Sun State Savings

The hous­ing mar­ket fin­ished 2011 with strength, and is car­ry­ing mea­sur­able momen­tum into 2012. 

Accord­ing to data from the National Asso­ci­a­tion of REALTORS®, on a seasonally-adjusted, annu­al­ized basis, December’s Exist­ing Home Sales climbed by 120,00 units over­all from the month prior on its way to an 11-month high.

An “exist­ing home” is a home that’s been pre­vi­ously occu­pied; that can­not be con­sid­ered new construction.

After 4.61 mil­lion exist­ing homes were sold in Decem­ber, there are now just 2.38 mil­lion homes for sale nation­wide. The last time the national home sup­ply was this sparse was March 2005.

At today’s sales pace, the com­plete, national home inven­tory would be exhausted in 6.2 months — the fastest pace since before the reces­sion. A 6.0-month sup­ply is believed to rep­re­sent a mar­ket in balance. 

The Decem­ber Exist­ing Home Sales report con­tained note­wor­thy fore­clo­sure and short sale sta­tis­tics, too :

• Fore­clo­sures sold at an aver­age dis­count of 22% to mar­ket value
• Short sales sold at an aver­age dis­count of 13% to mar­ket value
• Together, fore­clo­sures and short sales accounted for 32% of all home sales

Clearly, “dis­tressed homes” remain a large part of the U.S. hous­ing market.

Fur­ther­more, in its report, the real estate trade group also noted that one-third of homes under con­tract to sell nation­wide suc­cumbed to con­tract fail­ure last month. That’s up from 9% one year ago.

Con­tract fail­ure occurs for a mul­ti­tude of rea­sons, most notably homes apprais­ing for less than the pur­chase price; the buyer’s fail­ure to achieve a mort­gage approval; and, insur­mount­able home inspec­tion issues. December’s high fail­ure rate under­scores the impor­tance of get­ting pre-approved as a buyer, and of buy­ing homes in “good condition”.

For today’s home buyer , December’s Exist­ing Home Sales fig­ures may be con­strued as a “buy sig­nal”. Home sup­plies are drop­ping and buyer demand is ris­ing. This is the basic recipe for higher home prices ahead.

If your 2012 plans call for buy­ing a home, con­sider that home val­ues are expected to rise as the year pro­gresses. The best val­ues of the year may be the ones secured this winter.

The hous­ing mar­ket con­tin­ues to sig­nal that a broad rebound is under­way. In Octo­ber, despite sparse home inven­tory, the num­ber of prop­er­ties sold increased 1.4% nationwide.

Accord­ing to data from the National Asso­ci­a­tion of REALTORS®, on a seasonally-adjusted, annu­al­ized basis, Octo­ber Exist­ing Home Sales gained 70,000 units as com­pared to Sep­tem­ber, reg­is­ter­ing 4.97 mil­lion exist­ing homes sold over­all.

An “exist­ing home” is a home that has been pre­vi­ously occu­pied and, as com­pared to prior months, the stock of homes for sale is depleted. 

Just 3.3 mil­lion homes were listed for sale last month. This rep­re­sents a 2 per­cent drop from Sep­tem­ber and marks the spars­est home resale inven­tory of 2011.

The cur­rent home sup­ply would last 8.0 months at today’s sales pace — the fastest rate since Jan­u­ary 2010. 

The real estate trade group’s report con­tained other note­wor­thy sta­tis­tics, too :

1. 34 per­cent of all sales were made to first-time buyers
2. 29 per­cent of all sales were made with cash
3. 28 per­cent of all sales were for fore­closed homes, or short sales

It also said that one-third of trans­ac­tions “failed” as a result of homes not apprais­ing for the pur­chase price; fail­ure to achieve a mort­gage approval; and, insur­mount­able home inspec­tion issues.

This 33% fail­ure rate is huge as com­pared to Sep­tem­ber 2011 (18%) and Octo­ber 2010 (8%). It under­scores the impor­tance of get­ting pre-qualified to pur­chase, and of select­ing a home “in good condition”.

For today’s home buyer, October’s Exist­ing Home Sales may be a “buy sig­nal”. Sup­plies are falling and sales are increas­ing. Ele­men­tary eco­nom­ics says home prices should begin ris­ing, if they haven’t already.

Remem­ber : The data we’re see­ing is already 30 days old. Today’s mar­ket may be markedly improved already.

The good news is that mort­gage rates remain low. Fred­die Mac reports that the aver­age 30-year fixed rate mort­gage rate is 4.000% with 0.7 dis­count points, mak­ing homes as afford­able as they’ve been in history.

With ris­ing home val­ues, you may end up pay­ing more to pur­chase your new home, but at least you’ll pay less to finance it.