Market Insights – Page 16

Urban Living Outpacing The Suburbs

July 10, 2012 by admin

New Census data indicates that for the first time since the 1920’s, urban areas are growing faster than their suburban counterparts.

Twenty seven of the 51 largest urban metropolitan areas across the nation exceeded their suburbs in population growth from April 1, 2010 to July 1, 2011. This is a trend that has been underway since the 2007.

Historically the growth of the suburbs has been fueled by young urban families leaving the city and establishing homes in the suburbs. However with tougher economic times many young adults are opting to remain in the city rather than purchase suburban homes.

The traditional influx of young college graduates into urban areas continues, young people are moving into and staying in the city, but fewer are getting out.

Wallingford Real Estate – Wallingford, PA 19086

The Impact Of Rising Student Loan Debt On Housing Prices

June 28, 2012 by admin

As home values have fallen over the past several years, some of the burden of financing higher education has shifted from parents to students. Declining home equity has limited the ability of parents to tap what once seemed like a unlimited ATM machine for college financing. The Federal Reserve reports US household wealth has dropped 40% in the period of 2007 to 2010, largely due to declining home equity. College students have been forced to take on a greater share of financing their rising college costs.

College graduates amass an average student loan obligation of $25,000 at the end of their college years. Student loan debt is the fastest growing form of consumer debt, it has steadily risen while all other types of debt have been shrinking over the past several years.

Coupled with a tight job market for college grads, many graduates are faced with student debt that consumes 25% or more of their monthly income. With the average length of student loan repayments being 10 years, college grads are facing a difficult time in achieving a balance of student loan debt and other consumer debt, such as credit card and automobile loans.

Mortgage underwriting guidelines generally stipulate that a borrowers total debt limit can not exceed 41% of income. If a quarter of one’s debt is dedicated to student loans, there is very little room is left for shouldering the additional cost of a new mortgage, even at current record low interest rates.

In short many college graduates are being shut out of the housing market for up to 10 years after graduation until student loan obligations are paid off. With first time home buyers being an integral part of the housing market, the percentage of which has been declining over the past several years, housing demand is falling among this key group.

First time home buyers purchase the homes that allow former first time home buyers to move up into a larger home. When first time home purchases stall the whole market puts on the brakes. It is basic economic theory that falling demand results in falling prices.

As the younger generation faces the challenge of increasing debt, the housing market faces another hurdle toward a meaningful recovery.

Wallingford Real Estate – Wallingford, PA 19086

Title Insurance Rates Increasing In July

June 8, 2012 by admin

Effective July 1, 2012 you can expect to dig a little deeper into your wallet for title insurance. Title insurance rates in the state of Pennsylvania will increase by 7%. The Pennsylvania Insurance Department has termed this change as Title Insurance Simplification And Rate Increase.

The simplification refers to the establishment of a single rate structure for home purchases, and a single rate structure for non-sale title insurance for mortgage refinancing.

There will no longer be a discount for the rate for title insurance based upon the length of time that has elapsed since the last title has been issued.

Currently there is a rate know as the reissue rate, that is 10% less than the standard rate for a buyer who is obtaining title insurance on a home where title insurance has been issued within the last ten years.

Wallingford Real Estate – Wallingford, PA 19086

The Return Of Multiple Offers

April 28, 2012 by admin

Wallingford Real Estate - Wallingford, PA - Multiple Offers - Bidding Wars

Multiple Offers Are Returning To The Marketplace

During the real estate sales boom several years ago it was not uncommon for homes to receive multiple offers on their first day on the market. This characterized a surging demand by buyers during the peak years, when everyone wanted to be a part of the game. Today multiple offers are thought to signify an increasing shortage of homes in many parts of the country.

While I would not whole heartily agree that we are facing a shortage of inventory locally, there is ample evidence to show that multiple offers are on the increase. In the past three weeks I have written three purchase contracts, and two of them involved multiple offers which were successfully negotiated. Fellow agents are also talking about encountering multiple bid scenarios. Locally I think multiple bid situations reflect a shortage of properly priced homes that have been readied properly by the sellers.

In many parts of the country inventory levels are declining for several reasons:

– Sellers have been unwilling to come to terms with the reality of prices in the current market and have taken their homes off the market in anticipation of higher prices somewhere down the road. To that point there are some predictions that on a national level the forecast of a 1% downturn in prices is now being forecast into a slight 1% gain in prices for the year.

– The return of investors to the market with all cash offers, also has contributed to quicker sales and a thinning of housing inventory.

– Fannie Mae, Freddie Mac, and many large banks have been slow to release their backlog of foreclosed properties to the market.

The Wall Street Journal reported this week that in their recent quarterly survey inventory levels in 28 markets that were measured nationwide, all reported that inventory levels are down sharply. At the height of the housing crisis in 2008 there was a 11.1 month supply of inventory, in March that inventory level had fallen to 6.3 months. As of today in Wallingford there is a 9.3 month supply of homes on the market.

A key point for buyers to remember is that a properly priced home that is in market ready condition is likely to attract a lot of interest in today’s market, and that multiple offer scenarios are a situation that you and your agent should be prepared and strategize for.

Wallingford Real Estate – Wallingford, PA 19086

Down Payment Amounts Remain Stable

April 24, 2012 by admin

: The Median Down Payment Is 11 Percent

Down payments greater than or equal to 20 percent were made by 34 percent of all residential home purchasers last month, a percentage that has remained relatively stable over the past year, according to the latest REALTOR® Confidence Index survey from the National Association of REALTORS®.

For both conventional and FHA loans, which require only a 3.5 percent down payment, NAR reported the median down payment for all buyers was 11 percent in 2010-2011. First time buyers put about 5 percent down in 2011. Repeat buyers, pooling equity with savings, typically put down about 15 percent.

The states with the highest median down payments were Washington, D.C. (13.5 percent), New York (13.47 percent), Hawaii (13.33 percent) and California (13.22 percent). The state with the lowest average down payment is North Dakota, where buyers put down an average of 11.34 percent.

Down payments are a major barrier to first-time buyers, whose market share has dwindled since the home buyer tax credits expired in 2010. Half of all potential buyers planning to buy in two years or more are waiting in part because they lack the money for a down payment or closing costs.

Wallingford Real Estate – Wallingford, PA 19086

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S. Clark Kendus