August Local Home Sales Surpass July, But...

August Home Sales Surpass July Sales, But Still Off on a Yearly Basis.

Home sales locally in August -- at 2,161 units sold -- increased over a month earlier, when sales totaled 2,112. But on a yearly basis, homes sales last month fell 15.3% from August one year earlier.

Nationally, August home sales were off 4.3% from July on a seasonally adjusted basis, and 12.8% less than a year ago. Average selling price locally for August was $176,592. That’s down 3% from $181,768 a year earlier.

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Median sale price August 2006: $141,000
Median sale price August 2007: $141,000
The median sale price remained unchanged in August at $141,000, the same as August one year earlier. The median price is not skewed by a lot of home sales on the low end or high end. It is the midpoint of all sales.

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Home sales in August 2002: 2,163
Home sales in August 2007: 2,161
“Home sales in August matched sales in August 5 years ago,” said Tom Steele, president of the Cincinnati Area Board of Realtors. “It’s all relative. We were ecstatic with similar sales numbers in 2002 and 2003”. “When we consider that we sold more than 140,000 properties during the ‘boom’ years 2000-2005, that investors (estimated to be 10% of that market) have stepped to the sidelines, that sub-prime buyers (estimated to be 1-2% of the boom market) have been removed from the market due to lenders’ more tighter loan standards and that it has taken many sellers 6-10 months to realize that we are in a ‘correction period’ and that their list prices should be adjusted, sales numbers are really holding their own. We do not have 30-50% declines that other areas of the country are experiencing.” “We’re not out of the woods yet,” added Steele. “We’re looking for the bottom, and when that happens, sales will resume their long-term upward trend. It will just take time.”

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Inventory of Unsold Homes July 2007: 8.5 months
Inventory of Unsold Homes Aug. 2007: 8.3 months

Inventory of homes for sale continues to be our major concern, said Steele. “A balanced market would be 5 to 6 months of unsold homes,” he said. “We’re now at 8.3 months. That compares to 8.5 months of inventory in July. Nationally, the inventory is 10.0 months. A lower number is better.

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30-Year Fixed Rate Loan: Mid-September 2006: 6.58%
30-Year Fixed Rate Loan: Mid-September 2007: 6.56%

Low mortgage interest rates continue to be in the public’s favor. The average 30-year fixed rate loan in the Cincinnati area currently is 6.56%. That’s basically the same rate as one year earlier. Over the past 12 months, it peaked at 6.88% on June 4.

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Days on Market, Average Home for Sale, August 2006: 70 days
Days on Market, Average Home for Sale, August 2007: 74 days
Marketing time for selling homes, on average, is 74 days, the same as the previous month. That’s only a 4.8% increase from a year earlier.

August Home Sales
Summary of Single Family and Condominium Sales
Multiple Listing Service of Greater Cincinnati
Cincinnati Area Board of REALTORS®

August 2007 vs. August 2006 Monthly Home Sales

Closings Gross Volume Average Price
Aug. 2007 2,161 $381,614,886 $176,592
Aug. 2006 2,551 $463,688,959 $181,768
Variance -15.29% -17.70% -2.85%

Year-to-Date 2007 Home Sales vs. YTD 2006 Home Sales

Closings Gross Volume Average Price
Jan-Aug. 2007 15,839 $2,799,826,228 $176,768
Jan-Aug. 2006 17,813 $3,202,470,564 $179,783
Variance -11.08% -12.57% -1.68%

Does FED rate drop = Mortgage Rate Drop?

Here's some insight to share with you on whether mortgage interest rates are headed up or down.

Remember that conforming home loan rates are tied to Bonds or "Mortgage Backed Securities" - so when Traders sell off Bonds, it causes the Bond price to go down, which in turn causes home loan rates to rise.

And although most of last week's economic news was "Bond-friendly", and should have resulted in higher Bond prices and lower home loan rates, Bond Traders decided to sell some holdings and lock in their recent gains instead, ahead of what could be a volatile week of market action.

The Federal Reserve is meeting this coming week, and will release their highly anticipated Interest Rate Decision and Policy Statement on Tuesday at 2:15pm ET. So do you know what is expected from the Fed, and how their actions might save you money right away?

The economic calendar thickens up considerably this week, giving a read on manufacturing, inflation and housing...but many of these reports will take a back seat to the Fed's Policy Statement and Interest Rate Decision, to be released on Tuesday afternoon. Traders are forecasting a 100% chance of a Fed rate cut. About half the traders are expecting a cut of ¼%, and the others expecting a cut of ½%. Of perhaps greater importance is tone of their highly analyzed Policy Statement. Comforting words about inflation will help bonds and home loan rates.

Remember that a cut to the Fed Funds Rate would impact the Prime Rate, which affects Home Equity Lines of Credit, credit cards, business loans, car loans and the like - but does NOT have a direct correlation to home loan rates. For example, if the Fed should cut the Fed Funds Rate by .25%, you would likely see a change to your Home Equity Line of Credit by .25%, if it is tied to the Prime Rate as most are - but do not expect regular home loan rates to drop correspondingly, as the Fed's take on inflation will guide the way.

Also, when you hear about the current national rate average on the radio or TV, that may come with having to pay 1 or 2 points (1 point equals 1% of the loan amount borrowed). It also can vary based on the type of mortgage product you are getting. The less money you put down, the higher the interest rate will probably be.

If you're not sure if you're being told the correct information, please don't hesitate to contact me. I'll do my best to answer your questions and make sure that you're not being "sold" a bad deal.

New Ohio Homestead Exemption Program

The new and expanded Homestead Exemption program effective for tax year 2007 will lower residential property tax bills for all seniors and qualifying disabled individuals.

The new program is open to any Ohio homeowner who currently lives in their home and that home is their primary residence, and who:

• Is at least 65 years old or will reach age 65 during the current tax year; or
• Is certified totally and permanently disabled as of January 1 of the current tax year, regardless of age; or
• Is the surviving spouse of a qualified homeowner, and who was at least 59 years old on the date of their spouse’s death.
  

Eligible homeowners may now apply for the new Homestead Exemption program through their county. Applications must be received by October 1, 2007 in order to receive savings on tax bills payable in 2008.

FHA To Help Teaser Rate ARM Borrowers!

WASHINGTON, D.C. - President George W. Bush announced that HUD's Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

• A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset;
  
• Interest rates must have or will reset between June 2005 and December 2009;
  
• Three percent cash or equity in the home;
  
• A sustained history of employment; and
  
• Sufficient income to make the mortgage payment.
  

"FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates," said Assistant Secretary for Housing-FHA Commissioner Brian Montgomery.

The guidelines to the program have not been set up yet, but if this is something you need to look into and investigate further, I would recommend contacting Rick Pilger of Union National Mortgage (office: 513-770-6999 or cell: 513-600-9003). I've worked with Rick for many years and he's well versed in FHA mortgage loans.

Handling Home Builders Right Now!

There's been a lot of discussion about the solvency of builders lately. Some builders are picking up and leaving subdivisions where they've been selling homes, but with slower home sales now, they're looking for greener pastures.

Today, the experience you'll have with any builder is based on how good the sales rep and field supervisor, who's overseeing the construction, are.

Do they answer your questions or do they just give you 'lip service'?

Right now, no matter who the builder is, I would check with the Better Business Bureau, ask for some references and talk with those who recently built with the builder, make sure that everything you want is in writing (don't be in a rush to sign) and make sure that you're able to have a qualified home inspector (with new construction experience) visit the home site 2 - 6 times during the construction.

I would also have the builder's paperwork approved by a real estate attorney. Some builders won't let you change the pre-typed verbiage in the agreement, but at least you'll understand what you're signing before you agree to it.

I would also ask them how many recent sales have been in the neighborhood and how many homes are currently under construction. What percentage of the subdivision is completed? If it's at the very beginning stage, you need to determine if it's in a desirable area that consumers will want to move into and become your neighbors. I would think builders are hungry right now to make sales. I know of builders, who are laying off workers. Builders may want you to think they're in control, but you have the money. Be willing to walk away if the builder rep is being difficult. Find out what options the builder offers with the floor plan you like. Are they willing to make an modifications to the floor plan? Expect to pay extra charges if you make changes after your selections are made.

It's important for you to have an experienced, buyer's agent on your side, who can help you negotiate successfully with a builder.

Also, if they're offering incentives, be sure that they benefit you. Some builders own the mortgage companies that they recommend you get approved through. That's just another profit center for them. You need to look at their mortgage financing programs closely and compare to other mortgage companies in the area. Don't be teased into getting a 'below market', temporary 'buy-down" interest rate. Make sure that you comfortably qualify at the top interest rate. If you have questions about any of this, I can go into more details with you.