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Washington, DC, September 21, 2011

Existing-home sales increased in August, even with ongoing tight credit and appraisal problems, along with regional disruptions created by Hurricane Irene, according to the National Association of Realtors®. Monthly gains were seen in all regions.

Total existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 7.7 percent to a seasonally adjusted annual rate of 5.03 million in August from an upwardly revised 4.67 million in July, and are 18.6 percent higher than the 4.24 million unit level in August 2010.

Lawrence Yun, NAR chief economist, said there are some positive market fundamentals. “Some of the improvement in August may result from sales that were delayed in preceding months, but favorable affordability conditions and rising rents are underlying motivations,” he said. “Investors were more active in absorbing foreclosed properties. In additional to bargain hunting, some investors are in the market to hedge against higher inflation.”

Investors² accounted for 22 percent of purchase activity in August, up from 18 percent in July and 21 percent in August 2010. First-time buyers purchased 32 percent of homes in August, unchanged from July; they were 31 percent in August 2010.

All-cash sales accounted for 29 percent of transactions in August, unchanged from July; they were 28 percent in August 2010; investors account for the bulk of cash purchases.

“We had some disruptions from Hurricane Irene in the closing weekend of August, when many sales normally are finalized, along the Eastern seaboard and in New England,” Yun said. “As a result, the Northeast saw the smallest sales gain in August, and some general impact is expected in September with widespread flooding from Tropical Storm Lee. Aberrations in housing data are possible over the next couple months as markets recover from disrupted closings and storm damage.”

Yun said an extremely important issue currently is the renewal and availability of the National Flood Insurance Program, scheduled to expire at the end of this month. “About one out of 10 homes in this country need flood insurance to get a mortgage, and we would see significant negative market impacts without it,” he said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.27 percent in August, down from 4.55 percent in July; the rate was 4.43 percent in August 2010. Last week, Freddie Mac reported the 30-year fixed rate fell to a record low 4.09 percent.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said the market is remarkably affordable for people with secure jobs, good credit and long-term plans. “All year, the relationship between home prices, mortgage interest rates and family income has been hovering at historic highs, meaning the best housing affordability conditions in a generation,” he said.

“The biggest factors keeping home sales from a healthy recovery are mortgages being denied to creditworthy buyers, and appraised valuations below the negotiated price. Buyers may be able to find more favorable credit terms with community and small regional banks, and Realtors® can often give buyers advice to help them overcome some of the financing obstacles,” Phipps said.

Contract failures – cancellations caused largely by declined mortgage applications or failures in loan underwriting from appraised values coming in below the negotiated price – were reported by 18 percent of NAR members in August, up from 16 percent July and 9 percent in August 2010.

The national median existing-home price³ for all housing types was $168,300 in August, which is 5.1 percent below August 2010. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 31 percent of sales in August, compared with 29 percent in July and 34 percent in August 2010.

Total housing inventory at the end of August fell 3.0 percent to 3.58 million existing homes available for sale, which represents an 8.5-month supply⁴ at the current sales pace, down from a 9.5-month supply in July.

Single-family home sales rose 8.5 percent to a seasonally adjusted annual rate of 4.47 million in August from 4.12 million in July, and are 20.2 percent above the 3.72 million pace in August 2010. The median existing single-family home price was $168,400 in August, which is 5.4 percent below a year ago.

Existing condominium and co-op sales increased 1.8 percent a seasonally adjusted annual rate of 560,000 in August from 550,000 in July, and are 8.3 percent higher than the 517,000-unit level one year ago. The median existing condo price⁵ was $167,500 in August, down 3.3 percent from August 2010.

Regionally, existing-home sales in the Northeast increased 2.7 percent to an annual pace of 770,000 in August and are 10.0 percent above a year ago. The median price in the Northeast was $244,100, which is 5.1 percent below August 2010.

Existing-home sales in the Midwest rose 3.8 percent in August to a level of 1.09 million and are 26.7 percent above August 2010. The median price in the Midwest was $141,700, down 3.5 percent from a year ago.

In the South, existing-home sales increased 5.4 percent to an annual pace of 1.94 million in August and are 16.9 percent higher than a year ago. The median price in the South was $151,000, which is 0.8 percent below August 2010.

Existing-home sales in the West jumped 18.3 percent to an annual pace of 1.23 million in August and are 20.6 percent higher than August 2010. The median price in the West was $189,400, down 13.0 percent from a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

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TOO GOOD TO BE TRUE

Many homeowners are still facing mortgage default, and while the best bet is to contact your lender directly, there are tempting advertisements out there for companies that claim they can solve your financial crisis. Fraud is rampant, so look out for the following warning signs.

First, don’t believe the hype when you hear, “We’ll stop the auction!” or, “Debt eliminated, guaranteed!” If it sounds too good to be true, it is!

You should be suspicious of any company that tries to gain your trust by imitating a government agency. They may (illegally) publish government logos and names, or even copy the look of an official website, so pay attention to the details.

Back out of any deal that requires you to pay any fees upfront. There is no need to pay anyone to modify your mortgage terms, because your lender, and only your lender, can do that.

Most importantly, do not make mortgage payments to anyone but your lender. If a person or company presents you with an official looking statement that indicates payments should now be made to them, don’t walk – run for the door, and call the Better Business Bureau.

By working directly with your lender, you may be able to modify your loan terms, or agree to a pay-off through a “short sale” listing. Please heed this advice from an experienced professional.

Pricing your home is both an art and a science. In a recent study, it was found that sellers who purchased their home after the housing bubble, were more unrealistic about pricing their home than those who purchased before or during the bubble. Pricing your home correctly to begin with is essential to generate the most buyer traffic and to avoid your home becoming stale on the market.

With over 30 years of experience, I would be happy to provide you with a Comparative Market Analysis, helping you to determine what your home is worth in todays market. Contact me today.

Click here for the full article about pricing your home correctly by Jeff Brown on MSN Real Estate.

The graph below shows Lynden Homes For Sale, Homes Sold and Pending Sales for the past 15 months.

I hope you enjoy your Labor Day Weekend!

The Ripple Effect
Just as there is a ripple effect in water, there are ripple effects in the economy. Banks have been especially reticent to lend to small business owners without an established name. So small business start ups are having a tough time funding new business. In the past, small business owners have used home equity lines of credit to infuse their new business with capital, but due to the decrease in peoples home equity, small business owners are without cash to inject into their business. This leads to more unemployment, which leads to less people pay taxes, which leads to further government deficit problems. Home price recovery is extermely critical to help not only homeowners, but small business owners, their employees and the government. According to Lawrence Yun, Chief Economist for the National Association of Realtors, “The good news is that the declines {in home prices} appear largely over. However, if we’re going to kick-start the economy, our small businesses will need to find funds to turn their ideas into business growth. That means home price recovery is more critical than ever.”