Jobs

Five Trends to Watch in Real Estate

Friday, June 4, 2010

Home sales are surging. Don’t be left behind.

As a buyer, there are five trends you want to watch as you shop for your new home. The last one, though, is personal.

  1. Prices
  2. Sales
  3. Interest Rates
  4. Jobs
  5. Showings

Prices

In the Merrimack Valley and Southern New Hampshire, home prices have stabilized and are even ticking up. New homes are coming on the market all the time and they’re being priced more aggressively. The buyers, however, aren’t biting at the aggressively priced homes.

The buy side of the market is still of the mindset that foreclosures or other “distressed” properties are a bargain. As new buyers enter the market and face the reality of homes that require “too much work,” they’re starting to move up-market and considering more realistically-priced homes.

Buyers who are looking for a “deal” on real estate will find them harder to come by going into the Fall selling season.

Sales

Single-family home sales are brisk in this area. Not counting condos and multi-families, 34 single-family homes closed in the month of May in Methuen alone. Andover had 24 closings, North Andover had 19, Haverhill had 34, Lawrence saw 22, and Lowell recorded 39. North of the border in New Hampshire, Salem saw 14 closings of single-families, Portsmouth had 22 sales, and Nashua enjoyed an incredible 47 sales.

Across the nation, Lawrence Yun, Chief Economist for the National Assoc. of Realtors® (Bio) says that in the short-term, sales will decline as the effect of the home-buyer tax credit wears off but over the long-term, sales should increase as the market returns to a more normal equilibrium.

There is no question that the real estate market in the Merrimack Valley and Southern New Hampshire is alive and well. To see so many single-family homes change hands in a one-month period should encourage buyers and sellers alike to take advantage of this traffic.

Interest Rates

The market anticipated rates moving higher as the government wrapped up its purchases of bonds at the end of the first quarter. This buying program was part of the economic stimulus package that was designed to keep interest rates low. As luck would have it, the European economies ran into difficulty. The trouble in Europe has sent bond buyers scurrying to the safety of U.S. bonds.

Yields (or rates) move inversely to the price of bonds. As bond prices rise, yields go down. Uncle Sam was driving demand for bonds as part of its stimulus program. That demand kept prices high, and yields low. When the Treasury stopped buying, European investors stepped in to fill the void.

Interest rates are expected to stay low for as long as there is weakness in the European economies.

Jobs

According to The Boston Globe (Business Updates), the unemployment rate in Massachusetts moved lower to 9.2% in April from 9.3 percent in March and 9.5 percent in February. While still on the high side, the trend towards lower unemployment is becoming clear.

More people with jobs – and money in their pockets – means higher demand for everything from washers and dryers to cars and real estate. Clearly, the economy is on the mend: 90% of the people in Massachusetts alone have a job and the means to buy a home if that’s what’s important to them.

More jobs means more competition for buyers in the real estate market. Buyers should be on the lookout for bidding wars on the more realistically-priced homes on the market and be prepared to offer their highest and best bids on the home of their dreams.

Showings

If you’re working with a good Realtor® and they’ve shown you 6-10 homes that meet your requirements and you’re still not satisfied, you might be in danger of being priced out of the market (Is it Really a Seller’s Market?). There’s not a single buyer out there that doesn’t want to “fall in love” with a home. But, if you’re not feeling the love in the price range that you’re comfortable with, you might find yourself having to stretch a bit.

Don’t be afraid of stretching today in order to live the life you love for the next 10-20 years or more! Today’s investment in real estate can bring years of pleasure in the future.

Buyers will do well to consider that they’re locking in a lifestyle at today’s dollars and interest rates that will seem trivial only five years from now (How to Take the Risk Out of Buying a Home).

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Posted in Buyers, Economy, Investment | Your Thoughts? (0) »



Is it REALLY a Seller’s Market?

Tuesday, April 6, 2010

How to tell if you’re being priced out of the market

You’ve been sitting on the fence about buying a home. You’ve been looking and looking but nothing really strikes your fancy. There’s a good reason for that! You’re being priced out of the market. And it’s only going to get worse from here.

Your Price Range is Getting Tight

You don’t see it coming – it happens that slowly – but one day you wake up and decide that now is not the time for you to buy a home. You just got priced out of the market.

It’s a shame, too: There are so many good homes just begging to be bought but you keep waiting for new inventory. And it never comes. That’s because new inventory is being priced more aggressively with each passing day. The new, GOOD stuff is not hitting your universe and you don’t know it because you’re “looking for homes between X and Y.”

Here’s the scenario: You buy your home based on your monthly payment. You HAVE to. It’s an economic reality. So, you set your Internet search criteria for homes in your price range. You can’t move higher than that because you can’t afford it. It’s normal. Only Bill Gates and Warren Buffet have the luxury of buying any darned thing they want. The rest of us have to live with the universe of homes in our search criteria’s price range. That’s YOUR universe. Read Fantastic Inventory.

The Mortgage Calculator Brings Bad News

You start to notice that the new stuff that hits your radar isn’t quite what you were looking for. Each day, you get more frustrated. You start playing with numbers with the mortgage calculator to see if you can afford more. You check the interest rates and notice that they’re ticking up. When you plug the new number in, your dreams are dashed!

The next shoe to drop is the disappearing tax credit. Current homeowners are eligible for $6,500 bucks, first-timers could score $8,000 grand. You have to sign a purchase and sale agreement by April 30 and close on the deal by June 30. Short sales and bank-owned properties disappear from the radar since they probably won’t close in time. After April 30, everything gets $6,500-$8,000 more expensive.

The numbers start looking worse for you. How about tax rates? Someone has to pay for free health care, “cash for clunkers,” tax credits for homebuyers, and all that other stimulus. You’ll see that person in the mirror. Property assessments start to rise, tax rates are hiked. The new reality that comes from the mortgage calculator is not pretty when you plug in higher taxes.

Jobs: Good News, Bad News

The good news on the jobs front is that jobs are coming back. Hooray! The bad news for homebuyers is that jobs are coming back. Boooooo… More people with more money in their pockets means increased competition. More demand means higher home prices.

Not too many folks are worried about mass layoffs anymore. Indeed, the latest reports from the National Association of Realtors and MLS Property Information Network, the local Multiple Listing Service, is that Essex and Middlesex counties have fallen into Seller’s Market territory. The main driver of this new phenomenon is jobs.

The most recent report is the 4th Quarter 2009 Economic and Market Watch. It shows that on a scale from 1 to 5, with 5 being a full-blown Seller’s Market, Essex and Middlesex counties are at a 4. The prior two quarters were at a neutral 3. You can see all these reports on the MLS Web site.

What’s Past is Prologue

Shakespeare said it best, “What’s past is prologue.” The fourth quarter of 2009 is old news. You and your Realtor® are making fresh news TODAY. Don’t let the headline read, “Seller’s Market Leaves Would-Be Buyers in the Cold.”

How to Save Yourself

Folks on the fence about buying a home are spending WAY too much time in front of a computer screen and not enough time inside of houses. The Internet is a sword that cuts two ways: It makes searching for homes so much easier but it also feeds your indecision. You’re overloaded with information but the information you’re getting is not helping you make a decision.

Pretty pictures on the Internet don’t tell you anything about the layout of a house. The pretty pictures are silent on the location or neighborhood. If you’re SERIOUS about buying a home, you absolutely MUST work with a Realtor® who can help you line up financing, set up private viewings on YOUR schedule, and coordinate the closing and final move into your new home.

A Realtor® will help you decide what’s best for you and your family. The Internet will show you pretty pictures of a Seller’s Market while you get priced out of the market.

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Why You Should Watch the Jobs Numbers

Sunday, March 28, 2010

People aren’t afraid of losing their jobs

You’re a buyer and you’re looking for a new home. You’re hoping you can get a tax credit but you know that in the bigger scheme of things, $8,000 bucks for a first-timer or $6,500 bucks for a current homeowner isn’t that big of a deal (Tax Credit). You KNOW you’re worried about interest rates creeping up (CBS News: How High Will Morgage Rates Go?) but you PRAY that home prices stay affordable. Watch the labor market and unemployment report for clues to what the future holds.

The Recession is Easing

We’re already seeing the effects of the recession easing. People aren’t so afraid of losing their jobs. Consumers are coming back into the stores and opening their wallets. Retailers are stocking their shelves and that means that manufacturers are ramping up production. This renewed economic activity lifts people’s spirits and spells J-O-B-S. Jobs!

According to the Economic and Market Watch Report for the 4th Quarter, 2009, the National Association of Realtors® says that 1,036 jobs were added in Essex County. There were 2,732 new jobs added to the payroll in Middlesex County. That’s the fourth quarter of last year. That’s old news. (Late News Cycle).

Realtors® are Busy

It just keeps getting better! If you’ve just come back from reading (Late News Cycle, you’ll know that what’s happening TODAY is more relevant. This author has been working flat-out seven days a week since the beginning of February. He’s been in someone’s house almost every night up to 6:00, 7:00, 8:00 p.m.! And he’s wearing a silly grin.

Over the past few years, Realtors® haven’t had to worry about setting appointments. They’ve had a lot of free time on their hands. TODAY, Realtors® live on a strict schedule set in an appointment book. And all of this is because people have more confidence in the economy, more money in their pockets, and no more worries about the next wave of layoffs.

Unemployment Report is Due Friday

On Friday, the government will release its monthly employment report. Most economists expect that it will be the first ray of sunshine since 2007. If the news breaks as expected, SELLERS will begin gaining pricing power. Pent-up demand for homes from serious buyers will be unleashed. Serious buyers are like your Mom and Dad. They want a homestead. Home, Sweet, Home. They’re turning away from beaten-up foreclosures and looking for something to raise a family in.

You’re a buyer and you’re looking for a new home. You’re also looking at increased competition from other buyers with more confidence in the economy, more money in their pockets, and no more worries about the next wave of layoffs. AND, you’re facing SELLERS with increasing pricing power.

Good Inventory is Needed

Currently, this author reports that the hardest task he’s facing is getting enough inventory. It’s selling as quickly as it comes on the market — if it’s in decent shape. This means that buyers are facing bidding wars for the good stuff while the foreclosures just plod through the bank bureaucracy.

Watch the jobs report on Friday. Watch the interest rates. Notice how new inventory is coming on the market priced more aggressively. And, be careful that you don’t find yourself priced out of the market or having to settle for second best. If you’re a buyer, acting sooner rather than later is in your best interest.

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Posted in Buyers, Economy | Your Thoughts? (0) »