Karen Rychlik\’s Blog

The First Multiple Listing Service and experts reported the following:

1)           More homes went under contract in November and December 2010 compared to the same period in 2009.

2)           41,470 single family homes were sold in 2010.   This was an 8.3% decline from 2009.

3)           The average sales price for single family homes was $200,252 in 2010.   This was an increase of 1.4% over 2009 and the first year-to-year annual increase in average sales price since 2006 and 2007.

4)           There were 40,778 active listings at the end of 2010 for single family homes, condos and townhomes combined.   The number of properties for sale continues to be at low levels.

5)           Traditional resales are still experiencing competition with foreclosures and short sales.   But, combined with very low interest rates, could lead to a great spring buying season.

6)           Interest rates, although historically low, have been steadily rising since November.   Interest rates are currently around 4.625%.

Starting October 4^th, the Federal Housing Administration (FHA) will implement changes to its FHA-backed mortgage which will increase the cost for a buyer to obtain an FHA loan.   FHA has experienced an escalated amount of delinquencies during the mortgage recession.   In the third quarter 2010, 14.36% of FHA loans were past due, according to the Mortgage Bankers Association.   FHA reported that its reserve fund has dropped to 0.53% of its insurance guarantees.   This is well below the 2% ratio which is mandated by Congress.   The fund covers losses on mortgages the agency insures.

The following changes will be made to compensate the rapidly depleting reserve fund:

1)   Up-front mortgage insurance premiums will decrease from 2.25% to 1.00%
2)   The 0.55% annual premium will be increased to 0.85% for mortgages with loan-to-value ratios up to and including 95%, and to 0.90% for loan-to-value ratios above 95% (the majority of FHA loans)
3)     Borrowers will be required to have a credit score of at least 580 to qualify

The First Multiple Listing Service and experts reported the following:

1)           There were very mixed results in May for the Atlanta housing market.   On the front end, closings were up, but on the back end, fewer homes accepted a contract.   This translated into fewer closed sales in June and fewer contracts written.   Weak sales in May and June produced a decline in July™s closed sales as well.

2)           Sales of all single family properties in July 2010 were lower than those of July 2009.   This is the 2^nd consecutive year-to-year decline after 8 increases.   Although sales in the first quarter of 2010 steadily outpaced first quarter of 2009 sales, second quarter sales in 2010 are behind those of the second quarter of 2009.

3)           3,311 single family detached homes sold in July 2010 which was a decrease of 29.3% over the same period last year.   Is this a signal that our housing marketing is doing a double-dip?   Or, is it the natural after effect of the April 30^th Home Buyer Tax Credit expiration?

4)           The average sales price in July 2010 was $226,186 for single family detached.   This is a 4.9% increase over July 2009.  

5)           After 11 consecutive year-to-year closing for single family attached, July had a decline.   576 single family attached homes sold in July 2010 versus 725 closings the same time a year ago.  

6)           The average sales price in July 2010 was $143,290 for single family attached.   This is a 7.7% decrease compared to July 2009.   With the large amount of new construction condo inventory still available, expect a continued downward pressure on selling prices.

7)           The number of homes for sale has been decreasing; the level is moving into the normal range.

          The majority of Metro Atlanta is no longer being considered a declining market in the eyes of appraisers.   As a result, more contracts are going to the closing table at the originally negotiated purchase price.

I subscribe to a quarterly statistical report specific to West Cobb real estate sales. The 2^nd quarter 2010 numbers have just been released by Chartmaster Services and include the following:

• Sales of single family detached houses January through June were +3.9% above those of the same period last year
• Monthly 2010 sales have been higher in each month than in the comparable months of 2009 “ until May and June. The expiration of government homebuyer incentives at the end of April have contributed to the slower sales during May and June
• It™s important to watch sales during the 3^rd quarter 2010 to see if the lower numbers from May and June signaled the start of a renewed downtrend
• Foreclosed properties made up a slightly smaller percentage of total W. Cobb sales in the 2nd of 2010 compared to the same period in 2009.
• However, distressed sales (foreclosures + short sales) represented almost 40% of all 2^nd quarter sales in the <$200K price range.
• Foreclosure sales affect on non-foreclosure sales prices “ As the number of foreclosure sales has increased, the median sales price of non-foreclosure properties has declined
• The portion of sales which were distressed sales remained 19% or higher in all price ranges below one million, continuing to impact sales prices, seller concessions and time on market
• Segmenting sales by price range and new vs. resale shows that there was an increase in resale sales above $200K and a decline in new home sales above $200k during the 2^nd quarter of 2010 compared to the 2^nd quarter of 2009
• The median sales price in the 2^nd quarter of 2010 was -2.4% below that of the 2^nd quarter of 2009, showing that price resistance was still present in the market even though sales were increasing slightly
• Sellers were forced to negotiate away even more of their original list prices in order to reach a contract agreement as buyer price resistance increased in a market changed by foreclosures, short sales, higher listing inventories and tighter credit
• The supply of listings has continued to decline; there were -3% fewer homes on the market in W. Cobb at the end of the 2^nd quarter of 2010 compared to the same time last year.
• Using a 3 month average of 2^nd quarter 2010 sales yields a 9.6 month supply, meaning that it would take more than 9 months to sell the current inventory of listings at the current sales rate, if no new listings came on the market. A œbalanced market is usually considered to be at 6 months of inventory.

It™s natural to experience a slow down in sales immediately following the expiration of the homebuyer tax credit. And, this goes right along with the slower traffic most sellers are experiencing. The last week of July, I enjoyed an increase in phone calls and emails about my listings plus initial contact from a few new buyers. I™m hopeful these are signs of a healthy upcoming 3^rd quarter.    

The First Multiple Listing Service and experts reported the following:

1)           There were very mixed results in May for the Atlanta housing market.   On the front end, closings were up, but on the back end, fewer homes accepted a contract.   This translated into fewer closed sales in June and fewer contracts written.

2)           Sales of all single family properties in June 2010 were down 5.3% compared to June of 2009.   Although sales in the first quarter of 2010 steadily outpaced first quarter of 2009 sales, second quarter sales in 2010 are behind those of the second quarter of 2009.

3)           4,326 single family detached homes sold in June 2010 which was a decrease of 6.9% over the same period last year.   This is only the second year-to-year monthly decline in the last 9 reporting periods.

4)           The average sales price in June 2010 was $214,694.   This is a 1.3% increase over June 2009 and $40,000 higher than the February 2009 recession low.

5)           The number of homes for sale has been decreasing; the level is moving into the normal range.

6)           The majority of Metro Atlanta is no longer being considered a declining market in the eyes of appraisers.   As a result, more contracts are going to the closing table at the originally negotiated purchase price.

7)           With the exception of June, a review of recent trends would indicate we are on a housing rebound. However, the April 30^th expiration of the stimulus package caused a dip in new contracts.   The same dip was experienced last fall when the initial stimulus package expired.

The First Multiple Listing Service and experts reported the following:    
1)           There were very mixed results in May for the Atlanta housing market.   On the front end, closings were up, but on the back end, fewer homes accepted a contract.

2)           Sales of all single family properties in May 2010 were up 10.5% compared to May of 2009.   Sales in 2010 have steadily outpaced 1^st quarter 2009 sales.

3)           4,101 single family detached homes sold in May 2010 which was an increase of 8.3% over the same period last year.

4)           The average sales price in May 2010 was $210,279.   Sales prices have also steadily outpaced those of 1^st quarter 2009.   This is 7.2% higher than May 2009.

5)           The number of homes for sale has been decreasing; the level is moving into the normal range.

6)           In May, the average days on market for all single family properties was 89.6.   It™s been 2 years since the average days on market was below 90.  

7)           The majority of Metro Atlanta is no longer being considered a declining market in the eyes of appraisers.   As a result, more contracts are going to the closing table at the originally negotiated purchase price.

          After reviewing all of the above trends, one would think we are definitely on a housing rebound.   However, the April 30^th expiration of the stimulus package caused a dip in new contracts.   The same dip was experienced last fall when the initial stimulus package expired.

1)           There are numerous signs that the housing market is turning positive.   But a robust rebound is not expected.

2)           Sales of all single family properties in April 2010 were up 12.2% compared to April of 2009.   Sales in 2010 have steadily outpaced 1^st quarter 2009 sales.

3)           4,028 single family detached homes sold in April 2010 which was an increase of 9.6% over the same period last year.

4)           The average sales price in April 2010 was $200,812.   Sales prices have also steadily outpaced those of 1^st quarter 2009.

5)           The number of homes for sale has been decreasing; the level is moving into the normal range.

6)           The majority of Metro Atlanta is no longer being considered a declining market in the eyes of appraisers.   As a result, more contracts are going to the closing table at the originally negotiated purchase price.

7)           Because of the stimulus package, 2^nd quarter closings should be significantly higher than the previous year.   Even without the stimulus package, the forecast for 3^rd quarter sales is positive.

The First Multiple Listing Service and experts reported the following:

1)           There are numerous signs that the housing market is turning positive.   But a robust rebound is not expected.

2)           Sales of all single family properties in March 2010 were up 7.1% compared to March of 2009.

3)           3,793 single family detached homes sold in March 2010 which was an increase of 5.2% over the same period last year.

4)           The average sales price in March 2010 was $197,433, an increase of 9.4% versus March 2009 and the largest year-to-year monthly increase since January 2001.

5)           Inventory for all single family seems to be entering a more normal seasonal cycle.   It looks like our spring season is having a œnormal increase in supply.

6)           The majority of Metro Atlanta is no longer being considered a declining market in the eyes of appraisers.   As a result, more contracts are going to the closing table at the originally negotiated purchase price.

7)           New construction may be on the rebound!   Permits are up almost 50% in the 1^st quarter of 2010 versus the 1^st quarter of 2009.   There were 1,900+ permits issued for the 1^st quarter of 2010 versus 1,270 for 1^st quarter 2009.   It™s critical to increase the rate of new construction “ as this means jobs.  

This might be a great time to list your home on the market for sale.   The strongest season for homeselling, in almost 3 years, is likely just ahead.   Last year, many sellers™ efforts to sell their home were unsuccessful because buyers had so much to choose from.   The number of homes on the market compared to the rate at which they sell is referred to as the inventory level; par is 6 months.   Inventory levels in Cobb, South Cherokee and East Paulding Counties are currently around 9 months.   Certainly, some price ranges have more inventory and some have less.   But, compared to what we™ve experienced in the last 3 years, 9 months is a welcomed improvement.   It means more sellers will be successful in attracting a buyer.   It™s with optimism, and even excitement, that I look toward this spring and summer as an opportunity to assist more sellers and buyers.

Many experts believe we are at or near the bottom of the market and forecast an upswing this year.   But, home prices will not immediately re-capture lost values.   This is our new norm; we build from here.   A 3-4% appreciation rate can be expected as home prices increase (which is our historical average).

Statistical evidence indicates that a recovery in West Cobb single family sales may be underway! But, it must be noted that there are still areas of concern that may limit the degree and time frame of the recovery.

Positive factors are found in the 4^th quarter 2009 sales data which include:

Sales were higher than 4^th quarter 2008. This is the 1^st time in 3 years that year-to-year sales comparisons showed an improvement.

The total number of homes sold in 2009 equals that of 2008. The 1^st quarter had a decreased number of home sales which was made up in the 4^th quarter.

A recovery will likely start within the lower price points. Sales under $200,000 were 29.8% higher than the same quarter the previous year. This is either a sign of recovery or a result of government homebuyer incentives “ or both.

Foreclosures represent a smaller (but still significant) percentage of total sales. The rate at which this foreclosure percentage decreases will determine the pace of recovery.

The supply of homes on the market is down to 9.4 months and is moving towards the balanced amount of 6 months.

To no surprise, there are negative factors in the 4^th quarter 2009 sales data that must be considered as well:

The 4^th quarter sales data was compared to the severely depressed 4^th quarter of 2008. Future comparisons will not have this advantage.

The average number of days from listing to contract is still very high although nearly equal to the previous year.

Distressed sales (foreclosures and short sales) still represent 25% of all sales and are partially responsible for keeping prices down.

87% of properties are initially overpriced for current conditions resulting in longer days on the market.