Despite National News Media, Metro Housing Prices Up

The National Association of Realtors published the latest article in Realtor Magazine Online, the trade magazine of Realtors in North America. The report concludes that U.S. major metro areas are showing to be stable with modest appreciation in a majority of national markets.  Read the full article below.

Most Metro Areas See Modest Price Gains
The vast majority of U.S. metropolitan areas showed rising or stable home prices in the third quarter, with most experiencing modest gains compared with a year earlier, says the latest quarterly survey by the NATIONAL ASSOCIATION OF REALTORS®.

In the third quarter, 93 out of 150 metropolitan statistical areas show increases in median existing single-family home prices from a year earlier, including six areas with double-digit annual gains and another 21 metros showing increases of 6 percent or more. Fifty-four areas had price declines, and three were unchanged. Regionally, prices rose in both the Northeast and Midwest, as did the national condo price.

Lawrence Yun, NAR chief economist, says the data underscores the fact that all real estate is local. “Some metro areas are hot while others are experiencing localized problems,” he said. “The report also shows that home prices in the vast midsection of America, from the Appalachians to the Rockies, are affordable and, perhaps, even undervalued.

Yun says the quarterly metro home price report is the most meaningful long-term series available on price performance because it looks at all of the available transactions in a given area.

Unlike other home price series that are based on county records and mortgage securities, which are collected well after the actual transaction date, NAR’s information comes directly from multiple listing services. The report includes actual market prices rather than just the percentage changes so people can compare housing values around the country, Yun says.

Even with most areas showing improvement, a disruption in higher-priced sales impacted the national median existing single-family home price, which was $220,800 in the third quarter, down 2 percent from the third quarter of 2006 when the median price was $225,300.

The median is a typical market price where half of the homes sold for more and half sold for less.

Gaylord: Know Your Market

NAR President Richard Gaylord says consumers need to understand what’s going on in their own area. “There is no such thing as a national housing market – it doesn’t perform like the equities markets,” he says. “What’s really important for consumers is to make informed decisions based on individual needs, desires, and timelines in a given area. Most people plan to stay in a home for 10 years, and for buyers with a long-term view, housing is an excellent investment.”

Typical sellers purchased their home six years ago, with the median price in the third quarter of 2001 at $159,100. Despite the dip in the national median price over the past year, the median increase in value for home sellers who bought six years ago is 38.8 percent. “Nearly every market is showing positive long-term gains, with a home equity accumulation of $61,700 over the past six years for a typical U.S. home owner,” Gaylord says.

Even in most of the places that are undergoing a large price decline, long-term increases are quite respectable, he says. For example, the Sarasota area of Florida is showing a median rise in home value of $112,000 over the typical holding period, and ranks well above norm for overall gains.”

Biggest Price Gains, Biggest Drops

In the third quarter, the largest single-family home price increase was in Bismarck, N.D., area, where the median price of $161,600 rose 15.1 percent from a year ago. Next was the Salt Lake City area, at $246,700, up 14.1 percent from the third quarter of 2006, followed by Yakima, Wash., where the third quarter median price increased 13.6 percent to $163,200.

Median third-quarter metro area single-family home prices ranged from a very affordable $81,600 in the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, to more than 10 times that amount in the San Jose-Sunnyvale-Santa Clara area of California, where the median price was $852,500.

The second most expensive area was San Francisco-Oakland-Fremont, at $825,400, followed by the Anaheim-Santa Ana-Irvine area (Orange County, Calif.), at $700,700.

Other affordable markets include the Saginaw-Saginaw Township North area of Michigan, with a third-quarter median price of $84,900, and Decatur, Ill., at $85,900.

Condo Market Recap

In the condo sector, metro area condominium and cooperative prices – covering changes in 59 metro areas – show the national median existing condo price was $226,900 in the third quarter, up 2 percent from $222,500 in the third quarter of 2006. Forty-one metros showed annual increases in the median condo price, including six areas with double-digit gains; 18 areas had price declines.

The strongest condo price increases were in Bismarck, N.D., where the third quarter price of $133,300 rose 22.3 percent from a year earlier, followed by the Austin-Round Rock area of Texas, at $171,700, up 19.2 percent, and the Portland-Vancouver-Beaverton area of Oregon and Washington, where the median condo price of $210,200 rose 14.9 percent from the third quarter of 2006.

Metro area median existing-condo prices in the third quarter ranged from $114,000 in the Rochester, N.Y., area, to $663,700 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Los Angeles-Long Beach-Santa Ana, at $388,800, followed by the San Diego-Carlsbad-San Marcos area at $351,900.

Other affordable condo markets include Wichita, Kan., at $117,100 in the third quarter, and the Cincinnati-Middletown area of Ohio, Kentucky and Indiana at $117,500.

Sales Pace: State by State

Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 5.42 million units in the third quarter, down 13.7 percent from a 6.29 million-unit pace in the third quarter of 2006. “The housing market correction is clearly focused on transaction volume and not in home prices,” Yun notes.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.55 percent in the third quarter, up from 6.37 percent in the second quarter; the rate was 6.56 percent in the third quarter of 2006. Last week, Freddie Mac reported the 30-year fixed rate was down to 6.24 percent.

Only two states showed annual gains in existing-home sales from the third quarter of 2006, while complete data for two states were not available. In North Dakota, the level of third-quarter sales rose 2.9 percent from a year ago, while Vermont increased 0.8 percent. “The biggest decline in sales appears to be concentrated in areas that had significant levels of speculative investment, including Nevada, Florida and Arizona,” Yun said.

Regional Price Trends

Northeast: The median existing single-family home price in the Northeast rose 3.2 percent to $286,300 in the third quarter from the same period 2006. Total existing-home sales in the region declined 7.3 percent to an annual pace of 973,000 units in the third quarter from the same period a year ago.

The strongest price increase in the Northeast was in the Binghamton, N.Y., area, at $119,600, up 11.4 percent from the third quarter of last year, followed by Reading, Penn., with a median price of $162,900, up 7.0 percent, and Atlantic City, N.J., at $273,100, up 6.2 percent.

Midwest: The median existing single-family home price increased 0.5 percent to $170,800 in the third quarter from the same period in 2006. Overall, existing-home sales in the Midwest fell 10.8 percent to a 1.27 million-unit annual level in the third quarter compared with a year ago.
After Bismarck, N.D., the strongest metro price increase in the Midwest was in the Green Bay, Wis., area, where the median price of $162,900 was 7.2 percent higher than a year ago. Next was Akron, Ohio, at $124,700, up 6.9 percent from the third quarter of 2006, and Gary-Hammond, Ind., at $144,300, up 6.7 percent.

South: The median existing single-family home price in the South was $180,800 in the third quarter, which is 3.6 percent below a year earlier. Total existing-home sales in the region were at an annual rate of 2.16 million units in the third quarter, down 14.3 percent from the third quarter of 2006.

The strongest price increase in the South was in the Charlotte-Gastonia-Concord area of North Carolina and South Carolina, at $220,100, up 11.0 percent from a year ago, followed by the Beaumont-Port Arthur area of Texas, with a 10.2 percent gain to $129,100, and Corpus Christi, Texas, at $140,500, up 7.6 percent.

West: The median existing single-family home price in the West was $338,100 in the third quarter, down 3.8 percent from a year ago. The existing-home sales pace in the West of 1.01 million units fell 21.5 percent from the third quarter of 2006.

After Salt Lake City and Yakima, the strongest metro price increase in the West was in the San Jose-Sunnyvale-Santa Clara area, which increased 9.4 percent from a year ago, followed by the San Francisco-Oakland-Freemont area, up 8.6 percent from the third quarter of 2006.

— REALTOR® Magazine Online

Mortgage Comment

Market Comment

Mortgage bonds rose pushing rates slightly lower last week. Rates were helped by continued equity weakness and tame core inflation data. Inflation continues to remain a concern amid high energy prices. The core rate of the consumer price index, which excludes volatile food and energy prices, rose 0.2%, exactly as expected.

For the week, interest rates on government and conventional loans fell by about 1/8 of a discount point.

The Fed minutes Tuesday will be the most important event this week. Housing starts, leading economic indicators, and consumer sentiment data will also be important. The market may be volatile Wednesday as trading in bonds stops early ahead of the Thanksgiving Holiday Thursday. Trading Friday will also be shortened.

Mortgage Week in Review

Last Week In Review

“I CAN SEE CLEARLY NOW, THE RAIN IS GONE…” Johnny Nash hit number one on the charts with this classic tune in 1972…and 35 years later, Fed Chairman Big Ben Bernanke is singing the same tune, mentioning in comments last week that the Fed would be more transparent so we all can see their policies clearly.

The new, improved, and more transparent Fed is a far cry from the days of “The Cryptic One”…Former Fed Chair Alan Greenspan, who was famous for his hidden messages. After a Greenspan speech, many traders were left scratching their heads and wondering what exactly was said. In sharp contrast, Bernanke has been very clear and easy to understand.

More importantly, Ben has done a good job of keeping inflation under control. The latest read on inflation was tame for last month, as a large jump in energy costs were offset by meek automobile, housing, and clothing prices. This suggests that higher oil prices haven’t yet pushed up the prices of other goods overall.

But one topic that is still cloudy is the Fed’s next move on December 11th. The latest chatter from the “more transparent” Fed indicates that the Fed will not cut – but traders in the pits are betting the ranch on another quarter-point cut. One thing is very clear – this topic will be debated right up until the Fed makes the announcement.

Bonds and home loan rates saw quite a bit of activity in the holiday shortened week, but ended up exactly where they started.

Affordable Mortgage coming to a home near you…

Effective Monday, November 12, 2007 the DC Bond Program interest rate will be revised to 5.60% and 2 points!This is good news for purchasers who are looking to get their first place!The DC Housing Finance Agency is offering special programs to help make home ownership more affordable through a DC Bond Program.This special program is available to home buyers interested in purchasing in Washington, DC. Funds will be given on a first come, first-served basis so act quickly to see if you qualify.These programs offer below-market interest rateson a 30-year fixed rate loan to qualified candidates.Additional assistance programs may apply dependingon your qualifications.Find out more by calling Jordan Milne today.As a participating lender, he can help you determine if you qualify. After all, we’ve been making homeownership a reality for more than 110 years. An opportunity for homeownership you can’t afford to miss…Courtesy of Jordan Milne, BF Saul Mortgage 240-497-8533 

Washington Design Center Fall 2007 Design House Open

The Washington Design Center and DC Magazine have launched the annual Fall Design House. Called “a fashion house” the home pays homage to runway fashion by reinterpreting runway styles for home. Eight mid-Atlantic based designers have designed compelling living rooms, dining rooms, bedrooms, kitchens, sitting room, and art salon. Visit for your inspiration today!

 Free to the public, the house is located at the Washington Design Center. 300 D Street, S.W. Open Monday-Fridays 9am-5pm. Saturday & Sunday 10am-3pm.

Home Prices Up in D.C. Area

The Washington Business Journal reported November 9th that the average selling price for homes in D.C. and the close-in suburbs rose in October compared with last year, while those in further away counties like Prince George’s fell.The largest price jumps from September to October were in D.C., Arlington and Alexandria, according to a study released Friday by Rockville-based Metropolitan Regional Information Systems Inc.The average selling price for a house in D.C. rose nearly 6 percent to $499,526 as compared with the city’s prices in October 2006. Alexandria prices increased 6 percent to $490,476 and those in Arlington jumped 7 percent to $556,517. In Montgomery County, homes cost on average $317,221, up 2 percent from last year.The results defy the national market trend, showing there are still buyers in the market willing to pay a premium to be near D.C.”Prices continue to rise in the central jurisdictions,” said John McClain, a senior fellow at George Mason University’s School of Public Policy, in a statement. “By comparison, outlying suburbs of Northern Virginia have been particularly hard hit.”Selling prices in Prince George’s County dropped 9 percent to $317,221 compared with a year ago. Fairfax County’s prices feel 2.85 percent to an average $520,186.The suburbs further from D.C. may be more affected by the housing slump in part because they have the highest rates of new construction and new homes cost more than older homes, according to MRIS.

Weekly Mortgage Commentary

Mortgage bonds fell pushing rates higher last week. Rates were pressured by high oil prices and remarks by Fed Chairman Bernanke indicating inflation may increase. Fortunately significant stock weakness the latter portion of the week helped bonds recover some of the losses seen earlier in the week.

For the week, interest rates on government and conventional loans rose by about 3/8 of a discount point.

The consumer price index data Thursday will be the most important event this week. Retail sales, PPI, industrial production, and capacity utilization will also be important. The market may be volatile Tuesday as trading resumes following the Veterans Holiday.

Could Mortgage Rates Drop to 5%?

The manager of the world’s largest bond fund predicted Monday that the Federal Reserve “cannot afford” to let U.S. housing prices fall and will have to cut interest rates aggressively to prevent it from happening. “A Fed cannot afford to let homes go down by 10 to 15 percent like we saw in Japan,” Bill Gross, chief investment officer of Pacific Investment Management Co., said on CNBC Television. “We’ve only begun to see the pain from the standpoint of the home owner in terms of those monthly payments. Defaults and delinquencies will increase as we extend throughout 2007 and then into 2008.”

Gross expects the Fed to cut the federal funds short-term rate to 3.5 percent, which implies that the 30-year mortgage rates will come down to 5 percent to 5.5 percent. Source: Reuters News (11/05/07)

Four Washington Suburb Counties Rank Top Wealthiest Suburbs in Nation

According to a recent Washington Business Journal study four counties around Washington ranked in the top 10 list for the Wealthiest Suburbs in the country. Washington was the only metro area to have more than one suburb to make the list. Those counties are:

#2 - Fairfax County, VA
#4 – Howard County, MD
#5 – Loudon County, VA
#6 – Montgomery County, MD

To view the article view http://www.bizjournals.com/specials/slideshow/35.html.

DC First Time Homebuyers Credit due to expire December 31, 2007

Thinking of buying your first home in DC? You may want to purchase before the end of the year! The Federal DC First Time Homebuyers Credit for $5000 is due to expire at the close of the year. The credit has been in existence since 1997 thanks to Congresswoman Eleanor Holmes Norton. Heed this warning as advice. The credit has been renewed several times by Congress but is never guaranteed.

 The Norton homebuyer tax refund is credited with stabilizing the city’s population and stemming the near-catastrophic taxpayer flight of recent decades. The D.C. business tax incentives have assisted scores of small and large businesses, as well.  Employers located in many residential and downtown neighborhoods qualify for these attractive tax incentives, including tax exempt bonds for facilities and equipment and federal tax credits for wages paid to employees who are D.C. residents.  Norton said, “The wage credit is my favorite because D.C. is a virtual job machine for the region.  The suburban job base is so large that they overwhelm our small numbers and our residents lose out.  This credit levels the playing field and gives employers an incentive to look closely at D.C. residents and help make up for the denial of commuter tax authority here.”

Residents interested in the homebuyer credit can call Norton’s office at (202) 225-8050 or go to http://www.norton.house.gov/ for general information or contact the Internal Revenue Service at 1-800-tax-form or http://www.irs.gov/.  Information about the business tax credits is available at the D.C. Office of Planning and Economic Development at (202) 727-6365 or www.dc.gov.