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New Home Sales Up in September

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Services for Real Estate Pros with HomeFinder.com

                                       

 As median home prices dropped to the lowest level in four years, many economists appeared pleased that the housing market is beginning to chip away at the inventory glut. The U.S. Commerce Department said Monday that sales of new single-family homes rose by 2.7 percent in September to a seasonally adjusted annual rate of 464,000 units.

The new data comes on the heels of a National Association of Realtors (NAR) report released Friday that said existing-home sales also increased in September, as buyers responded to greater affordability. Existing sales - which consist of single-family homes, townhouses, condominiums and co-ops - rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September. That's up from a level of 4.91 million units in August and 1.4 percent higher than the 5.11 million units sold in September 2007, according to the report.

Affordability drawing buyers
While the credit markets have been gridlocked, and obtaining a home loan is not as easy as it was during the housing boom, affordability has never been greater for new buyers. The median price of a new home declined by 9.1 percent from a year ago to $218,400, its lowest level since September 2004, according to the Commerce Department.

The national median price for all types of existing homes was $191,600 in September, down 9.0 percent from a year ago, when the median was $210,500, NAR reported. Foreclosures or short sales currently make up 35 to 40 percent of transactions. NAR says these distressed sales are pulling the median price down, because many are being sold at discounted prices.

As a prospective home buyer, don't believe everything you read. Despite the barrage of negative housing news, obtaining a home loan is not as impossible as some news reports allege, but only if you have a solid credit rating and make decent money.

Over the weekend, I had dinner with some friends who recently made a deal on a preconstruction condo in downtown Chicago. My friends have been looking for over a year, but decided not to take the plunge until recently. Their waiting has paid off. Both of them have excellent credit scores and good jobs, so they were immediately approved for a conventional, 30-year fixed-rate mortgage. With home values down and fewer buyers in the market, they went in with the upper hand and were able to negotiate the asking price down by some $15,000. Not only that, they got all the condo's swanky upgrades included in the price. So when real estate agents tell you this is a buyer's market, they're not lying.

Sellers, be realistic
Many homeowners who want to sell their homes in today's down market are holding out. Others, who have no choice but to put their property on the block (especially if they're relocating for work), need to be realistic about their asking price.

Another friend of mind, who recently decided to move from the city into the suburbs, had to reduce the asking price for his 4-bed, 3-bath duplex from $850,000 to $750,000 (the result of several failed reductions in between). After the price reduction, he received three bids on the property. The duplex had been on the market for nearly six months without a single offer. Taking a $100,000 loss is not something most sellers want to do or will likely do. But in my friend's situation, he didn't want to get stuck paying two mortgages. And with today's shaky financial market, he was willing to take a major loss to get the property sold. My friend is a successful entrepreneur and is no novice at selling homes. He moonlights as a real estate investor and points out that people are naive if they think they can still rake in a 20-to-30 percent profit in today's market.

If the housing meltdown has taught us anything, it's the lesson that owning a home is a long-term investment. Buying a property today and trying to sell it within the next two years isn't going to net you the same profits it once did during the boom. I can't stress enough the importance of doing your homework before you buy. Get to know your area's community, schools and crime rate. Being patient and well-informed could mean the difference between a profit and a loss.

Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@homescape.com.

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Comments (8)

Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Great FACTS!!!!!  Your post reminds me that the rest of the world is moving forward.  I'm ready to rejoin society after our local political situation through our local government is settled....NOV 4th.  In the meantime, your post gives me hope that the facts will continue to be positive for our profession.

Oct 28, 2008 02:05 AM
April Stephens
RE/MAX One Realty - Clayton, NC
Broker/Realtor - Johnston & Wake County

We have seen an increase in our market as well in the past month.  Unfortunately some are confusing aggressive marketing with desperation.  Great post!

Oct 28, 2008 02:12 AM
Lori DeLoera
Century 21 Sundance - Port Orange, FL

It's very refreshing to see read such an articulate point of view on what most are feeling depressed about.  Thanks for the good news.  We're starting to see an upward trend in Daytona Beach, FL as well.  Let's hope it continues as the facts of selling in this market are absorbed by both Buyers and Sellers.

Oct 28, 2008 02:30 AM
Bob Anderson
Remax Jazz Inc. - Oshawa, ON

Good to hear.  It seems there are always buyers out there and when the deals get sweet enough more people choose to buy.  Perhaps this means we are approaching the bottom of the market.

Oct 28, 2008 02:42 AM
Fran Gaspari
Patriot Land Transfer, Inc. - Limerick, PA
"The Title Man" - Title Insurance - PA & NJ

Amy,

Great analysis! Shhhh! Wait until the election is over to spread good news about the economy!!! :^) Thanks,   Joe, The Plumber

Oct 28, 2008 03:02 AM
Bo Hussung
Bell Title /Triserv LLC - Nashvle, TN

Amy, it sounds like your friend listened to his own advice about profit taking in a down market. Good for him.

Nice article.

Bo

Oct 28, 2008 04:02 AM
HomeFinder.com Real Estate
HomeFinder.com - Chicago, IL

Thank you all for your comments. It sounds like some of you are seeing an upturn in your markets. The bottom could be nearing. 7 days until election day!!!!

Amy

Oct 28, 2008 07:22 AM
Everard Korthals
---Preferred Lifestyle Advisors--- - Lancaster, PA
Mountain Realty

Some inventory is clearing up as we've noticed too, but generally this is referring to low income housing.  The high priced homes(450k+) are still depreciating in listing prices.  The bottom is not close yet but it's definetely starting to take a slight upswing if looking at the statistics.

Oct 28, 2008 07:50 AM