Dallas Metro New Home Sales Soar in June

Further evidence of an economic turnaround showed up yesterday in the form of new home sale statistics as Texas and in particular Houston and Dallas led the nation in new home sales for June. Houston was the top market for new home sales while the Dallas market was second. Texas had more new home permits than Florida and California combined. Much of the increase can be attributed to first time buyers starting to come to the market in mass in order to beat the November 30 deadline. The market is currently experiencing a push upward. Just recently released numbers showed an existing home sales increase of 3.6%. The two numbers are the best news that the local housing market has had in some time. Even with the news of new home sales being positive, home starts in the Dallas market are down about 70% from 2006 levels. This is important because builders need to keep inventories from bulging in the second half of the year and therefore putting renewed pressure on the local housing market. We will continue to monitor these statistics here on this Blog.

June New Home sales are up

Found this article from the Associated Press. It is very interesting.

WASHINGTON (AP) -- New home sales in June posted the fastest increase in more than eight years as buyers took advantage of bargain prices, low interest rates and a federal tax credit for first-time homeowners.

While home prices are still falling, the figures released Monday were another sign the housing market is finally bouncing back. Earlier this month, the government reported that new home construction rose to the highest level since last fall. And data out last week showed home resales rose almost 4 percent in June, the third straight monthly increase.

"The worst of the housing recession ... is now behind us," said David Resler, chief economist at Nomura Securities. "We're turning the corner toward increased activity in housing."

New home sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000, the Commerce Department reported Monday.

Shares of big homebuilders soared on the news, with Beazer Homes USA up by more than 13 percent and Hovnanian Enterprises rising 8 percent in afternoon trading. But with home prices still falling, these companies won't be making much money anytime soon.

The median sales price of $206,200 was down 12 percent from $234,300 a year earlier and off nearly 6 percent from $219,000 in May.

In addition to lower prices, buyers are rushing to tax advantage of a federal tax credit that covers 10 percent of the home price or up to $8,000 for first-time buyers. Home sales need to be completed by the end of November for buyers to take advantage.

"The window of opportunity is closing," said Bernard Markstein, senior economist for the National Association of Home Builders.

June's results were the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.

There were 281,000 new homes for sale at the end of June, down more than 4 percent from May. At the current sales pace, that represents 8.8 months of supply - the lowest level since October 2007. If that number falls to just over 6 months, analysts say, builders will feel more comfortable ramping up construction.

Fallout from the housing crisis has played a central role in the U.S. recession, now the longest since World War II. Foreclosures have spiked, homebuilders have slashed construction, and financial companies have lost billions.

But it will still be a while before homebuilders turn into an engine for the economic recovery. Construction levels are still weak because builders still have too many unsold homes sitting vacant.

Collin County Real Estae Shows Strength

We have definitely seen a change in the direction of the local market. While our local media continues to write articles about the weakness of the local real estate market we are actually seeing a change in the direction of momentum. I do not mean to say that sales are up. Indeed they are not equal to the sales of last year. What has happened is that the sales to available inventory has reversed in direction. This is an indicator of what is to come. It is called our pending sales ratio. There is a direct correlation to the strength of the market and this ratio. What we are seeing is that the inventory of available homes continues to shrink. For instance in Plano we had 1167 active listings at the end of June. At the same time last year we had 1596. The months supply of inventory went from 5 months to 4.8 months. The most dramatic change was in Frisco where we went from 1597 to 1275. Months of inventory went from 6.8 months supply to 5.8 months supply. Our buyers are amazed at the fact that they are having a hard time finding a home that suits there needs at a price they can afford. They become frustrated when they see something nice and find that it already has an offer coming in. The really nice homes are leaving the market quickly. We saw the pending ratios bottom out in December of 2008 and January of 2009. These ratios have increased every month since the first of the year and we believe we will see these ratios continue to strengthen the rest of the year. If you would like the full report for all of the Collin County Markets please call me at 214-693-0593 or email me at bill@janwebb.com

Plano's Current Real Estate Market

Posted on Saturday, December 6, 2008 at 01:05PM by Bill Webb Post a Comment So, what is going on in our market? Many of you are seeing the national news every evening and seeing the situation as painted by the media. It is important that you understand what is going on in the Dallas area as well as the particular community that you are located. November, as expected, was not kind to the real estate market. As we saw the financial markets melt and become chaotic, we saw real estate transactions slow down dramatically. I did some research and the local zip codes with the greatest amount of income are the zip codes that slowed the most. In other words, those most affected by the stock market’s demise were the quickest to act in real estate. This was not unexpected, given the severity of the financial mess. It has taken a few weeks for potential buyers to become adjusted to the economy. As confidence is re-established with the economy we are seeing buyers starting to return to the market. What we also know is that our local market is quite different from the national market. Here is a sampling of what is going on in our local market at this time. The Dallas area enjoys an employment growth rate of 2.3%, which is far ahead of the national average. Of the twenty largest cities Dallas ranks number one in the category of most affordable homes. The North Dallas area (which is where most of you are) has a job growth rate of 2.6% which was the highest gain of the thirty-two metro areas that were surveyed. Home prices have declined slightly in the Metroplex. Our market shows a decline of about 2.6% as compared to a national average of over 16%(this is the number you see on the nightly news). To summarize our situation I believe that we have seen the worst of it. That is providing our national economic scene does not deteriorate further. I do think we will start to see a rise in home sales locally. Interest rates are now in the 5.5% range and are trending lower. I believe that we will see lower rates in the near future as lending practices start to loosen a bit. I also believe that the government is making the housing industry a major focus of its recovery plan. I still believe that homes in this market need to be priced right and in the best condition possible to make sure that they get sold. We must make sure that the buyer can see value.

Will Mortgage Rates Go Lower

I have received many calls today from agents and consumers alike who are hearing news reports of fixed rate mortgages being reduced by the government to 4.5%. While rates are very, very low right now, they are not at the 4.5% level. More importantly, they may or may not be headed in that direction. As you are aware, interest rates are driven by market forces and respond to bond market issues in response to daily eco­nomic news and, occasionally, whims. The government does not “set” the interest rates. Accordingly, this news story is not factually accurate. Having said this, could there be days in the coming weeks or months that we have ac­cess to interest rates at these levels? Yes, this is possible. However, it is far from cer­tain and should, therefore, be considered with great caution. It is important that con­sumers understand that current interest rates are in the low to mid 5’s which is histori­cally extremely low. A client who chooses to wait on his/her buying decision until rates hit “bottom” will likely end up missing the great opportunities of today…and miss the bottom as well. History has taught us that the bottom typically lasts for a period of hours, not days, and is quite elusive. Please read the opinion of the mortgage analyst below. Larry Baer does a wonderful job of explaining the discrepancies between the news media and the markets. As he says: “The markets are always right. You and I are some of the time.” I think most readers would agree there is a big difference between talking the talk - and actually walking the walk. The Wall Street Journal and Reuters News Service really got the rumor mills buzzing yesterday when they claimed their "sources" within the U.S. Treasury Department are whispering insider knowledge that indicates the government is considering reducing residential mortgage rates to 4.5% by upping investment in mortgage-backed securities. The plan would be for Fannie Mae and Freddie Mac to buy up more mortgage-backed securities to help drive borrowing costs roughly 1.0% lower than last week's U.S. average of 5.53% for a 30-year fixed mortgage. I certainly don't want to rain on anybody's parade here - but there are a couple of things I think you ought to consider in order to put this story into perspective. The Treasury Department already has authority to buy billions of dollars of mortgage-backed securities - it has yet to use that authority to any large degree. Does additional purchase authority suddenly create a storm of mortgage-backed security purchase ac­tivity that didn't exist before? How much additional buying power is necessary to push 30-year fixed-rate mortgage-backed securities down to 4.5%? The Federal Reserve announced plans to buy $500 billion of mortgage-backed securities from Fannie and Freddie on Monday - which did cause rates to spike lower - for a couple of hours - be­fore mortgage interest rates finished flat to slightly higher through this morning. As I write, 30-year fixed rate mortgages in most of the country are trading at or near levels last experienced in June 2003 - when they touched 5.25%. It is unlikely any co­ordinated effort by the government to push 30-year mortgage interest rates to 4.5% or lower will occur until at least January 20th - there's probably too much "political hay" to be made by the majority party to make this event happen any earlier. Last but not lest, in my 30-years of managing mortgage market risk on a daily basis I've never seen mortgage interest rates sustain a dramatic move to lower levels when Uncle Sam is dumping huge amounts of supply into the credit markets. Current esti­mates indicate Uncle Sam has an immediate borrowing need that is multiples of his previous all-time record. So in a nutshell, we're talking about a program that doesn't even exist, that has no qualifying parameters, no timeline for implementation if it actually takes form and that will - at best - offer a note rate that is roughly 50 basis-points less than is immediately available in the market today. I hate these "two in the bush versus one in the hand" dilemmas - don't you? Shifting gears a little bit, I want to remind you that the economic "biggie" of the week is on tap tomorrow morning at 8:30 a.m. ET. The employment report is expected to show the economy shed 320,000 jobs in November, accelerating the labor market decline from the 240,000 jobs lost in October. In my judgment a dismal nonfarm payroll report is already priced into the mortgage market. As desensitized as mortgage investors have become to miserable macro-economic data it will likely take a November job loss figure greater than 350,000 and/or a national jobless rate higher than 6.9% to support a rally in the mortgage market. Numbers that match the consensus estimates for the November nonfarm payroll data will likely have little, if any significant impact on the near-term direction of mortgage interest rates. The above article was contributed by Tish Ashley of The Funding Source

First Time Homebuyer Credit

Posted on Wednesday, November 26, 2008 at 12:02PM by Bill Webb Post a Comment MONDAY, NOVEMBER 10, 2008 First Time Buyer Credit The tax credit may be enough of an incentive for potential buyers to jump off the fence. That is, if they know about it. By Robert Freedman November 2008 The $7,500 home ownership tax credit that the federal government created earlier this year as part of the Housing and Economic Recovery Act (H.R. 3221) is another tool at your disposal to encourage potential buyers to jump off the fence and get into the real estate market. When you combine the tax credit with today’s low interest rates, wide selection of for-sale inventory, and affordable home prices, many of the pieces are in place for your customers to buy now. But tax credits can be confusing. To help your clients understand how the credit works and why it would help them, you must learn the details. Here are 6 things you should be able to explain to prospects and clients: 1. Buyers have until July 2009 to make a purchase that qualifies. The tax credit was passed in July of this year as part of the Housing and Economic Recovery Act (H.R. 3221). It’s worth up to $7,500 and can be taken in a single tax year. Authorization for the credit ends July 1, 2009, so if your customers wait to buy in the first half of 2009 they can take the credit on their 2009 tax return. Taxpayers can take the credit on their 2008 tax return if they bought their house this year after April 9. 2. Buyers don't really have to be "first-timers." The tax credit is actually available to any individual or household that hasn’t owned a home for at least three years. And the NATIONAL ASSOCIATION OF REALTORS® has asked Congress to expand the credit to all buyers, not just those who haven't owned a primary residence in recent years. 3. Even if buyers exceed the income limit, they can benefit from the credit. The actual credit amount is set as a percentage of the home purchase amount. That percentage amount is 10 percent, so your customers can get 10 percent of the home price credited against their tax liability, up to a maximum $7,500. Sounds like a great deal. But what if your clients make more money than the income limit of $75,000 for individuals and $150,000 for households? Good news: Individuals whose income exceeds the $75,000 limit but don't make more than $95,000 can still take the credit but on a reduced basis. The same thing applies to households earning up to $170,000. By the way, any house is eligible as long as it’s a primary residence and is in the United States. 4. Think of it as an interest-free loan. The federal government requires the tax credit to be paid back in small, 6.67-percent increments over 15 years, although repayment will be no more than $500 yearly and payments will not start until 2011. For that reason, some analysts have likened the credit to a 15-year, interest-free loan to help make home buying affordable. NAR is pushing congress to remove the repayment provision, making this tax credit a true tax credit rather than an interest-free loan. 5. You don't have to be authorized before making a home purchase. There is no pre-purchase authorization, application, or other approval process. Eligible buyers simply have to claim the credit on their IRS Form 1040 tax return and/or any form that the IRS might devise. 6. New-home construction qualifies. For a home that a buyer constructs, the purchase date is the first date the buyer occupies the home.However, any home that is not a primary residence, such as a vacation home or income property, does not qualify. NAR Asking Congress to Expand Credit As mentioned above, NAR has asked Congress to do away with the repayment provision of the first-time buyer tax credit and expand the credit to all home buyers, not just first-timers. The proposals were part of a four-point housing stimulus plan the association submitted in mid-October. “Housing has always lifted the economy out of downturns, and it is imperative to get the housing market moving forward as quickly as possible,” said NAR President Richard F. Gaylord. “It is vital to the economy that Congress take specific actions to boost the confidence of potential homebuyers in the housing market and make it easier for qualified buyers to get safe and affordable mortgage loans. Article courtesy of Realtor Magazine