Bellevue Real Estate, Mortgage, and Economy 8/2/10
Posted on 02 August 2010
MARKET RECAP
Here is the Bellevue Real Estate Report for August 2, 2010.
Could we be seeing the beginning of a post-tax-credit rebound? We can’t say for sure – too many variables and too many contrasting opinions to vet – but we hold out hope that June’s rebound in new-home sales could presage better days.
On that front, sales rebounded to 330,000 units annually, a 23.6 percent increase over May’s rate of 267,000 units. More encouragingly, sales were up in three of four major regions: The Northeast posted the biggest gain at 46.6 percent, followed by the South at 33.1 percent, and the Midwest at 20.5 percent. The West was the notable loser, posting a 6.6 percent drop, but it’s worth noting that the West had been posting stronger sales over the past few months.
We don’t want to get carried away and read too much into one month’s worth of data, but if there is a bright spot for homebuilders, it’s that inventories are as lean as they’ve been in forty years.
Homebuilders can also take solace knowing that home prices rose nationally, in May. According to Standard & Poor’s/Case-Shiller home price index, prices increased 1.3 percent, with 19 of 20 markets posting month-over-month gains. Of course, we are speaking of national prices, and real estate is local. If you bought a home in San Francisco recently you might be asking, what housing slump? If you had bought a home in Las Vegas anytime over the past four years, you’re still wondering when the nightmare will end.
Some think the nightmare won’t end soon. Fiserve, for one, projects that home prices will fall another 4.9 percent nationally over the next 12 months, with the usual suspects – Nevada, Arizona, and Florida – taking the hardest hits. Not surprisingly, these areas have also been hardest hit by unemployment.
That said, we still believe we are looking at a relatively stable pricing environment for most parts of the country. The Miami metropolitan area, one of the more notoriously overbuilt burgs, has even posted some price improvement over the past twelve months. Again, real estate is local, so it’s impossible to predict how any one market will perform over the coming months. In aggregate, though, we question Fiserve’s projections.
Mortgages rates, on the other hand, are influenced by national events. Here, the trend continues to push lower. Just about everything is being quoted under 5 percent these days, with some adjustable-rate mortgages regularly quoted under 4 percent. The low rates offer plenty of options: Moving to a 15-year fixed-rate mortgage to save interest and to more quickly amortize the loan being one of the more obvious. A 20-year fixed-rate mortgage is another worthwhile option, particularly for borrowers unsure if they can handle the monthly obligation of the 15-year loan.
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