Market Insights – Page 19

Housing Affordability Index Set To Reach New Record High

August 22, 2011 by admin

Housing affordability will be at its highest in a generation this year.

The affordability index is comprised of median home prices, median family income, and the prevailing mortgage rate. An index of 100 implies that a median income family has just enough income to buy a median priced home. An index of 120 implies that a median income family has 20 percent more income than is necessary to buy a median priced home. The index reached an all-time high (since the index was created in 1970) of 174 in 2010. This year, it looks to surpass 180. The rising affordability is a combination of lower home prices, record low mortgage rates, and a slight rise in family income.

In short, there has not been a better home buying opportunity in 40 years.

However, not all people have the necessary confidence to make a major expenditure like a home purchase in an uncertain economic environment. More importantly, the underwriting standards are overly stringent. Those who are currently able to get conforming mortgages have an average credit score of 760. Under normal underwriting standards (and not the lax underwriting of the bubble years), credit scores would be closer to 720 on conforming mortgages. For FHA mortgages, today’s borrowers have an average credit score of 700, compared to historic FHA borrowers who had an average credit score of 660. If the underwriting standards were just to return to normal then there could be an additional 15 to 20 percent increase in home buying activity.

Banks have plentiful cash reserves but are unwilling to lend. They are blaming the regulators, saying extra cash holding is needed in case of another catastrophic economic event and because the banks are uncertain about future regulatory rules. Simply getting the excess cash holdings held by the banks out to the borrowers will be the true, natural stimulus for the economy.

Source: National Association Of Realtors – Economists’ Outlook

Where Are The Listings In Wallingford?

June 17, 2011 by admin

Where is the listing inventory in Wallingford in terms of asking price? With 139 active listings on the market, as of 06/17/2011, with current asking prices ranging from $70,000 to $799,999.

This is today’s snapshot of Wallingford inventory categorized by price range, number of listings in the price range, percentage of total listings for the range, average price for the given range, and the average number of days homes in the price range have been on the market.

To no surprise the heart of the market, and consequently the most active, is the price range of 200,000 to 399,999 with that range accounting for 52.6% of the listing inventory.

Price Range	Units	PCT	Average	Days Listed
0 – 99,999	5	3.6%	$73,480	148
100,000 – 199,999	28	20.4%	$148,472	126
200,000 – 299,999	36	25.9%	$251,450	111
300,000 – 399,999	37	26.7%	$353,803	128
400,000 – 499,999	19	13.8%	$446,984	151
500,000 – 599,999	4	2.9%	$576,725	137
600,000 – 699,999	5	3.6%	$681,380	224
700,000 – 799,000	4	2.9%	$765,700	166
Average	139		317,161	132

Benefits Of A Pre Listing Appraisal

May 12, 2011 by admin

Setting the listing price for a home is in no way an exact science. A potential seller and real estate agent look at the data which includes, homes currently on the market, homes that are under contract, and most importantly homes of similar size, style, age, etc. that have sold within the last 6 months. Out of this mix of data, sprinkled with the emotional bond the seller has with the home, a listing price is set. A large question looms at this point – Is the listing price an accurate reflection of what a ready, willing, and able buyer will pay?

Unfortunately in many cases the listing price of a home does not reflect what potential buyers are willing to pay. Hence the property does not get many showings, and as time goes on the price is adjusted downward, and as the number of days on the market increases the frustration of the home seller increases as well.

The adage “time is money” is very true in real estate – the more time your property is on the market the more likely it is you will receive less money for it.

A pre listing appraisal can help alleviate some of the unknowns regarding the market value of a property. An independent professional appraisal can shorten your time to contract and provides an unbiased opinion of value for your home established through methodology and detail that goes beyond a real estate agent’s Competitive Market Analysis (CMA).

Benefits Of A Pre Listing Appraisal:

– Establishes a competitive price, stimulating buyer demand

– Provides solid data for use in the negotiation process

– Establishes credibility for a listing price

– Provides advance knowledge of repairs necessary to secure financing

– Helps create an offer closer to the original listing price

– Creates offers sooner than later

There is no perfect solution for pricing a home to sell quickly in today’s volatile market, but getting an objective price opinion through a pre listing appraisal is a smart step in the process of getting a home sold in the quickest time and for the most money. The cost is approximately $300 to $400 – it is definitely money well spent.

If you are considering listing your Wallingford home and would like additional information regarding a pre listing appraisal I would be glad to assist you.

Higher FHA Insurance Premiums In Effect

April 19, 2011 by admin

New FHA Insurance Premiums Now In Effect

The Federal Housing Administration – FHA – has increased the annual mortgage insurance premium .25% effective Monday April 18, 2011. The increase is based upon one quarter of one percent of the total loan value.

This increase is in response to the congressional mandate that the agency must maintain a 2% capital reserve in it’s Mutual Mortgage Insurance – MNI – fund. The action will help replenish the agency’s capital reserves which have been shrinking over the past several years due to losses on defaulted loans. It is estimated that the agency’s current capital reserves amount to 1/2 percent of outstanding loan balances.

This increase will raise the monthly cost of a $150,000 FHA insured loan by approximately $375 annually, or about $31 per month.

FHA loans have become increasingly popular in the past several years, requiring a minimum of a 3.5% down payment which has proven very attractive to home buyers. A FHA Mortgage Insurance Premium – MIP – is comprised of two elements – an upfront premium which can be rolled into the loan, and a monthly premium.

Wallingford Home Financing

For Wallingford homes sold this year through April 15, FHA financing was used in 15% of the reported sales – 3 out of 20 homes sold. Conventional financing was the method of financing for 12 home buyers, followed by 4 cash transactions, and 1 deal was privately financed.

The Values Of Home Ownership

March 17, 2011 by admin

With the spring market underway it is time to review the many merits of home ownership. The barrage of negative media stories regarding the state of the market can lead to buyer and seller concerns. Three major points regarding the impact of housing:

Financial Benefits – Over the past 41 years h0mes values have risen an average of 5.5% annually. In spite of recent loss in value over the past several years they are stronger than that were in 2004. Leveraging a 5% down payment in your home you can expect to exceed average stock market returns.

Social Benefits– Home ownership promotes stable communities. During the period of 2008 to 2009 only 5.2% of homeowners moved, as opposed to 30% of renters changing residences. Studies have shown that home owners are significantly more likely to vote and volunteer in the community. Areas with high home ownership rates have significantly less crime, and children are more likely to achieve a higher level of education.

Housing’s Economic Impact – Housing is an engine that drives the economy. Six of the last eight recessions have ended as a result of a robust housing market. The National Association of Realtors estimates that one job is created for every home sale, and each existing home sale at the median price of $173,000 has a economic impact of over $30,000.

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Wallingford Home Financing

S. Clark Kendus