Why Wait Until Spring To Sell

 

We have been happy to report that house prices have increased over the last several months. However, we have also warned that month-over-month prices since 2009 have softened in the fall and winter. We are beginning to see that situation repeat itself in 2012.

CoreLogic, in their latest House Price Index revealed that prices increased by 5% over last year. Yet, prices actually dropped .3% month-over-month (m-o-m). Analytics firm FNC, in their latest Residential Price Index, reported that prices increased 2.3% over the last year but prices remained unchanged m-o-m.

What Does This Mean for Sellers?

Sellers should be excited about the headlines showing price appreciation across the country for the first time in a long time. However, if you want to sell your home in the next 6-8 months realize that there is a better chance that prices will soften than appreciate during that time span. Waiting to the spring for a better price probably makes little sense.

Is It Time to Buy A Rental Property?

Yesterday, I discussed rising rents and their impact on the long term housing expense of tenants. Today, I want to look at the opportunities that single-family rental units present for the small investor.

With house prices inching up and rents skyrocketing, this may be the perfect time to invest in single family residential real estate.

If you do, you won’t be alone. According to the National Association of Realtors’ (NAR) 2012 3rd Quarter Metro Area Report:

“Investors…accounted for 17 percent of all transactions in the third quarter.”

More than one out of every six houses sold are purchased by an investor. In the most recent MarketPulse Report by CoreLogic, their Principal Economist, Sam Khater, wrote on the subject in a story titled Roll Tide, or The Rise of the Single Family Rental Market. The major takeaways from the article are:

§ The single-family rental market remained very active in the late summer of 2012 with increases in demand, tightening inventory and rising rents.

§ Nationally, rental leasing volumes were up every month for two years. In August, they were up 7% over last year.

§ Supply was down 11% over the same period.

§ This tightness in supply has caused rents to increase.

§ Rent growth is expected to increase at a ‘strong clip’ late in 2012 and in 2013.

If a private investor is looking for a great hands-on opportunity, perhaps purchasing a single-family house to rent out makes sense. Give me a call at (910) 617-7654 to uncover the many opportunities in our area.

Where Are Mortgage Rates Headed?

I am often asked where I think mortgage rates are headed over the next year. The best people I can go to on this issue are the people who deal with it on a daily basis – The Mortgage Bankers Association (MBA). Here is what was reported by MarketWatch in a recent article:

“After reaching record lows in 2012, mortgage rates are expected to creep up slowly in the year ahead, the Mortgage Bankers Association predicted.

Rates on the 30-year fixed-rate mortgage are expected to average 3.8% in the fourth quarter of 2012, rising to 3.9% in the first quarter of 2013 and eventually rising to an average 4.4% by the fourth quarter of next year.”

If the MBA is correct, mortgage interest rates could inch up almost a full percentage point in the next year.

Where Are House Prices Headed?

I am often asked where we think home prices are headed over the next year. Recently, several groups have stepped forward and given their projections as to what level of appreciation we can expect by the end of 2013. Here is what they said:

§ Demand Institute Study: 1.75% appreciation

§ Urban Land Institute: 2%

§ Home Price Expectation Survey: 2.44%

§ National Assoc of Business Economists: 2.8%

§ Wall Street Journal’s Survey of Economists: 3.25%

All five groups are calling for home values to rise through the end of next year. However, none are projecting that we will hit historic annual appreciation levels (3.6%) that existed prior to the housing bubble.