Selling a House? Don’t Overprice It

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There is no doubt that the housing market is coming back nicely. What, if anything, could slow down the current momentum? We believe it may be sellers’ over exuberance when it comes to pricing. There is little doubt that house prices have appreciated over the last twelve months in most regions of the country. However, with both the inventory of homes for sale and interest rates increasing, we have to be careful to not over judge what the market can bare.

Trulia just reported that asking priceshave jumped dramatically and the increase is accelerating:

  • Year-Over-Year prices jumped 10.7%
  • Quarter-Over-Quarter prices jumped 4.1% (16.4% annualized)
  • Month-Over-Month prices jumped 1.5% (18% annualized)

No expert is expecting home prices to shoot up 18% in the next twelve months. If anything, price appreciation may slow as rates and inventories increase. Investors will begin to slow their purchases and the first-time buyers expected to take their place will be working within a pre-set budget in many cases.

Buyers’ Purchasing Power

Let’s look at an example: A young couple is looking for a home and have predetermined that their budget will only allow them to spend $1,000 a month on a mortgage. At today’s mortgage rate of 4.5%, they could afford a $200,000 mortgage ($1,013 principal & interest). However, if rates jump to 5%, they would have to lower their mortgage amount to $190,000 in order to keep their monthly payment where they need it ($1,020). At 5.5%, the mortgage would need to be no more than $180,000 ($1,022).

The Impact on Prices

This decrease in buyers’ purchasing power will have an impact on home values going forward. We do not believe it will cause a decrease in prices. However, we do believe it will likely cause current rates of appreciation to slow.

If you are thinking about selling your home, don’t get carried away with current headlines about home price increases that have taken place over the last twelve months. Instead, call a local real estate professional. They will be best prepared to explain where prices are headed over the next six months

 

By: The KCM crew at KCM Blog


Florida Cities Top List of 'Hot Spots' for Retiring, Investing

Although Florida is often recognized for its high foreclosure rate, the state also holds a handful of cities that are retirement “hot spots” due to their real estate opportunities, according to RealtyTrac.

On Thursday, RealtyTrac released a list of the top 15 markets for retiring. In order to be considered, at least one-third of the population in the markets had to be aged 65 or older. Overall, 40 fit that criteria, and 15 of those markets stood out due to their strong annual price growth.

Out of the 15 markets, seven were in Florida.

Dunnellon, Florida, came out ahead of other cities, with a 31.4 percent annual increase in home prices. Naples, Florida ranked second with a 26.8 percent annual increase in prices.

Other Florida cities on the list include North Fort Myers (+19 percent), Punta Gorda (16.7 percent), Sun City Center (14.7 percent), Venice (11.5 percent), and Orange City (8.8 percent).

Cities outside of Florida that were placed high on the list included Hot Springs Village, Arkansas (+25.9 percent), Douglassville, Pennsylvania (22.3 percent), and Sun City, Arizona (19.9 percent).

RealtyTrac’s ranking also included other data that might be of interest to retirees such as capitalization rate, median sales price in May 2013, annual chance of sunshine, among other factors.

Florida cities were also strong candidates for those who are considering the option of owning rentals into retirement. Orange City, for example, held the highest capitalization rate of 12.9 percent, followed by Dunnellon (10.3 percent) and North Fort Myers (9.4 percent).

“These popular retirement cities will very likely be an area of growth in the housing market over the next 15 years as baby boomers retire in greater numbers,” said Daren Blomquist, VP at RealtyTrac. “The baby boomer generation started retiring in 2011, a trend that will continue at least through 2029, ensuring plenty of demand for both rentals and owner-occupant purchases in these markets for the foreseeable future.” 

By: Esther Cho with DSNEWS

 


Pending home sales reach highest level since 2006

 

Pending home sales soared in May, reaching their highest level in seven years, the National Association of Realtors reports.

NAR’s Pending Home Sales Index rose 6.7% to 112.3 in May, up from a downwardly revised 105.2 index score in April. From last year, the index is up 12.1%.

Contract activity came in at the strongest level since December 2006, when it reached 112.8. For the past 25 months, pending sales have been above year-ago levels. 

Lawrence Yun, NAR chief economist, believes there may be a fence-jumping effect.

“Even with limited choices, it appears some of the rise in contract signings could be from buyers wanting to take advantage of current affordability conditions before mortgage interest rates move higher,” Yun said. “This implies a continuation of double-digit price increases from a year earlier, with a strong push from pent-up demand.”

With the national median existing-home price expected to increase more than 10% to nearly $195,000, Yun upgraded his price forecast for 2013. This would mark the strongest increase since 2005, when the median increased 12.4%. 

Existing home sales are expected to rise 8.5% to 9.0%, reaching 5.07 million sales in 2013 — the highest level in seven years. In 2007, 5.03 million sales were recorded. 

The PHSI in the Northeast remained unchanged at 92.3 in May but is 14.3% above year ago levels. 

In the Midwest, the index jumped 10.2% to 115.5 in May and is 22.2% higher than May 2012. 

Pending home sales in the South rose 2.8% to an index score of 121.8 in May, up 12.3% from a year ago. 

Meanwhile, the index for the West jumped 16.0% to 109.7. With limited inventory, the region is only 1.1% above May 2012 levels. 

By: Megan Hopkins with Housingwire