Dwight’s Real Estate Update

Last year’s real estate market ended on a high note with the average price of a single family home reaching $219,214.  That’s the highest the average price has ever reached in the month of December, and was a 15.1 percent increase above the 2008 figure.  For most of the year the average price for a single family home was in the high $190,000’s or above $200,000.  The median price of a single family home also remained stable in the $150,000 to $160,000 range for a number of months.

The main reason for the stable pricing is that the balance of supply and demand stayed in check.  As demand has been reduced over the last couple of years, the inventory of homes both new and resale has also been reduced.  The inventory of active listings for sale fell below 7 months to the 5-6 month range and stayed below the national average for most of the year.  Starting off the new year, the current level of single family hmes is probably under the 5 month level.

Another reason for stable home demand in 2009 was the low interest rates which remained below 6% for the year.  The $8,000 tax credit also created an uptick in the sales figures.

The effect of the foreclosures in our market definitely help increase the number of homes sold, but probably did little to boost the rise in the average price since most foreclosures were under the $150,000 range.  In fact the median price of foreclosures in December was $89,900.  I don’t have an exact figure for the number of foreclosures that sold in 2009, but I believe it was in the 20% range for single family homes.  This information was based on the press release from HAR and other sources.

According to Realty Trac (realtytrac.com), foreclosure filings in November placed Texas in 24th place of states having the most foreclosures.  The Texas activity rose to 12,095 foreclosure filings, up 3 percent over October filings and 54% above November of 2008.

If there is any good news here, it’s that things could be worse.  Due to short sales and loan modifications, the amount of foreclosures is not as high as it could be.  Actually the foreclosure filings in Texas for November only accounted for 4% of the 306,627 filings reported nationwide for the month according to Realty Trac.

In the Houston area market, there have been over 11,000 single family home foreclosures sold through the Houston MLS.  That’s about 20% of all the single family homes sold in the area during 2009.  More than 80% of the foreclosures were in homes priced under $150,000.  Just a note here.  Don’t confuse or compare the number of filings with the homes that sold.  Filings means homes that were posted at the courthouse to go into foreclosure.  The homes that sold were homes that had already gone through the foreclosure process anywhere from a few months to a year(or more) ago.  The time it takes to go from foreclosure to going up for sale to the public can differ from house to house.  Some homes can set vacant for quite a time after foreclosure while title problems, etc. get cleared up.

Foreclosures will always be with us in good times and bad.  We are expected to see more coming on the market throughout 2010.  For a current list of foreclosed properties, feel free to contact me.

Time is running out for you first time homebuyers or anyone who hasn’t owned a home is three years. The $8,000 that does not have to be paid back will expire on December 1, 2009. Now as I understand it, you have to close on the sale of your home before Dec. 1 to qualify for the tax credit. That means your last day to close and fund at the title company would be November 30th, which is a Monday. Now let’s back that up a little. In order to close by Nov. 30th, you might need a 45 day period to the get the loan and go through the closing process. To get that full 45 days, you need to be under contract on your home no later than October 15th. Time to get moving.

In case you are a little short on cash to cover the down payment, there may be some help from the Texas Department of Housing and Community Affairs. It seems they have a short term loan program that will extend a short term loan to you for most of the $8,000 until you get it back from Uncle Sam. Go to their site at MyFirstTexasHome.com to get all the details.

Now if you are wondering how you get the tax credit and if you qualify, you need to see your own tax professional. The NAHB also has an informative site at www.federalhousingtaxcredit.com

The second quarter of 2009 shows the market adjusting with declines in the number of sales and active listings from the same time in 2008, presenting a balanced supply of housing. With a balanced supply, comes stable pricing. In June the mediam price for a single-family home reached a record high of $164,500. The average price of a single-family home rose to $221,783, the highest level since August, 2008. The median price in the townhome/condo market reached the highest level since August 2008.

According to the Real Estate Center at Texas A&M, the Texas economy experienced a little bit of the national recession with a loss of 113,600 jobs from March 2008 to March 2009. The Center further stipulated that the U.S. economy lost more than 4.8 million jobs in the same time period. Some sectors of the Texas economy actually has positive growth numbers. Those sectors included education, health services, natural resouce related and government.

According to the Texas Comptroller’s office, both the U.S. and Texas economies have contracted in 2009, but Texas continues to perform relatively better than the nation. The Comptroller’s office estimates that the Texas gross state product will contract by 1.7 percent during calendar 2009 and that the U.S. economy will shrink even more, by 2.8 percent for the year

The sales from the first quarter of 2009 still show a decline from the first quarter of 2008. Closed sales totaled 3240 in January, 3995 in February and 5022 in March. Compared to the total sales for the first quarter of 2008, the 2009 figures are off 23.3 percent. As in previous months, there are fewer properties selling, but I view it as a simple market adjustment. Not all of the news is bad. The total months of inventory is slightly over 6 months. Still more of a buyer’s market than a seller’s market, as I see it. The average price for a single-family home and the median price for a single-family home are both lagging behind the numbers for year ‘08, but creeping back up. Could be seasonal, but time will tell.

This past week, rates for a 30 year fixed rate mortgage fell below 5 percent.  This was mainly caused by the Federal Reserve putting more funds into mortgage backed securities held by Fannie Mae and Freddie Mac.

There are still some problems in home financing these days, but this definitely helps.  If rates will stay low, it will help more people afford a home.  As I keep saying, it’s a heck of a time to be home shopping.

In the American Recovery and Reinvestment Act of 2009 (aka Stimulus Plan), the Federal Government amended the first time homebuyer tax credit given by the Bush Administration in 2008.  The new act increases the $7,500 tax credit to $8,000 and will be eligible on home purchases after December 31, 2008 and before December 1, 2009.

The good news is the change where the new tax credit does not have to be paid back.

Now as to all the rules and particulars, I fully recommend that you seek proper tax guidance from a tax professional.  My expertise comes in helping you find the home to purchase before December 1st.

I’m sure you have heard it on the news. The new administration has brought some help to homeowners having trouble paying the mortgage on their home. They have created a new program where some homeowners can modify the terms of their current mortgage or refinance altogether. This is where you are not delinquent on your mortgage payments, but are having a hard time making the payments, or you want to refinance, but can’t because the value of your home has fallen below your current mortgage balance.

The kicker is, you have to have a loan backed by Fannie Mae or Freddie Mac, which means this program will eliminate some of you from modifying your loan or refinancing under this program. Also, you have to participate in this program before June 2010 when the program expires.

You can get the lowdown on this program at http://www.makinghomeaffordable.gov.  There’s also information there to help you determine in you have a Fannie or Freddie loan. If your loan is not of this type and you still have questions, give me a call.

Sales data from the Houston Assn of Realtors shows that sales of single-family homes dropped to a total of around 2,800 for January 2009 and the average price also dropped to around $164,000.  The highest total for single-family sales in the month of January was in 2007 when the total was 4,017.  That was up from the 3,648 total in January of ‘06 and then it went down again in January 2008 to 3,620 sales.  The average price of a single-family home in January of 2008 was around $190,000.  The continued influx of foreclosures are the primary reason for the price decline.

The good news is that the inventory of current mls listings remains lower than average and should help out the balance of buyers vs. number of homes for sale.  In some parts of town, there appears to be a shortage of listings.