WASHINGTON (Reuters) – Pending sales of previously owned U.S. homes unexpectedly rose in February, a trade group said on Monday, pointing to a modest pick-up in home sales.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in February, increased 2.1 percent to 90.8.
Economists had expected the index, which leads existing home sales by a month or two, to fall 1.0 percent after a previously reported 2.8 percent decline.
“We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who have been on the sidelines,” said NAR chief economist Lawrence Yun.
RISMEDIA, March 18, 2011—While affordable housing prices, ample inventories, and historically low
interest rates signal ‘buyer’s market’ for investors or move-up buyers in many U.S. markets, inexperienced first-time buyers may not know if the time is right to make a move into real estate.
“It’s not about timing the market. It’s about time in the market,” says Steve Berkowitz, chief executive officer at Move, Inc., a leader in online real estate. “Once you know how long you expect to own a home, look at the historical value performance of properties in the neighborhood. Be confident about your own job security, down payment resources and tolerance for upkeep, as well as the lifestyle you want today and in the near term. While homeownership may not be for everyone, it is the right choice for hundreds of thousands of people. Today’s housing market, especially for first-time buyers, makes it almost impossible not to think about the possibilities.”
To help first-time buyers know if they’re ready to look for the home of their dreams as we head into this year’s home-buying season, the experts at Move have created a ‘reality checklist’ designed to help them decide if the time is right.
Get your financial house in order
Before you decide to buy a home, it’s essential to make sure your credit is in good shape and repair any damage previously done. Know your credit score: thirty-five percent (35%) of successful buyers recently reported they didn’t know their credit score when they went house shopping, according to a national survey fielded for MortgageMatch.com. Having enough money set aside for a down payment is a key component to making sure you are ready to purchase a home. Also, it’s important to not put all of your money in the down payment as other fees or unexpected expenses often arise after closing.
Don’t fall in love with a house you can’t buy
Find out how much you can afford: establishing your purchase power upfront, including how much money will be required for a down payment and closing costs, is a must for first-time buyers. Look for special loans available from FHA and government sponsored loans for first-time home buyers that reduce the amount of money required to get into a home.
Learn the lingo
Since first-time buyers are new to the market and will finance a significant portion of their purchase, it’s important to get familiar with the processes and terminology associated with home-buying. Here are a few key terms from MortgageMatch.com to add to your vocabulary:
Bait rate: Misleading mortgages with low rate promises and no contingencies generally for those with extraordinary credit. Rates are based on: credit, debt-to-income and loan-to-value ratios, the size and type of loan, property location and the day you lock your rate, etc. The loan isn’t locked until the application is accepted. By then, it may be too late to find a better rate from another lender.
Basis point: A term used in the mortgage industry which simply means 1/100th of 1%.
Closing costs: The fees required to process and close your loan. They’re a cash obligation running from 3-5% of the purchase price. Motivated sellers might pay a portion of these costs.
FHA: Federal Housing Administration, the Federal Government Agency that oversees the U.S. Housing market. FHA Loans are loans insured by the Dept. of Housing and Urban Development.
FRM and ARM: A Fixed-Rate Mortgage Loan (FRM) is a loan where your interest rate stays the same for the life of the loan. ARMs are Adjustable-Rate Mortgages with variable interest rates that fluctuate based on an agreed-upon index.
GFE: The Good Faith Estimate (GFE) is a document explaining all costs involved in getting a loan.
TIL: The Federal Truth-in-Lending Form is a document that spells out the costs and fees of the loan.
Lis pendens: An official notice that there is a pending lawsuit over real estate.
Per Diem interest: Interest you pay per day, from the day you close to the last day of the month.
Underwriting/underwriting fees: Underwriting is a process the lender performs to qualify a borrower for a loan and the fee is what you pay the lender at closing to cover evaluating the risk involved with loaning you money.
Warranty deed: A legal document guaranteeing the seller has a right to sell a property, which is very important if you are considering a distressed or discounted property.
Mortgage Knowledge
While national rates on 30-year-fixed-rates mortgages have risen slightly this year, they are still at historic lows not seen since 1980, according to Freddie Mac. “Buyers who prepare themselves financially before they start looking for a home will have a better chance of succeeding,” says Sue Stewart, senior vice president for Move, Inc. “If you want to land the best mortgage that fits your needs, start early, educate yourself on your financial situation, get your documentation together and find a lender you trust.”
If now isn’t the right time, prepare for your future purchase
If now isn’t the right time to buy a home, make a plan with a target date for when you expect to be ready. Improving your credit, paying down debt, stabilizing your work history and calculating exactly how much you can afford, are the best ways to prepare for your future home purchase. It’s also important to refrain from making any new large purchases or applying for new credit
The conventional wisdom when selling a home has always been to wait until the ‘Spring Buying Season’. Over the years, that has seemed to make sense and is now accepted as a good strategy for those who want to sell their house and receive the best possible price. This real estate market has shattered many previously held beliefs. The wisdom of waiting for a sprng market is another belief that is about to fall.
Here are five reasons why:
1. Interest Rates are On The Rise
Interest rates have spiked up rather dramatically over the last ninety days and are now over 5%. Initially an incrase in rates has a positive effect on the market as it forces buyers off the fence. However, it also eats into a buyer’s purchasing power. As rates increase, the mortgage amount of a buyer qualifies for decreases. This will eventuallly have a negative impact on prices .
2. Your Dream Home Will Never Be Cheaper
If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.
3. Buyers are Out Early
There is mounting evidence that buyers are coming out earlier this year. A belief that now is a good time to buy coupled with the increase in interest rates has started the buying season early.
Pete Flint, CEO of Trulia:
“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth. We’ve are now experiencing 100,000 property views per minute.”
The National Association of Realtors just reported that the number of house sales increased 12.9% over the last month.
4. Inventory Increases Every Spring
Every year there is an increase of inventory which comes to market as we approach the spring. Here is the number of listinngs available for sale in 2010.
- February – 3,531,000
- March – 3,626,000
- April – 4,029,000
We believe there will be an increase in these numbers in 2011 as there is a pent-up selling demand created by the weak market of the last few years. You won’t have to worry about this increasing competition of you sell now.
5. We are in The Eye of the Foreclosure Storm
While banks are trying to recify their foreclosure procedures, there is a large supply of discounted properties which has been delayed coming to makret. This inventory will be released sometime in the next few months. Foreclosures sell on average at a 41% discount. When released they will be competing with your hosue for the buyers in the marketplace. If you are looking to sell in 2011, you want to sell before this inventory becomes your competition.
CNN Money quoted the leadership of RealtyTrac on this issue:
“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000” said James Saccacio, CEO of RealtyTrac.
“Unfortunately,” he added, “This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”
“We expect a spike in the first quarter,” said Rick Sharga, a RealtyTrac spokesman.
BOTTOM LINE
These are five strong reasons to sell now instead of waiting until later in the year.
Article by M Emerson from First Team News
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