Londonderry NH real estate listings and homes for sale, home buying, home selling information – Driscoll & Driscoll

Apprasial Notes

Existing-Home Sales Record Big Gains

November 23rd, 2009 2:31 PM

Daily Real Estate News | November 23, 2009 |

Existing-Home Sales Record Big Gains
Driven by the home 2:30:56 PM buyer tax credit, existing-home sales showed another big gain in October with a strong uptrend established over the past seven months, according to the NATIONAL ASSOCIATION OF REALTORS®. At the same time, inventories have continued to decline.

Existing-home sales—including single-family, townhomes, condominiums and co-ops—surged 10.1 percent to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

Tax Credit Fuels Surge

Lawrence Yun, NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through—there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said.

Historically low interest rates also are boosting the market. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Yun noted. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September; the rate was 6.20 percent in October 2008. Last week, Freddie Mac reporter the 30-year rate dropped to 4.83 percent.

Inventory Declines

NAR President Vicki Cox Golder said strong demand by first-time buyers is creating some unusual conditions. “In parts of the country, especially in Southwestern states but also in Florida and suburban Washington D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” she said.

“In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive. In this kind of environment it’s important to work with a REALTOR® who can walk you through the process and help you negotiate a satisfactory deal,” Golder said.

Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.

“The supply of homes on the market is now at the lowest level in over two-and-a half years – we’re getting closer to a general balance between buyers and sellers,” Yun said. The last time the relative housing inventory was this low was in February 2007 when it also was at a 7.0-month supply.

Existing Home Price by Type

The national median existing-home price for all housing types was $173,100 in October, down 7.1 percent from October 2008. Distressed properties, which accounted for 30 percent of sales in October, continue to downwardly distort the median price because they usually sell at a discount relative to traditional homes in the same area.

“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” Yun said.

He added that low home prices also are contributing to extremely favorable affordability conditions. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.”

Single-family home sales rose 9.7 percent to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4 percent above the 4.39 million-unit pace in October 2008. The median existing single-family home price was $173,100 in October, down 6.8 percent from a year ago.

Existing condominium and co-op sales surged 13.2 percent to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8 percent above the 547,000-unit level a year ago. The median existing condo price was $172,900 in October, which is 10.4 percent below October 2008.

Regional Views

Here’s a look at existing-home sales figures in different regions of the United States:

Northeast: Existing-home sales rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.

Midwest: Existing-home sales surged 14.4 percent in October to a pace of 1.43 million and are 28.8 percent above a year ago. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008.

South: Existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.

West: Existing-home sales increased 1.6 percent to an annual rate of 1.31 million in October and are 12.0 percent above a year ago. The median price in the West was $220,200, which is 14.7 percent below October 2008.

—NAR

Posted by Michael A. Driscoll - MA on November 23rd, 2009 2:31 PMPost a Comment (0)

Subscribe to this blog

Commercial Real Estate Forecast Uncertain

November 19th, 2009 3:01 PM

Commercial Real Estate Forecast Uncertain
The recent deep economic downturn has had a pronounced impact on commercial real estate sectors, but credit availability is the big unknown that will determine how soon commercial markets recover, according to the NATIONAL ASSOCIATION OF REALTORS®.

Lawrence Yun, NAR chief economist, said some initial movements earlier this week in commercial mortgage-backed securities are encouraging. “The first commercial mortgage bond deal in over a year shows the Federal Reserve’s efforts to sell securities through the TALF program can be fruitful, but the level of activity is well below what is required to resuscitate the commercial market. Credit availability needs to significantly rebound for any hope of a meaningful commercial recovery in 2010.”

The Commercial Leading Indicator for Brokerage Activity rose 0.9 percent to an index of 102.4 in the third quarter from 101.5 in the second quarter, but is 11.1 percent below a reading of 115.3 in the third quarter of 2008. The index in the second quarter was at the lowest level since the first quarter of 1994; NAR’s track of the commercial leading indicator dates back to 1990.

Yun said the modest index recovery follows steep declines in the past several quarters. “Gains in industrial production, durable goods shipments and retail sales; a rebound in the NAREIT price index; and improving figures on first-time unemployment claims were stabilizing factors,” he said. “Negative impacts include falling private sector income and fewer jobs involving commercial real estate. The office and industrial markets are the sectors most negatively impacted by the economic downturn.”

The Society of Industrial and Office Realtors, in its SIOR Commercial Real Estate Index, a separate attitudinal survey of more than 710 local market experts,² suggests a lower level of business activity in upcoming quarters with recessionary impacts on the industrial and office markets, although 47 percent of members are more hopeful about the near-term outlook.

The SIOR index has declined for 11 consecutive quarters and stood at 35.3 in the third quarter, compared with a level of 100 that represents a balanced marketplace. Even though it is a buyer’s market with lower prices, investment activity continues to decline from the lack of credit, and 85 percent of respondents report development is virtually nonexistent in their markets.

Looking at the overall market, commercial vacancy rates are rising and rents are declining, according to NAR’s latest COMMERCIAL REAL ESTATE OUTLOOK.The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data were provided by CBRE Econometric Advisors.

Office Market
Vacancy rates in the office sector are expected to rise from 16.1 percent in the third quarter to 18.5 percent in the third quarter of 2010, with job losses continuing to dampen the market.

Annual office rent should fall by 12.1 percent this year and decline another 8.5 percent in 2010. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, is seen at a negative 56.1 million square feet in 2009 and a negative 43.3 million next year.

Industrial Market
Industrial vacancy rates are forecasted to rise from 13.5 percent in the third quarter of this year to 15.4 percent in the third quarter of 2010.
Annual industrial rent is projected to fall 10.8 percent this year and another 11.5 percent in 2010. Net absorption of industrial space in 58 markets tracked is likely to be a negative 298.7 million square feet this year, and a negative 140.5 million in 2010.

With much of the construction in recent years customized for specific industrial needs, there is an overhang of obsolete structures on the market. “There is an opportunity for non-current owners to look at distressed industrial properties in the current market,” Yun said.

Retail Market
Retail vacancy rates will probably rise from 12.2 percent in the third quarter to 13.0 percent in the third of 2010. “Near term, retail is the most hopeful commercial sector with an expected rise in consumer confidence, resulting from a restoration of housing wealth as home prices stabilize and begin to rise around the spring of next year,” Yun said.

Average retail rent should decline 1.3 percent in 2009 and 3.0 percent next year. Net absorption of retail space in 53 tracked markets is forecast at a negative 21.9 million square feet this year and a negative 4.7 million in 2010.

Multifamily Market
The apartment rental market – multifamily housing – is impacted by higher home sales to first-time home buyers. “However, as the economy turns around and consumer confidence returns, constraints on household growth will be released, which may help to unleash a pent-up rental demand,” Yun said. Multifamily vacancy rates are projected to be fairly steady, edging up from 7.3 percent in the third quarter of 2009 to 7.4 percent in the third quarter of next year.

Average rent is likely to decline 4.1 percent this year, moderating to a 3.3 percent loss in 2010. Multifamily net absorption is forecast at 168,300 units in 59 tracked metro areas in 2009 and 59,700 next year.

Source: NAR

Posted by Michael A. Driscoll - MA on November 19th, 2009 3:01 PMPost a Comment (0)

Subscribe to this blog

Commercial Outlook from NAR Chief Economist

November 17th, 2009 6:59 AM

Daily Real Estate News | November 16, 2009 |

Commercial Forecast: Dark Clouds Ahead
NAR Chief Economist Lawrence Yun sounded a downbeat note on the state of the commercial real estate market over the next few years in an address Friday afternoon at the 2009 REALTORS® Conference & Expo.

Yun said the most immediate problem for this sector is simple: There aren’t nearly enough buyers.

"Who is buying? The answer is no one,” he explained. “The level of transactions is way down. We're looking at an almost 90 percent decline from peak to current levels."

One particularly hard-hit area of commercial is the office sector: Vacancy rates are getting precariously close to 20 percent and sales volume has fallen as far as 93 percent from its peak just a few years ago.

The industrial part of commercial is also performing well below the norm, due in large part to warehouses, Yun said. There's more space, but much less need for it. Rents fell more than 10 percent this year, and probably will again next year.

The prospects for retail and multifamily are somewhat better. Yun predicts that as housing prices rise, people will be more inclined to spend, which will benefit retail. In addition, young people and professionals who’ve fallen on hard times will be able to move out of their relatives’ households and into their own residences as the economy slowly recovers. This will boost both multifamily and housing, Yun said, but he added that the employment picture will have to improve first.

However, the overall commercial market will probably continue to move down—too many indicators point to more trouble. For instance, cap rates are starting to rise for the first time since the beginning of this decade. Issuance of commercial mortgage-backed securities (CMBS) actually fell to zero during a few recent months. Moreover, CMBS delinquency rates have skyrocketed over the past couple of years.

That isn’t even the worst part, though. The biggest concern in the coming years is defaults. Commercial real estate debt maturities will spike at $1.8 trillion in 2012, and much of that amount is comprised of poor-quality loans.

"The credit situation in the commercial market is very disconcerting,” Yun said. “On the residential side, there is more government backing. That's not the case for commercial real estate. In commercial, there will be another letdown before things improve."

However, he also expressed confidence that the federal government would try to prevent a large collapse in the commercial sector. The Federal Reserve and Treasury Department have extended the Term Asset-Backed Securities Loan Facility (TALF), a federal relief program intended to increase credit availability, through 2010.

Yun said he expected to see more relief efforts in the future.

"The policy makers clearly understand that commercial real estate is the next shoe to drop, so they're looking at things they can do. That doesn't mean they have the policy to implement yet," he said.

—Brian Summerfield, REALTOR® magazine

Posted by Michael A. Driscoll - MA on November 17th, 2009 6:59 AMPost a Comment (0)

Subscribe to this blog