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According to the Standard & Poors Case-Shiller Index, home values rose 5 percent in June versus the month prior, and 4 percent from a year earlier. It’s the 16th consecutive month in which Case-Shiller reported an increase in home values and the third straight month of outstanding results.
That said, homeowners and Home Buyers in Blairsville and Blue Ridge would do well to temper Case-Shiller enthusiasm. The June figures are issued on 60-day delay and, over the last 60 days, housing data has been lackluster at best.
- Existing Home Sales are down 27 percent
- New Home Sales are down 12 percent
- Homebuilder confidence is down
Stories like these highlight a key weakness of the Case-Shiller Index — it’s out of date as soon as it’s published. Because of this, the Case-Shiller Index relevance to everyday Americans is muted. People don’t buy homes in the “60 days ago” real estate market, after all.
June is ancient real estate history to buyers and sellers in the North Georgia Mountains.
However, the Case-Shiller Index does have its place. As the most widely-followed, private-sector housing tracker, the index is used to help make policy decisions and to shape Wall Street’s expectations of the economy. This means that a strong Case-Shiller reading can cause mortgage rates to rise, and a weak Case-Shiller reading can cause rates to fall.
Tuesday, mortgage rates fell.
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The number of home resales plunged by 1.4 million units in July, according to the National Association of Realtors® Existing Home Sales report.
It’s a drop of 27 percent from June; single-family home resales are at the report’s lowest levels since May 1999.
Furthermore, because of the sharp drop in sales volume, home inventories are spiking.
Homes for sale nationwide fell just short of 4 million units in July and, at the current sales paces, it would take 12.5 months for the existing inventory to be absorbed.
Home supply was just 8.9 months in June.
For home sellers in Hiawassee, Blairsville and Blue Ridge, the Existing Home Sales report is a bit of bad news. North Georgia Mountain Home Buyers are still waiting for the “bottom.” Fewer sales and larger inventories put negotiation leverage in the hands of the buyers which, in turn, creates downward pressure on home prices. It may also increase time-on-market.
For home buyers, however, the data is decidedly welcome. After a stimulus-driven spring buying season that favored sellers, the summer and early-fall market seem to favor buyers. More choices and more leverage is a positive.
It helps that home affordability is up, too.
Although there’s reports that home values are rising, their modest gains are more than countered by the ongoing rally in mortgage rates. Freddie Mac says that 30-year fixed rate mortgage rates are at their lowest levels in history and, at today’s rates, every one-eighth drop in mortgage rates roughly offsets a 1.5% increase to home price.
Mortgage rates are down 0.75 percent since mid-April.
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Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.
After reaching a 3-year high just 90 days ago, the National Association of Home Builders’ Housing Market Index is now at a multi-year low. It’s since dropped by almost half.
As an economic indicator, the HMI’s goal is to “take the pulse of the single-family housing market”. It surveys home builders across the country and asks them to report on 3 facets of their business:
- How are market conditions today?
- How do market conditions look 6 months from now?
- How is the prospective traffic of new buyers for new homes?
Responses are then collated, weighted, and presented as the Housing Market Index.
The August HMI reading of 13 is the lowest since March 2009.
Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.
Builders report watching foot traffic stagnate and most likely won’t want to be stuck with excess inventory into the fall and winter months. For home buyers in Blue Ridge and Blairsville, drops in builder confidence like this can be an excellent negotiation tool.
Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower.
This one-two combination can make for cheaper homes with cheaper monthly payments.
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The Pending Home Sales Index failed to rebound from a cliff-dive in May, falling by another 3 percent more in June. The index remains at record-low levels.
A “pending home sale” is a home under contract to sell, but not yet closed. The data is culled from local real estate associations and large brokers and accounts for 20 percent of all purchase transactions in a given month nationwide.
The Pending Home Sales Index is a future indicator for the housing market; there is a high correlation between the PHSI and the monthly Existing Home Sales report. This is because of the relatively large sample set used for the PHSI, and because 80 percent of homes under contract close within 60 days, according to the National Association of Realtors®.
June’s Pending Home Sales Index is weak by most measures, but if you’re a home buyer in Blue Ridge or Blairsville, the headlines aren’t so bad. Fewer home sales can push negotiation leverage to the buy-side of a transaction.
Plus, there’s other positives in the market for today’s buyers:
- Home supplies are up, which creates competition among sellers
- Builder confidence is down, which leads to “free” upgrades and incentives
- Mortgage rates are low, which increases cash flow and disposable income
All things equal, the current home buying conditions haven’t been this favorable in years.
The falling figures in June’s Pending Home Sales Index hint that home sales will be down through the rest of the summer and into early-Fall. However, mortgage rates may not and higher mortgage rates can do more to change a monthly payment that a small reduction in home price.
If you’re planning to buy a home later this year, consider moving up your time frame.
It’s an excellent time to be a buyer in the North Georgia Mountains.
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No doubt you’ve heard that mortgage rates are low. They’re lower than they’ve ever been in history. The news is everywhere.
Just check out some of these headlines from the last 24 hours:
- Mortgage rates set new lows for the 6th straight week (Reuters)
- Mortgage rates fall again; 30-year fixed at 4.54% (Wall Street Journal)
- Mortgage rates hit another low : 4.54% (NPR)
Fixed mortgage rates are now down more than 1/2 percent from the start of the year, and 3/4 percent from just 1 year ago. The drop has dramatically improved home affordability for home buyers in Blue Ridge and Blairsville while creating refinance opportunities for existing homeowners.
From a payment perspective, a conforming, 30-year fixed rate mortgage is now cheaper by $41.94 per month per $100,000 borrowed versus July 2009.
A homeowner with a $300,000 mortgage, therefore, is saving $45,295.20 over 30 years.
Low mortgage rates rarely last long and rates appear to have troughed. After a big downhill between April and July, they’re now flat. This could mean rates have finished falling, or that they’re gearing up for another drop lower. Either way, if you haven’t talked to your real estate agent about home affordability, or your loan officer about refinancing, it may be time to make that call.
If today’s market marks the end of low rates, rates are expected to rise quickly.
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After a down month in May, the sales of newly-built homes appears back on track.
As published by the Census Bureau, June’s New Home Sales report showed:
- A 24 percent sales volume increase from the month prior
- A 2-month drop in the supply of newly-built home
There are now just 210,000 new homes for sale nationwide.
June’s data is a major improvement over May, but it’s possible that the true “new home market” may be softer than the statistics suggest. This is for several reasons.
First, we’re comparing June’s sales data to the worst month in New Home Sales history.
In May, sales of new homes totaled just 267,000 units nationwide. That’s one-quarter fewer sales than in the previous worst month in New Home Sales history. May’s sales levels were awful by any measure but June’s improvement to 330,000 units remains second-worst sales levels ever posted.
Second, although much improved, June’s new home supply of 7.6 months is elevated versus the historical norm near 6.0 months. The last year has averaged 7.7 months.
For buyers of new homes in Blairsville and Blue Ridge, this combination of low sales volume and higher-than-normal inventory may be a positive. It’s the main reason why home builder confidence is reeling and the downturn has opened some doors for big discounts and deals. Free upgrades and closing cost credits can make a well-priced home even more attractive.
Data compiled through the Northeast Georgia MLS shows the following:
New Homes For Sale In The North Georgia Mountains
- Towns County (Hiawassee, GA.) – 37
- Union County (Blairsville, GA.) – 50
- Fannin County (Blue Ridge, GA.) – 98
- Gilmer County (Ellijay, GA.) – 56
New Homes Sold Year-To-Date In The North Georgia Mountains
- Towns County (Hiawassee, GA.) – 11
- Union County (Blairsville, GA.) – 23
- Fannin County (Blue Ridge, GA.) – 28
- Gilmer County (Ellijay, GA.) – 18
Plus, with mortgage rates at all-time lows and expected to rise, home affordability is may never be better.
If I can assist you with your North Georgia Mountain Real Estate needs, please Contact Me, or pick up the phone and give me a call at 706.994.8686. I sure would appreciate the opportunity to help you find your piece of Heaven here in our Mountains!
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Home values rose in March, according to the Federal Home Finance Agency’s most recent Home Price Index. Values were reported higher by 0.3 percent, on average, from February.
We use the phrase “on average” because the Home Price Index is broad-reaching, national housing statistic. It ignores the dynamics of neighborhood real estate markets such as The North Georgia Mountains as well as citywide markets like Ellijay, Blue Ridge, and Blairsville too.
Instead, the Home Price Index focuses on state and regional statistics.
For example, in March 2010 as compared to February:
- Values in the East South Central region rose 2.5%
- Values in the Mountain states rose 1.1%
- Values in the Middle Atlantic states fell 1.0%
Of course, none of this data is especially helpful for today’s home buyers and sellers.
Real estate is a local phenomenon that can’t be summarized by state or region. What matters most to buyers and sellers is the economics of a neighborhood and that level of granularity can’t be served up by a national housing report like the Home Price Index.
The Home Price Index data is additionally unhelpful to buyers and sellers in that it reports on a 2-month delay.
In other words, Home Price Index is not even a fair reflection of today’s market — it highlights the real estate market as it existed 60 days ago.
So why is the Home Price Index even published? Because government, business and banks rely on the reports. As a national indicator, the Home Price Index helps governments make policy, businesses make decisions, and banks make guidelines. This, in turn, trickles down to Main Street where it impacts every one of us — and eventually influences real estate.
Since peaking in April 2007, the Home Price Index is off 13.44 percent.
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When: May 29th-30th 10:00 a.m. to 5:00 p.m.
Where: Downtown Blue Ridge City Park
We wish to welcome your participation in the Annual Arts in the Park Festival in the beautiful, Historic Blue Ridge City Park. This festival has grown over the years and boasts some of the finest arts and crafts in the southeast. As in the past, all applicants for the festival will be juried in order to maintain our tradition as a premier show. The quality and diversity of the arts and crafts presented improve each year.
We hope that you will join us this weekend in The North Georgia Mountains.
Sponsored By:
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