West Cobb Real Estate News!

January 2008
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2007 Existing-home Sales Fifth Highest
Existing-home sales declined in December following several
months of stable activity, with total sales in 2007 still at the fifth highest
on record, according to the NATIONAL ASSOCIATION OF REALTORS®.

Existing-home sales – including single-family, townhomes,
condominiums and co-ops – slipped 2.2 percent to a seasonally adjusted annual
rate of 4.89 million units in December from a
pace of 5 million in November, and are 22 percent below the 6.27 million-unit
level in December 2006.

For all of 2007
there were 5,652,000 existing-home sales, the fifth highest year on record.
However, the total was 12.8 percent below the 6,478,000 transactions recorded in
2006.

Lawrence Yun, NAR chief economist,
says the market is experiencing uncharacteristic weakness.

“Home sales remain weak despite improved affordability
conditions in many parts of the country, but we could get a quick boost to the
market if loan limits are raised in combination with the bold cut in the Fed
funds rate,” he says. “Home prices are lower, mortgage interest rates continue
to decline and incomes are higher, but many potential buyers are delaying a
purchase.”

According to Freddie Mac, the
national average commitment rate for a 30-year, conventional, fixed-rate
mortgage fell to 6.10 percent in December from 6.21 percent in November; the
rate was 6.14 percent in December 2006. Last week, Freddie Mac reported the
30-year fixed rate dropped to 5.69 percent.

“Although interest rates on jumbo loans have fallen somewhat, they remain
well above conventional mortgage rates,” Yun says. “It isn’t surprising that the
share of single-family homes selling for more than $500,000 fell to 12.4 percent
of transactions in December from 14.2 percent a year
ago.”

A Closer
Look

NAR research also revealed the
following:

• Inventory: total housing inventory fell 7.4 percent at the end of December to 3.91
  million existing homes available for sale, which represents a 9.6-month
  supply at the current sales pace, down from a
  10.1-month supply in November. “The fall in inventory in December is
  encouraging, but inventories remain elevated and buyers have a clear edge over
  sellers in many markets,” Yun says.

• Prices: the national median existing-home price
  for all housing types was $208,400 in December, down 6 percent from a year
  earlier when the median was $221,600. Because home sales have slowed the most in
  higher cost markets, there is a downward distortion to the national median as
  the mix of closed sales has changed over the past year. For all of 2007, the
  median price was $218,900, down 1.4 percent from a median of $221,900 in
  2006.

• Single family homes: sales declined 2.0 percent to a seasonally adjusted annual
  rate of 4.31 million in December from 4.40 million in November, and are 21.6
  percent below 5.50 million-unit level in December 2006. In all of 2007,
  single-family sales fell 13.0 percent to 4.94 million. The median existing
  single-family home price was $206,500 in December, down 6.5 percent from a year
  earlier. For all of 2007, the single-family median was $217,800, down 1.8
  percent from 2006.

• Condo and co-op sales: existing condominium and co-op sales fell 3.3 percent to a
  seasonally adjusted annual rate of 580,000 units in December from 600,000 in
  November, and are 24.5 percent below the 768,000-unit pace a year ago. Condo
  sales for all of 2007 fell 11.0 percent to 713,000 units. The median existing
  condo price was $222,200 last month, which is 2.5
  percent below December 2006. In all of 2007, the median condo price was
  $226,400, up 2.0 percent from 2006.

NAR: Loan Limits Need Raised

NAR President Richard Gaylord says that raising the loan limit on
conventional financing is the most effective way to stimulate housing and
minimize the potential for a recession. He calls for lawmakers to raise the
limit on conforming mortgages to $625,000, which would open safe and affordable
financing to buyers in high-cost areas.

“It is grossly unfair that some Americans do not have access to
low-interest rate loans,” Gaylord says. “This would help people as they move
away from risky subprime mortgages and high-interest rate jumbo
loans.”

NAR projects the higher loan limit
would increase annual home sales by nearly 350,000, reduce foreclosures by
140,000 to 210,000, and increase economic activity by $44 billion. “What’s more,
this would come at no cost to taxpayers – it’s a policy change that could really
boost the economy,” Gaylord says.

Other
projections of NAR’s analysis show raising the loan limit would reduce the
supply of homes on the market by 1 to 1.5 months, and strengthen home prices by
2 to 3 percentage points. In addition, as many as 500,000 jumbo loans would be
refinanced to lower interest rates.

Gaylord says current housing conditions vary widely.

“Many local areas continue to have healthy or improving local
housing markets,” he says. “For example, we saw higher home sales last month in
diverse areas such as San Antonio; Syracuse; Springfield, Ill.; and Sarasota,
Fla. If you’re thinking about getting into the market as a buyer or a seller,
consult a Realtor® to learn about conditions in your area – they may be
considerably different from the composite national
picture.”

— REALTOR Magazine
Online

Existing-Home Sales to Hold Steady in Early
2008
Over the next few months, existing-home
sales are expected to hold fairly steady as indicated by pending sales activity,
and then rise later in the year and continue to improve in 2009, according to
the latest forecast by the National Association of
REALTORS®.

Lawrence Yun, NAR chief
economist, says there is a pull and tug exerting itself on the market.

“On the one hand, we have a pent-up
demand from the four million jobs added to our economy over the past two years
of sales decline,” he says. “On the other, consumers continue to wait for
additional signs of market stabilization. There are more people with financial
capacity now than in 2005, but many are trying to market-time their purchase. As
a result, the exact timing and the strength of a home sales recovery is a bit
uncertain. A meaningful recovery in existing-home sales could occur as early as
this spring, or it may be further delayed toward late 2008.”

The Pending Home Sales Index, a forward-looking indicator
based on contracts signed in November, fell 2.6 percent to a reading of 87.6
from a strong upward revision of 89.9 in October, but remains above the August
and September readings and indicates a broad stabilization. The index was 19.2
percent below the November 2006 level of 108.4.

“Although there could be some minor slippage in the first quarter,
existing-home sales should hold in a narrow range before trending up,” Yun
says.

Across the
Region

Regionally, the PHSI showed the
following:

• South: rose 2.3 percent in November to 100.7 but is 19.8 percent below a year
  ago.

• West: slipped 2.1 percent to 86.6 but is 18.5 percent lower than November
  2006.

• Midwest: fell 4.1 percent in November to 82.1 and is 18.6 percent below a year
  ago.

• Northeast: dropped 13 percent in November to 70.1 from a spike in October, and is
  19.1 percent below November 2006.

Existing-Home Sales Forecast

Existing-home sales for 2007 will probably total 5.66 million, the fifth
highest on record, then edge up to 5.7 million this year and 5.91 million in
2009, compared with 6.48 million in 2006. Existing-home prices for 2007 are
likely to be down 1.9 percent to a median of $217,600, hold even this year and
then rise 3.1 percent in 2009 to $224,400.

“Rising home prices in the affordable midsection of the country are
likely to offset declines in some of the previously hot markets,” Yun
says.

There are wide variations in housing
market conditions around the country, with nearly two-thirds of the metropolitan
areas showing price gains. Healthy increases in metro prices are occurring in
places such as Pittsburgh; Beaumont-Port Arthur, Texas; San Jose, Calif.; and
Bismarck, N.D.

“Our consumer survey shows
buyers today are in it for the long-haul, planning to stay in their home for a
median of 10 years,” Yun says. “This is a wise approach to housing because the
data shows the longer you own, the better your investment.”

New-home sales are projected at 773,000 for 2007, and
declining to 669,000 this year before rising to 730,000 in 2009. However, that
is well below the 1.05 million 2006.

With
an appropriate slowdown in production, housing starts — including multifamily
units — are forecast at 1.36 million for 2007 and 1.09 million this year before
edging up to 1.1 million in 2009. Starts totaled 1.8 million in 2006.

The median new-home price should drop 2.1
percent to $241,400 for 2007, and then rise 0.4 percent to $242,200 this year
and gain another 5.9 percent in 2009.

Call for Legislative Action

“Some policy changes, such as raising the loan limit on conventional
mortgages, would provide a significant boost to home sales, increase liquidity,
strengthen home prices and lessen foreclosures, but it is unclear as to if and
when the measure will be implemented,” Yun says.

NAR strongly supports raising the Government-Sponsored Enterprise loan
limit to at least $625,000 from the current $417,000 so that more consumers will
have access to lower interest rates on safe conforming mortgages.

“NAR estimates that raising the GSE loan
limit will result in interest rates savings for an additional 330,000 home
owners,” Yun adds.

NAR also encourages the
Fed to make a single lump-sum cut in the Fed funds rate to 3.5 percent at the
January Federal Open Market Committee meeting, rather than a series of modest
cuts throughout the year.

“Consumers are
also looking to market-time interest rates, and the expectations of further rate
cuts are pushing some home buyers to delay,” Yun says. “Monetary policy will be
much more effective with a one-time large cut, rather than a series of small
cuts.”

The 30-year fixed-rate mortgage is
expected to rise slowly to the 6.3 percent range by the end of this year, but an
additional cut in the Fed funds rate would lower short-term interest
rates.

Meanwhile, growth in the U.S. gross
domestic product (GDP) is seen at 2.1 percent in 2007, below the 2.9 percent
growth rate in 2006; GDP growth will probably be 2 percent this
year.

After averaging 4.6 percent for both
2006 and 2007, the unemployment rate is estimated to rise to 5.3 percent in the
second half of 2008. Inflation, as measured by the Consumer Price Index, is
projected at 2.9 percent for 2007 and 3.1 percent this year; it was 3.2 percent
in 2006. Inflation-adjusted disposable personal income is forecast to grow 3.1
percent for 2007, the same as in 2006, and then grow 1.6 percent this
year.

— REALTOR® Magazine
Online

NAR economist underlines real estate’s silver lining

Laurence Yun, the chief economist for NAR, had plenty of positive news for
Realtors at last month’s conference. Yun attributed much of today’s subprime
mortgage problem to greed. Wall Street wanted the 10-12 percent return that
subprime mortgages yielded as opposed to the smaller returns from more
traditional mortgage products. His take on the Wall Street types: “They gambled.
They lost.”

Yun’s outlook for 2008 sees a shift from greedy speculators to serious
homeowners. 2008 will be a year of opportunity where there will be serious,
healthy business. Furthermore, Yun predicted that the market returns to normal
by 2009.

According to Yun, one of the biggest mistakes that reporters make is talking
about national trends. Nationally, 2007 was the fifth best year ever on record.
Home prices declined about 1.5 percent after a 50 percent run up in prices.

The challenge is that national numbers are pretty much irrelevant. Yun argues
that talking about national averages is about as effective as having a national
weather forecast. Like the weather, all real estate markets are local. In fact,
you may have a buyer’s market and a seller’s market operating within a single
market area based exclusively upon price point. Here are the other key pieces of
positive news from Yun’s economic report:

1. New housing starts: Even though these are dropping, there
was too much building in recent years. The market is simply adjusting to normal
supply-and-demand pressures. The inventory is “being controlled which makes
stabilization occur more quickly.”

2. Foreclosures: According to Yun, the 41 percent increase
in foreclosures has resulted primarily from investor-heavy real estate purchases
in Arizona, California, Florida and Nevada. The majority of these individuals
are flippers whose investments did not payoff. More importantly, the number of
foreclosures in Utah, New Mexico, North Carolina and South Carolina is actually
declining.

3. Under-priced markets and superstar cities: Although the
coastal markets are still overpriced, Middle America is under priced.
Nevertheless, Yun cites a new trend termed, “superstar” cities. These cities
will command premium prices, regardless of what the market does. There is so
much wealth concentrated in these areas, that measurements are simply not
predictive. In addition to London, Paris, Tokyo and New York, Yun also
identified San Francisco, Miami and Seattle as potential new superstar cities.

4. The recovery has started: Other than the three states hit
heavily by job losses in the automotive industry (Indiana, Michigan and Ohio),
the states that first experienced a downturn in the Northeast, are now in
recovery. Specifically, Connecticut, Massachusetts, New York and Rhode Island
were the first to feel the slump and are now well into a recovery. Furthermore,
there appears to be a pent-up demand for first-time buyer properties due to a
large number of Gen Ys (born 1977 to 1994) that are now buying their first
homes. Falling interest rates will motivate many of these buyers to step into
the market now.

5. New jobs and corporate profits are still strong:
Corporate profits are still strong with companies as diverse as Microsoft and
Jack Daniels reporting close to record profits. Furthermore, the economy has
generated 4 million net new jobs and wages are rising.

6. A weak dollar may harbinger more foreign investment in U.S. real
estate
Although the decline of the U.S. dollar will end up costing
us more when we go overseas or purchase imports, it has resulted in more
manufacturing jobs returning to the U.S. It also may mean more foreign
investment in U.S. properties as well. Just a few years ago, the Canadian dollar
was only worth 70 cents in U.S. currency. Today, the Canadian dollar has been
hovering at about $1.05 to $1.10 U.S. What this means is that we can expect more
Canadians and Europeans to be purchasing U.S. property, because our prices are
approximately 50 percent cheaper than they were just three years ago.

7. Real estate: Still the best shelter: For those agents who
represent reluctant first-time buyers, Yun points to some interesting research
from the Federal Reserve. Between 1995 and 2004, the average renter accumulated
$4,000 in wealth. In contrast, the average homeowner accumulated $184,400.
Furthermore, the typical homeowner holds their property for six years. Within
this period of time, NAR’s research shows that approximately 97 percent of the
homeowners will have a positive equity position after that period of time.

Bottom line: 2008 represents the best window that buyers will have to find
excellent deals with excellent financing. Get the word out there. If they wait,
prices and interest rates will be higher and the reluctant buyer may be forced
out of the market.

Source:

By Bernice Ross
Inman News