Home Sales Are Up Due To The Tax Credit Deadline: The National Association of Realtors® (NAR) Pending Home Sales Index (PHSI) toppled the last two and half year home price records and climbed in 1.7 percent in November, posting its third consecutive monthly gain in home prices.
The Pending Home Sales Index is at the highest level since April 2010 when it hit 111.3 as some home buyers are pressing home closing dates to beat the deadline for the home buyer tax credit before it expires due to fiscal cliff threats. Outside of several months helped by tax stimulus, the housing market hasn't seen a higher reading since February 2007 when the index reached 107.9.
Home Sales in the Twin Cities - A Sustained Upward Trend
Yesterday NAR released a second report on home sales showing that on a year-over-year basis, pending home sales have risen for 19 consecutive months.
The PHSI peaked at 106.4 in November, a 1.7 percent increase over the October number which was revised down slightly to 104.6 from the 104.8 original reports indicated. The November home sales index was nearly a full 10 percent up, at 9.8 percent above the index of 96.9 in November 2011, after showing a sustained upward trend overall in 2012. After tabulating November's statistics, NAR reports that the housing market has achieved a ninth consecutive monthly year-over-year price gain, which last occurred from September 2005 to May 2006.
Jeffrey Hyland, president of brokerage Hilton & Hyland in Beverly Hills, has experienced a 60% increase in home sales this year, from figures of $1 billion in 2011 to $1.7 billion in 2012. "There's a real scarcity of inventory in L.A. right now, with a tremendous number of buyers," he says.
Home Affordable Refinance Program
According to the Administration's Housing Market Scorecard, Federal Reserve and Treasury Mortgage-Backed Securities purchase programs have helped home prices to increase and to keep mortgage interest rates at record lows over the past year. Over a half million home owners have refinanced their loans so far in 2012 through programs like the Home Affordable Refinance Program.
"Even with market frictions related to the mortgage process, home contract activity continues to improve. Home sales are recovering now based solely on fundamental demand and favorable affordability conditions" ~ Lawrence Yun, NAR Chief Economist
NAR Attributes The Rise In Home Sales
The National Association of Realtors®, "The Voice for Real Estate," substantially represents 1 million members and real estate professionals covering all aspects of the residential and commercial real estate industries. Their December 19th news release titled November Existing-Home Sales and Prices Maintain Uptrend offers behind the market influences in the rise in home sales.
Fundamental demand from increase in home buyer confidence
Favorable home affordability conditions from continued low interest rates
Low inventory supply pressuring home buyers to make decisions
Home buyers trying to get in on homeowners tax credit before they many expire
Increase in jobs
Household formation bursting out
Fiscal Cliff And The Tax Credit Deadline
Homebuyers are trying to rush short sales to beat the tax credit deadline imposed by the pending fiscal cliff as it threatens housing market stability.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., commented on the speculations of a rise in short sales before December 31, 2012 with the pending expiration of the Mortgage Forgiveness Debt Relief Act and Bush tax cuts. "However, there's been no movement in short sales, their market share is staying in a narrow range, and they're still taking much longer to sell - typically three months," he said.
"The fact remains it is extremely difficult to expedite a short sale, and banks' response to client urgency is only starting to improve. However, we're hopeful that the act will be extended before it expires on December 31 so sellers don't have to pay taxes on forgiven mortgage debt, which would be unfairly treated as income for owners who are selling properties under duress to willing buyers," Thomas continued.
Comparing Home Sales Year To Year - November 2012 to November 2011:
HUD and The U.S. Census Bureau New Residential Construction Report released December 19, 2012 and NAR's report contained the following highlights that effect home prices:
Privately-owned HOUSING STARTS - were at a seasonally adjusted annual rate of 861,000. This is 21.6 percent (±12.5%) above the November 2011 rate of 708,000.
Privately-owned HOUSING COMPLETIONS - in November were at a seasonally adjusted annual rate of 677,000. This is 16.1 percent (±9.5%) above the November 2011 rate of 583,000.
BUILDING PERMITS - in November 2012 were at a seasonally adjusted annual rate of 899,000, up 3.6 percent from the revised October rate and up 26.8 percent from November 2011.
TOTAL EXISTING HOME SALES - which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November. This is 14.5 percent higher than the 4.40 million-unit pace in November 2011.
The NATIONAL MEDIAN EXISTING HOME SALES PRICE - for all housing types was $180,600 in November, up 10.1 percent from November 2011.
MIDWEST EXISTING HOME SALES - up 7.2 percent in November to a peak of 1.19 million, coming in at 21.4 percent higher than in November 2011.
MIDWEST MEDIAN HOME PRICE - was $141,600, which is 7.0 percent above November 2011.
REO Home Sales May Better Short Sales In Your Local Neighborhood
If you are buying a home, it may be key to know that in many housing marketplaces, REO properties are selling for 1/3 less than short sales. In fact, in June 2012, National Mortgage News reported that sales of REO properties averaged a selling price approximately 1/3 less than traditional sales. Getting properties sold short, or before they become bank owned homes, benefits not only homeowners but the greater marketplace and local neighborhood real estate values.
NAR Expects Continued Increases In Residential Home Sales
NAR’s economic projections released today expect increases in residential home sales along with continued home price improvement as we head into 2013. Home sales and price trends will vary from market to market; Home Destination can help you find specific information on the neighborhood where you are seeking buy. Existing home sales are projected to expand to 4.6 million in 2012 ( 5 million in 2013). The median price for existing home sales is forecaster to complete at $176,100 in 2012 by years end. and is anticipated to rise to $185,200 in 2013. Shadow inventory is still high, but it is about 1 million fewer homes than two years ago and is anticipated to be steadily absorbed with time. Decreases in months of inventory of Minneapolis homes for sale and a decline in percentages of existing home sales coming from distressed properties are projected to lead continued housing market improvements in 2013.
Possible 2013 Wild Card Influencers On Home Prices
In a video released yesterday titled "Pending Sales Up, Post 19th Consecutive Year-Over-Year Rise" Robert Freedman from Realtor Magazine and Yun commented on the Dodd Frank rules. As they still need to be implemented, they are an unknown today and are a "wild card". Also if mortgage underwriting becomes less stringent because of abundant bank profits and home price growth,it generate a great increase in home sales than predicted.
Home Destination has rapidly grown to be an Twin Cities leader in residential home sales. Contact Jenna Thuening, owner of Home Destination, to request an opportunity to meet and gain her guidance through the exciting process of buying or selling your next home. Call 612-396-7832 today; the good deals are selling fast.
Download the Census Bureau and HUD's New Residential Construction Report for November 2012
Download the National Association of Realtors Realtor's Confidence Index for November 2012
Jenna Thuening, a CDPE can help you determine your best opportunities to refinance your home.
Eden Prairie MN 55334
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