Pinellas Property Online

Historically high housing affordability and low mortgage interest rates, combined with buyer opportunities in the distressed sales market, have increased home sales in many areas of the country.

“There has never been a better time to buy,” said National Association of Realtors® (NAR) Chief Economist Lawrence Yun, who presented NAR’s economic outlook at the Realtors Midyear Legislative Meetings & Trade Expo. Yun noted a “perfect storm” of favorable conditions.

“Housing affordability is at an all-time high, mortgage rates are historically low, and interest rates are the lowest they’ve been since the days of Eisenhower,” said Yun.

While he doesn’t anticipate an immediate pickup in the coming months, Yun believes early summer will be a critical indicator of how homebuyers respond to the $8,000 tax credit. “The home buying process takes time,” said Yun. “This summer will gauge the success of the first-time home buyer tax credit.”

California has already shown signs of recovery, with home sales rising much faster than anticipated; some areas in the state are seeing a 70 to 80 percent increase in sales. Yun attributes the extraordinary surge to buyers who sat on the fence but are now taking advantage of the great opportunities out of fear that they’ll miss out on current deals.

According to Yun, many first-time buyers want deeply discounted and distressed home prices. Nationally, distressed sales have made up about half of all recent transactions. Fifteen to 20 percent have been short sales, and 30 to 35 percent have been foreclosures. Yun says that these statistics are unfortunate, but the situation, along with current home buying incentives, has created an impressive window of opportunity for potential home buyers.

“The stimulus and falling inventory levels will help stabilize prices,” said Yun. “My projection is home sales will be 10 to 20 percent higher the second half of this year (compared to) last year, and we will come out of this recession in 2010.”

© 2009 FLORIDA ASSOCIATION OF REALTORS® 

American homeowners have a solid understanding of what has happened to the values of their own homes over the past year. A majority (60 percent) believes their home lost value during the past 12 months, according to the Zillow Q1 Homeowner Confidence Survey. In reality, however, 80 percent of homes across the country lost value during the past 12 months, according to Zillow’s first quarter Real Estate Market Reports.

Additionally, 18 percent of owners believe their home gained value in the past 12 months, and 22 percent believe its value remained the same. That resulted in a Zillow Home Value Misperception Index of five – the lowest it has been since Zillow introduced the index in the second quarter of 2008 – and down from 10 in the fourth quarter of 2008.

A Misperception Index of zero would mean homeowners’ perceptions’ were in line with actual values.

While consumers understanding of the real estate market’s slide became more accurate, that change also created hope for the future. Most homeowners – 74 percent – believe their home will not decline in value in the coming six months, effectively calling a bottom to their own home’s housing slide. Specifically, one in four homeowners (27 percent) think their home’s value will increase in the next six months, while nearly half (47 percent) believe their home’s value will remain the same. Homeowners were similarly optimistic when it came to predicting home values in their local markets. About two-thirds of homeowners believe home values in their local markets will increase (26 percent) or stay the same (37 percent) over the next six months. Thirty-seven percent believe home values will decrease.

The survey results also suggest that many Americans would like to sell their home but are waiting for a market turnaround to do so. When asked about future plans to sell, 31 percent of homeowners said they would be at least “somewhat likely” to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround.

“The perception of American homeowners is finally catching up to reality, which is that 80 percent of all homes in the country lost value during this past year,” says Dr. Stan Humphries, Zillow’s vice president of data and analytics. “While homeowners are now more realistic when looking backward, they are still pretty starry-eyed when looking forward, with three out of four homeowners believing that their own homes’ prices will increase or be flat over the next six months. Unfortunately, there are few markets we expect to perform this well.

“Also interesting is the information we have for the first time this quarter on the levels of ‘shadow inventory’ – homes that people would like to sell but that aren’t currently on the market, and thus aren’t captured in the official number of homes on the market,” Humphries says. “With almost a third of homeowners poised to jump into the market at the first sign of stabilization, this could create a steady stream of new inventory, adding to already record-high inventory levels, thus keeping downward pressure on home prices.”

    First-time homebuyers will soon have another option if they want to use their $8,000 tax credit toward a downpayment. On the tails of a Florida-created program that Gov.  Charlie Crist is expected to sign into law, the federal government announced its own downpayment assistance program at the National Association of Realtors® Midyear Legislative Meetings & Trade Expo taking place this week in Washington, D.C.

While the tax credit applies to “first-time homebuyers,” the term is misleading. In general, anyone who hasn’t owned a home for the past three years is considered a first-timer under the program. Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD), hopes to have additional details available within a few days, though it’s still unclear how soon homebuyers can apply for the credit.

Donovan said that the Federal Housing Administration (FHA) would allow its lenders to credit homeowners up to $8,000. He made the announcement to several thousand Realtors yesterday at a special daylong session called, The Real Estate Summit: Advancing the U.S. Economy.

“We all want to enable FHA consumers to access the homebuyer tax credit funds when they close on their home loans, so that the cash can be used as a downpayment,” Donovan said. According to Donovan, FHA approved lenders will be permitted to “monetize” the tax credit by using short-term bridge loans. Donovan also said that more will be done, and the Obama administration plans to further stabilize the housing market.

“I do think we have some early signs that the market overall is stabilizing,” said Donovan. “Since January, we’ve seen both home sales moving up and down around a relatively stable number, and we are seeing the first signs that the rapid decline in home prices is starting to abate.”