Vermont Buzz

July Existing Home Sales Highest in 5 Months

Existing-home sales rose in July to the highest level in five months, although sales have hovered in a relatively narrow range over the past 11 months, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent to a seasonally adjusted annual rate¹ of 5.00 million units in July from a downwardly revised level of 4.85 million in June, but are 13.2 percent lower than the 5.76 million-unit pace in July 2007.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the up-and-down pattern may break soon. “We hope the new tools in the hands of home buyers from the recently enacted housing stimulus package will spark a sustained sales uptrend in the months ahead,” he said. “Buyers who’ve been on the sidelines should take a closer look at what’s available to them now in terms of financing and incentives. Given some of the inventory on the market, we also strongly encourage buyers to get a professional home inspection.”

The national median existing-home price3 for all housing types was $212,400 in July, down 7.1 percent from a year ago when the median was $228,600.

Lawrence Yun, NAR chief economist, said home prices in some regions could soon increase. “Sales have picked up significantly in several Florida and California markets. Home prices generally follow sales trends after a few months of lag time,” he said. “Still, inventory remains high in many parts of the country and will require time to fully absorb. We expect more balanced conditions in 2009 and will eventually return to normal long-term appreciation patterns.”

Analysis of NAR price data since 1968 shows home prices normally rise 1 to 2 percentage points above the overall rate of inflation, building wealth over the typical period of homeownership.

Total housing inventory at the end of July rose 3.9 percent to 4.67 million existing homes available for sale, which represents an 11.2.-month supply² at the current sales pace, up from a 11.1-month supply in June. The rise in supply results from a sharp increase in condo inventory; the single family supply declined.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.43 percent in July from 6.32 percent in June; the rate was 6.70 percent in July 2007.

Single-family home sales rose 3.1 percent to a seasonally adjusted annual rate of 4.39 million in July from 4.26 million in June, but are 12.4 percent below the 5.01 million-unit level a year ago. The median existing single-family home price was $210,900 in July, down 7.7 percent from July 2007.

Existing condominium and co-op sales increased 3.4 percent to a seasonally adjusted annual rate of 610,000 units in July from 590,000 in June, but are 18.6 percent below the 749,000-unit pace in July 2007. The median existing condo price4 was $223,400 in July, which is 2.7 percent below a year ago.

Regionally, existing-home sales in the West jumped 9.7 percent in July to a level of 1.13 million and are 0.9 percent higher than July 2007. The median price in the West was $273,200, down 22.2 percent from a year ago.

In the Northeast, existing-home sales rose 5.9 percent to an annual pace of 900,000 in July, but are 11.8 percent below a year ago. The median price in the Northeast was $278,700, which is 4.9 percent lower than July 2007.

Existing-home sales in the Midwest increased 0.9 percent to an annual rate of 1.12 million in July, but are 17.0 percent lower than July 2007. The median price in the Midwest was $175,400, up 1.0 percent from a year ago.

In the South, existing-home sales slipped 0.5 percent to an annual pace of 1.85 million in July, and are 18.1 percent below a year ago. The median price in the South was $179,300, down 3.5 percent from July 2007.

Source: Northwestern Vermont Board of REALTORS® (NVBR)
202 Commerce Street | PO Box 814 | Williston, VT 05495
Office (802) 862-6407 | Fax (802) 862-2306 | info@vtrealestate.com

NAR lists Vermont in top 10

NAR Chief Economist Lawrence Yun reported last week at the Annual Leadership Summit in Chicago that Vermont is in the top ten states for sales recovery.  Sales are stabilizing across the nation and he believes that the recently passed $7500 tax credit for fist time home buyers along with higher loan limits for Fannie Mae and Freddie Mac will be the trigger to unleash high pent up demand from buyers who have been sitting on the side lines, frightened by gloomy reports.  Very soon he believes that the media will be forced to report the facts of increased sales.  The recovery can be sharp or moderate depending on the job we do in getting good information out to clients and consumers.  Don’t forget that you can find all the latest commentary from NAR research at: http://www.realtor.org/research/research_commentary

Source:  Vermont Association of Realtors E-News - August 08

Leading Real Estate Companies of the World Survey Finds Turnaround

More brokers see beginning of turnaround

     (CHICAGO) - A Leading Real Estate Companies of the World survey of brokers finds some easing of adverse conditions in the housing market, with 59 percent indicating they are seeing a stronger market in the last 60 days.
     Nearly 20 percent of brokers said they are seeing a decline in inventory from a year ago, and 82 percent said prices are down in the past year.
     Of those surveyed, 75 percent said the decline was less than 10 percent, and 33 percent said the decline was less than 5 percent.
     Ironically, only a third of those surveyed said foreclosure properties were having a significant impact on prices.

Source: Real Estate Intelligence Report

Vol 14 No 28 – by REAL TRENDS

Bernanke Warns of Systemic RisK

Bernanke warns of systemic risk

Restoring financial market stability is a top priority for the Federal Reserve as a weakening housing market, tighter credit and rising oil prices threaten to hinder the economy, Federal Chairman Ben Bernanke said today, July 15th.  Reuters reported that Bernanke said financial markets and institutions remain under considerable stress. Bernanke said the U.S. Central Bank might keep open a lifeline to financial firms, while the latest data showed distress in the housing and retail sectors continues.  He promised to consider retaining an emergency lending facility for Wall Street firms past year-end, showing the Fed is determined to stop the housing-inspired credit crisis from further harming the economy. Markets have feared the two government-sponsored entities might face capital constraints. But their regulator, the Office of Federal Housing Enterprise Oversight, said the accounting change that may affect trillions of dollars of mortgage bonds issued by Fannie and Freddie should not dictate capital requirements at the companies.  Taken literally, the change could mean Fannie Mae and Freddie Mac would need a combined $75 billion in additional capital, according to Lehman Brothers.

Source: Real Trends 18 July 08

Roulette Economy of 2007 Nearing End

“2007 has been a year of challenge; 2008 will be a year of opportunity for serious buyers and for REALTORS®,” NAR Chief Economist Lawrence Yun told a packed house at the NAR Conference in Las Vegas, NV on Tuesday, November 13.

What Yun characterized as “the roulette economy” of 2007, fueled by subprime greed and then buyers’ fear, is almost over. With a favorable economy, pent-up home demand, and Wall Street “fessing up to its losses and cleaning up its underwriting,” 2008 will be a healthy market for serious buyers, he said.

Home prices nationally have declined by some 1.5 percent in 2007, which is "no big deal" after years of rapid appreciation, said Yun. In addition, he noted, there are still many markets such as Utah, North Carolina, and Tennessee that are appreciating and may even be undervalued.

Remind Clients That Markets Are Local

“REALTORS® have to educate their clients that all markets are local and that problems in a few areas aren’t meaningful," he said. "A national picture of the real estate market is just about as valuable as giving a national high temperature for the day."

Yun also noted that while the credit crunch slowed deals in 2007, much of the pain is being felt in the subprime area, while other mortgage sectors are stabilizing. Subprime constitutes only about 10 percent of mortgage loans, but accounts for some 40 percent of current foreclosures. Going forward, proposed federal legislation that would increase FHA loan limits should help moderate-income buyers, said Yun.

Yun expects GDP growth of 2.8 percent and job growth of 1.1 percent in 2008. Inflation should also remain under 3 percent, and interest rates should rise only slightly, he predicts. “For buyers who are into home ownership for the long term, housing still remains the best investment,” he concluded.

Get Ready for the New Generation

Following Yun’s presentation, former NAR economist John Tuccillo gave attendees a preview of what the next real estate market would look like. When recovery comes, said Tuccillo, most clients will be Gen X and Gen Y. These younger buyers don’t want relationship selling; instead they want the best bottom line deal you can find and the one-stop shopping to make the deal faster so they can get on with their lives.

Other big buyers in the next decade will be retiring boomers, who will want homes in 24-hour cities and college towns. “Real estate practitioners have traditionally worked with first-time buyers. Think of these people as last-time buyers,” he quipped.

It’s hard to predict when any local market will begin to improve, but there are three indicators, said Tuccillo. First would be a drop in new listings, indicating sellers are withdrawing from the market. Second, days on market will fall. And third, the gap between listing price and sales price will narrow.

Taken from the Northwestern Board of REALTORS November 2007 Newsletter

Now is a Great Time to Buy

Interest rates are still low. High end sales (over $1 million) are ahead of prior years.
Foreclosures for both New Hampshire and Vermont are very low (Vermont was 50th
of the 50 states!). Subprime lending is uncommon in our markets as well.

The lesson in all of this is that all markets are local. Both New Hampshire and Vermont
have economic challenges yet we are not in the same category as Nevada or Florida
where speculative purchasing was rampant.

VT Education Property Tax Adjustment

VT Education Property Tax Adjustments – Act 185

The Vermont Legislature has changed the way in which State of Vermont Education Property Tax Adjustments are paid. In the past, the Vermont Tax Department paid the rebate/ prebate amounts directly to the individual property owner who was entitled to the tax adjustment. Beginning in 2007, the property tax adjustment will be paid directly to the municipality as a credit toward the homestead amount. Source:  VREIN (VT Real Estate Information Network)