ST. JOSEPH, MI ? ?After the number of closed homes slumped in September, October bounced back by 14 percent. We dropped 12 percent behind October 2009.? Year-to-date we have slipped 4 percent behind or 80 houses short of last year.? The dollar volume for closed transactions in October fell 19 percent below that in October 2009.? However, year-to-date total dollar volume remains up 2 percent for this year. As we entered into the fall months it is going to be interesting to see if the huge benefit of the Stimulus Tax Credit and current closed sales will keep us on par with last year,? stated Gary Walter, EVP, of the Southwestern Michigan Association of REALTORS?, Inc.
?The continual decline in mortgage rates, which are now at a 50-year record low, is making home ownership more affordable and attractive than renting.? A year ago, October mortgage rates were at 5.22 locally and now they have dropped to 4.47. A positive sign for sellers is that the year to date average selling and median prices are remaining above last year?s,? Walter continued.
October?s average selling price declined 8 percent from a year ago ($170,512 vs. $185,919) while the median price jumped 13 percent ($127,000 vs. $112,250).? Year-to-date the average selling price was up 7 percent and the median price was up 10 percent. The median price is the price at which 50% of the homes sold were above that price and 50% were below.
Nationally, existing-home sales retreated in October on the heels of two strong monthly gains, according to the National Association of REALTORS?,
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 2.2 percent to a seasonally adjusted annual rate of 4.43 million in October from 4.53 million in September, and are 25.9 percent below the 5.98 million-unit level in October 2009 when sales were surging prior to the initial deadline for the first-time buyer tax credit.
Year-to-date there were 4.149 million existing-home sales, down 2.9 percent from 4.272 million at this time in 2009.
Lawrence Yun, NAR chief economist, said the recent sales pattern can be expected to continue. ?The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels,? he said. ?Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year.?
The national median existing-home price for all housing types was $170,500 in October, down 0.9 percent from October 2009. Distressed homes accounted for 34 percent of sales in October, compared with 35 percent in September and 30 percent of sales in October 2009.
Regionally, existing-home sales in the Midwest slipped 1.1 percent in October to a level of 940,000 and are 32.4 percent below the tax credit rush one year ago. The median price in the Midwest was $139,500, down 3.6 percent from October 2009.
A parallel NAR practitioner survey shows 10 percent of REALTORS? in October report they had a contract cancelled as a result of a low appraisal, and 13 percent report they had a contract delayed; 16 percent said a contract was negotiated to a lower sales price as a result of a low appraisal.
According to FHFA, Fannie- and Freddie-backed mortgages that were recently originated show an outstanding performance, even better than during the pre-housing bubble years.
?A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget,? Yun added.
In SWMI, Walter stated ?While the foreclosed homes situation is still making the news, we keep experiencing a market with two-thirds of the homes sold and closed completed through normal transactions.? Transactions involving foreclosed or bank owned properties were at 30 percent in October. In September we were at 31 percent and in July we hit our lowest point at 24 percent. The lowest point in 2009 was 34 percent.?
?On October 31st, we had 3,385 houses listed for sale, which is a 5 percent drop from the number of houses listed for sale in September and 5 percent less than in October 2009. With this inventory level, based on the last 12- month?s sales, we have a 16.6-month supply of homes for sale.? Last year in October our inventory was at 17.8 months,? Walter reported.
Nationally, the total housing inventory at the end of October fell 3.4 percent to 3.86 million existing homes available for sale, which represents a 10.5-month supply at the current sales pace, down from a 10.6-month supply in September.
First-time buyers purchased 32 percent of homes in October, unchanged from September, but down from 50 percent a year ago during the initial surge for the first-time buyer tax credit. Investors accounted for 19 percent of transactions in October; they were 18 percent in September and 14 percent in October 2009; the balance of sales was to repeat buyers. All-cash sales were at 29 percent in October, unchanged from September but up from 20 percent a year ago.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage 4.23 percent in October from 4.35 percent in September; the rate was 4.95 percent in October 2009.
The numbers reported for local sales include residential property in Berrien, and the western half of Van Buren and Cass counties.? All three counties are included in numbers and percentages and do not reflect differences in any individual areas.
The Southwestern Michigan Association of REALTORS?, Inc. is a professional trade association for real estate licensees and ancillary service providers for the real estate industry in Van Buren, Berrien and Cass counties.? The Association is located at 3123 Lake Shore Drive St. Joseph, MI 49085, (269) 983.6375.? They can also be contacted through their web site, www.swmar.com.
The National Association of Realtors?, ?The Voice for Real Estate,? is America?s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.