also a link to the original at the botttom of this post.

______________________________

New Uniform Appraisal Dataset (UAD) becomes effective September 1

 

Appraisers must now use a new set of codes and abbreviations to provide much more information with each appraisal.

Read the summary Bill Holmes of Ann Arbor Mortgage has prepared to find out how you can help avoid unnecessary delays.

Big Changes Ahead with the UAD on September 1

 

Effective September 1, the implementation of the Uniform Appraisal Dataset "UAD" will certainly cause some consternation in the real estate community.

Q. What is it?
A. The UAD defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for a key subset of fields.

UAD Specifications:
Three Property Improvement Ratings = Remodeled, Updated, Not Updated
Six Condition Ratings = C-1 to C -6 (Currently - fair, average, good, superior)
Six Quality Ratings = Q-1 to Q- 6

 

There are over 100 standardization abbreviations that must be used in the appropriate appraisal report fields.

Q. What types of loans will it affect?
A. At this point, just Fannie Mae and Freddie Mac conventional mortgages. Effective January 1, 2012, FHA will adopt the system with all new case numbers issued. All single family and condominium Fannie Mae & Freddie Mac Real Estate Appraisals MUST use the ratings. The subject Real Estate Appraiser will be required to ask the subject home owner specific questions about the subject property. The answers must support the appraiser's opinions for the ratings in the appraisal report.

 

Q. Will the current appraisal forms change?
A. No. With the new standards, lenders will be providing more appraisal data than is provided today, but on the existing forms.

 

Q. What additional info must be provided on the appraisal forms?
A. More explicit info that was never requested before will be required. For example, the following are new data points that are being requested:

 

• Days on Market for the subject property and each comp
• Specifically defined Condition and Quality Ratings
• Status of improvements to kitchens and bathrooms for the subject property
• Sale type for the subject property and each comp

Some additional observations after reading through the new guidelines:

 

• The UAD requires that the United States Postal Service (USPS) standardized mailing address be included in the appraisal report.
•  The UAD requires the site size for all properties that are less than one acre to be reported in square feet and the site size of all properties that are one acre or greater to be reported in acres.

 

We spoke to a number of local appraisers and posed the following question:

  

"How can Realtors® help in making a smooth transition?"

 

This is a list of suggestions from the appraisers:

 

•  Take extra time when filling out the Seller's disclosure. The UAD is particularly focused on the 15 year mark--so the year upgrades and renovations were done is going to be important. According to the UAD, anything older than 15 years is not considered updated and redecorating is not renovation--it has to actually involve physical changes.
• The view from the home is receiving a lot of attention and is going to be very specific in the UAD so be prepared for pointing out enhanced views particularly if they are seasonal (i.e. park).
• Please have Realtors provide comparables at or before the appraisal inspection for appraisers to review PRIOR to the writing of the report.
• Include more detailed photos - in particular kitchen, baths, ½ baths, basement finish, (when you think you have taken enough photos, take a few more).
• Note the basement square footage.
• Note the finished basement square footage.
• Attach to the listing a detailed list of updates completed (the dates of these along with the extent of the updates).
• When appraisers call for information, return their calls in a timely manner (the current deal they are working on may not be yours, but the next one may be - you are helping your fellow Realtors and they, in turn, will be helping you).

 Be prepared - this will undoubtedly add extra time to the appraisal turn-around time and may also increase underwriting turn times. Please build extra time into your contingency removal timeframes.

 

 Many thanks to Bill Holmes at Ann Arbor Mortgage for this UAD summary.

  

Ann Arbor Area Board of REALTORS®

 1919 W Stadium Blvd

 (734) 761-7340

  

http://myemail.constantcontact.com/Appraisers-will-need-your-help-with-their-new-guidelines.html?soid=1101068216507&aid=9kLkVPFvptQ    

 

 

 

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