market conditions

Housing Starts Increased 3.5% in May

Compliments of Joseph Griffard of J.P. Griffard and Associates

By Brian S. Wesbury – Chief Economist
 and Robert Stein, CFA – Senior Economist

Housing starts increased 3.5% in May to 560,000 units at an annual rate. They were also revised up in March and April, but are still down 3.4% versus a year ago.

The rise in May was mostly due to a 3.7% increase in single-family starts. Multi-family starts (which can be volatile from month to month) also increased 2.9% and are up 17.5% versus a year ago.

Starts rose in the West and South, but declined in the Northeast and Midwest. 

New building permits increased 8.7% in May to a 612,000 annual rate. Compared to a year ago, permits for multi-unit homes are up 40.8% while permits for single-family units are down 6.9%.

Implications:  Housing starts bounced back in May, coming in well above consensus expectations.  Last month we said the drop in starts in April was due to an unusually violent tornado season because, on net, the entire decline happened in the South. Outside of that one region, starts were up. In other words, last month’s report did not signal a future downward trend. And, as we anticipated, starts rebounded in May. We believe home building has finally hit a long-term inflection point and will be riding a substantial upward trend over the next several years, just to get back to a “normal” pace of new residential construction. Right now, the number of homes under construction is at the lowest levels on record (dating back to 1970). As excess inventories continue to be worked off, home building will need to increase substantially.  In fact, the pace of home building is so low that inventory reductions will continue at a robust pace even as home building begins its long-term recovery.  The charts to the right show that the upward trend has already begun for multi-unit homes. In other news this morning, initial claims for unemployment insurance fell 16,000 last week to 414,000.  Continuing claims for regular state benefits declined 21,000 to 3.68 million. Also, in other news, the Philadelphia Fed index, a measure of manufacturing activity in that region, fell to -7.7 in June from 3.9 in May. The index has dropped steeply since hitting a 25-year high back in March. We think this is due to supply-chain disruptions from Japan and that the manufacturing sector will rebound sharply in the months ahead.

Single Family Home Sales Update

F EBRUARY  NEW  HOME  SALES

Information compliments of Joe Griffard of J.P. Griffard and Associates

New single-family home sales declined 16.9% in February 
by Brian S Wesbury – Chief Economist
and Robert Stein, CFA – Senior Economist
Date: 3/23/2011

New single-family home sales declined 16.9% in February, coming in at a 250,000 annual rate, well below the consensus expected pace of 290,000.  

• Sales were down in all major regions of the country.
• At the current sales pace, the months’ supply of new homes (how long it would take to sell the homes in inventory) increased to 8.9 in February from 7.4 in January. The rise in the months’ supply was all due to the slower pace of sales; actual inventories were unchanged from last month, remaining at the lowest level since 1967. 
• The median price of new homes sold was $202,100 in February, down 8.9% from a year ago. The average price of new homes sold was $246,000, down 13.4% versus last year. 

Implications:  New home sales fell to the lowest level on record in February. The new home market is facing two major problems. First, there are far too many existing homes on the market, many of which are almost new and – due to foreclosures and short sales – selling at a steep discount to fair value (or even building costs). Second, despite low mortgage rates, credit conditions are very tight, particularly for buyers who don’t have very good credit scores and a 20% down-payment. Interestingly, about half of the new homes sold are already completed. By contrast, during the housing boom the vast majority of new homes sold were either still under construction or not even started. In other words, buyers today can easily forego the headache of waiting for their new home to be finished. Buyers who have access to credit or can buy with cash have never been in a better position. We expect new home sales to eventually increase substantially, but it will take several years to fully recover due to the large inventory of existing homes. In other recent housing news, the FHFA index, a measure of prices for homes financed by conforming mortgages, declined 0.3% in January (seasonally-adjusted) and is down 3.9% versus a year ago.  Also, the Richmond Fed index, a measure of manufacturing activity in the mid-Atlantic region, came in at a still robust +20 in March versus +25 in February.  Manufacturing keeps growing rapidly even as housing continues to languish.

This information contains forward-looking statements about various economic trends and strategies. You are cautioned that such forward-looking statements are subject to significant business, economic and competitive uncertainties and actual results could be materially different. There are no guarantees associated with any forecast and the opinions stated here are subject to change at any time and are the opinion of the individual strategist. Data comes from the following sources: Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, the Federal Reserve Board, and Haver Analytics. Data is taken from sources generally believed to be reliable but no guarantee is given to its accuracy.•

7 Fixes to Boost Your Home’s Value

It’s time to tackle home-improvement tasks you put off during the hot summer weather. There are lots of relatively simple and affordable things you can do to give your home a face lift. Your house will look better and your family will feel happier in it. As a bonus, you will also boost your home’s value.

1.  Add the perfect touch with paint

“A fresh coat of light paint on the interior walls can work wonders,” says Kelly O’Ryan of Coldwell Banker in Lexington, Mass. “Paint will always clean up dirty walls and give a room a better image.”

Although dark colors can be stylish, O’Ryan advises going for lighter shades to brighten things up in warmer seasons. Karol Nickell, editor-in-chief of Fresh Home magazine, offers this advice: “Smart color selections can make a small or cramped room appear dramatically larger. In the foyer, make a good first impression with similar tones mixed at different strengths. In the living room, a bold color paired with a white ceiling makes the room seem taller than it really is.”

2. Focus on the flooring

Good, well-maintained flooring can set a positive tone for the entire interior of your home.

“Like paint, flooring can help create an impression of spaciousness and airiness,” Nickell says. “Whether it’s a floating laminate floor, tile or a natural ‘green’ alternative, lighter-tone flooring can make formerly drab areas appear modern and streamlined.”

3. Lighten up the accents

“Summer (or fall) is a great time to change your window treatments and area rugs,” O’Ryan says. “Once again, dark colors are associated with winter months; a lighter, airy curtain will give any room a brighter and more pleasant appearance. If your floors are in great shape, you may want to remove the area rugs and leave the floors bare. Eliminating the rugs will open up the room and make it appear larger.”

4. Update the windows

Old windows aren’t just ugly — they can also let your heat and air conditioning escape, costing you big bucks.

“While window treatments are typically a focus in many home makeovers, the actual windows themselves are often overlooked,” says Victor Gonzales Maertens, an energy efficiency expert with Lennox Industries. “However, upgrading old single-pane windows with new Energy Star-qualified windows can save an average of between $126 and $465 per year on energy bills, and some new windows qualify for the federal tax credit.”

5. Weed out bad landscaping

Neglected bushes and overgrown lawns can kill a home’s curb appeal. Don’t worry – you don’t need a green thumb to spruce up your yard.

“Clean up the site by removing any dead or dying plants, branches and flowers,” suggests Jennifer Hoxsie, landscape designer with Greenhaven Landscapes in Lake Bluff, Ill. “Prune overgrown shrubs along the home’s foundation so they are below the windowsills and off walkways and driveways. Fill empty holes with site-appropriate plants. Have all the planting beds weeded, edged and mulched for a clean, crisp look. Finally, weed and fertilize the lawn and provide supplemental watering if necessary to maintain a lush green carpet.”

6. Add decorative touches to the yard

We’re not talking about plastic pink flamingos or creepy garden gnomes. Taylor Graves of CertainTeed building products says, “Adding benches, steppingstones, fountains or other garden accents could go a long way in making your outdoors a visually appealing and welcoming environment.”

7. A few final exterior touches

While you’re outside, a few other quick moves can make a big difference.

“Add color with paint to outdoor features such as window frames, decorative beams and porches,” says Kurt Gleeson, national vice president of sales for RealEstate.com. Stick with calm colors that complement the home’s exterior color scheme, avoiding shocking shades and drastic contrasts.

“Clean external brickwork or concrete slabs with a liquid masonry cleaner to make them look new and neat. Power washing can give external stonework, walkways and front stoops a quick makeover.”

Spruce things up
By investing a few bucks and some elbow grease, you can boost your home’s image – and value – quickly this fall

Source: Investopedia.

Five Tips to Make House Hunting More Enjoyable

As the housing market continues to attract more buyers and sellers, finding the perfect home can required a lot of time and effort.  Here are my Five Tips to Make House Hunting More Enjoyable:

1.  Don’t Set Too Many Appointments for One Day – While you may believe that visiting as many properties as possible in one day will help you get closer to your perfect home, this strategy may actually cause you to miss seeing the home of your dreams.  Allow yourself enough time to explore each aspect and room at length, even if it’s just to allow for comparison with the next home on your list.  If you do find something of interest, you will want to have ample time to fully tour each room in greater detail.  This is your biggest investment; make sure you allow yourself the time to be sure it meets all your needs.

2.  Comfortable Attire – Casual dress is best when touring potential homes.  Not only comfortable dress for the season, but slip-on shoes or socks might be in order for homes with new carpet or flooring who may request you remove your shoes during the tour.  Comfortable shoes are a must – you’ll be going up and down stairs and doing a lot of walking, not to mention reaching, or bending to examine all the high and low spots.

3.  Ride Together – When touring multiple properties in one day, car pooling is the way to go – this also ensures that everyone stays together and is able to see the home at the same time. Even better, if you’re the passenger, you can focus on the neighborhood around each home rather than having to watch for street signs and house numbers.

4.  Considering the Area – Make sure you take notice of the area surrounding each home you’ll tour.  How far is it to the closest shopping area, what neighborhood amenities are there?  Where are the nearest schools?  Are there activities within walking distance; how far will you be from your job; and does there seem to be an unusually large number of homes on this block that are for sale? 

All of these considerations play into the benefits this home has to offer you even before you set foot in it.  Making note of the area surrounding the house can help you determine whether or not you want to make an offer.

5.  The Nose Knows – Generally speaking, if there’s a bad odor inside or outside the home you will want to find out why.  Also, if the home seems overpowered with the smell of fragrant candles or potpourri, this could be the seller’s way to mask a deeper problem.  If you smell mildew or mold, this can indicate a larger problem that could cost thousands of dollars to repair.  Pet or smoke smells can dissipate over time, but if you’re interested in a home with a strong odor, take the time to hire a professional home inspector to determine its cause before you close the sale.

Why Setting the Wrong Asking Price Could Cost You The Sale

Setting the right asking price when selling your home is one of the most important factors in getting your home sold.  Every seller wants to get the best price possible, but losing sight of  fair market indicators can cause serious repercussions.

In many cases, sellers believe pricing high initially offers them the opportunity to negotiate during the contract phase.  However, overpricing in this manner may actually force you to settle for a lower price than you would have received by not setting a realistic asking price based on current market statistics.

Overpricing Results Could Include;

Fewer Buyers Considering Your Listing – Today’s buyers do a lot of their initial research for a new home on the Internet, and in most cases will set a price range which represents their limit for the listings they will consider reviewing.  If your home is priced outside their range, even by just a few thousand dollars, it may never be considered.  .

Most buyers will then contract for the services of a buyer’s agent who will help them develop a strategy to match their needs within their price range.  While some buyer’s agents will consider showing homes slightly above the buyer’s maximum price level, they rarely go too far beyond that threshold.

Fewer Showings – If the Agent working with the homebuyer feels your home is overpriced they will steer the client away from a showing for fear of wasting their client’s time.

Helping Your Competitors – It may not have been your intention, but your home’s higher asking price will make other homes of equal size and quality look like a better value by comparison.  Agents representing those sellers will use the pricing difference as a selling point when featuring their listings to interested buyers.  You may find you have little to no interest until most of the other homes in your area have already been sold.

Extended Days on Market - If your home is priced higher than what buyers are willing to pay, your home will be on the market for a longer period of time.  This creates the idea that you are ‘overpriced’ in the community making buyers less interested in working with you.  Even if you drop the price later, this will only leave a negative impression of your listing, and may cause you to have to make even bigger concessions in pricing further down the road.

Difficult Negotiations – Some buyers use a higher listing price as leverage during the negotiation process. If the home doesn’t have the updates or features that warrant the higher asking price, buyers may think you don’t know the market, are not motivated to sell, or are simply leaving yourself room to negotiation.  If they believe this, they are likely to make a very low offer to see how low you will go.

Appraisal Problems – Even if you find a buyer to make an offer at your asking price, the deal may fall through if the lender’s appraisal of your home’s value falls short of the contract price.

An appraiser sets your home’s value on what similar homes in your area have sold for within the last six months.  If the appraisal is below the contract price, the lender will only approve the loan for the lower amount, forcing you to reduce the price or losing the deal and putting your home back on the market.

What This Means in Today’s Market

Because of today’s market, and the fact that home prices have dropped so dramatically, it can be more tempting to price your listing higher than the market will bear, or be influenced by the purchase price you made during the real estate boom.

This is an extremely flawed strategy since there is a much smaller pool of highly motivated and qualified buyers who are much more educated about the market and current trends.  Most buyers are unwilling to gamble and overpay for a home, knowing that the rate of appreciation may be slower than in better times.

Pricing to the Market

Remain objective when pricing your home and do your research to closely price yourself similarly to other properties in the area.  Visit open houses, look at recent sales, and make your focus more on selling your property quickly at the best possible selling price.

Correcting a High Market Price

If your home has had few offers or showings, take some time to be sure it is priced correctly.  Take stock of recent sales, especially those that have sold since your listing went on the market, or look to get feedback from any agents who have shown your property to their buyers.  If those buyers purchased other homes, ask why those buyers chose the home they did, and why yours was not in the running.

The best way to keep the momentum going is to quickly adjust the asking price to meet the comparables in your area.  Depending upon how long it has been on the market may dictate whether or not you may need to consider additional updates or repairs to make your listing more attractive to potential buyers.  To create additional interest you may even need to consider pricing your home slightly less than your competitors.

Post Dispatch Features CBG President’s details on Tax Credit Deadline

Tax Credit Deadline – April 30, 2010

Ask the expert: Jim Dohr, president, Coldwell Banker Gundaker

ST. LOUIS POST-DISPATCH

04/23/2010

With the federal tax credit for first-time home buyers expiring this month, what should homeowners do quickly to prepare their houses to make them stand out to people taking advantage of the credit?

Selling in today’s market can be intimidating, especially for those who have outgrown their starter home and are ready to sell for the first time. A likely market for such homes is comprised of first-time buyers who hope to have a house under contract before the tax credit expires next Friday.

A crucial step first-time sellers must take is completion of needed repairs. Take the time to make the glaring as well as minor improvements a home needs to make it ready to sell. Having a pre-inspection done could avoid any last-second surprises when a potential buyer has an inspection done.

Price to sell. Gauging a home’s value is different now. A real estate agent will pinpoint a home’s market value based on its features, location and comparable listings in the area. Setting the price too high can leave a home languishing on the market. A too-low price will deprive the seller of well-earned equity.
Be patient. Once a home is listed, the temptation is to hope every looker is the buyer. Even with the tax credit set to expire, the seller’s agent needs time to allow a potential buyer room to make a decision.

Still, with only a week until the $8,000 first-time home buyer and the $6,500 existing homeowner buyer credits expire, time is running out on opportunities that may never be repeated.

For buyers to be in a binding sales contract by April 30, they need to act almost immediately. That means this is also a prime opportunity for sellers.

Stop Double Taxation in Missouri – Protect Our Homes

There is a bill concerning future homeownership that I wanted you to be aware of.  Congress is trying to get us to pass a bill using a double negative format.  In other words, vote YES to say NO to this critical tax increase. 

If this bill passes, there will be a 4% tax to sellers who have sold their home.  This sill have a huge impact on the housing market and will make us take a step backward, not forward. 

Please pass this along to everyone on your list – together we stand strong and will not allow this to happen! 

Find out more here:  http://www.yestosavehomes.com/ 

Join Us Today 

Join with thousands of other Missouri residents and sign our pledge today to help mobilize friends and colleagues in support of a ballot initiative in 2010 to protect your property from a real estate transfer tax.

A real estate transfer tax :

• is a form of double taxation;
• lowers homeowner equity;
• negatively impacts the process of buying and selling a home; and
• unfairly targets property owners and lower income residents alike.

We need your vote!  There is a Constitutional Amendment on the November 2010 ballot in the State of Missouri that will prevent the State, Counties and other political subdivisions from imposing any new taxes on the sale or transfer of homes or any other real estate.

A yes vote means NO TO TAXES! 

Find out more here:  http://www.yestosavehomes.com/

Top 9 Reasons NOW is the Best Time to List Your Home

Most information you see around this time of the year is that the real estate market slows down during the holidays or over the colder months.  I have found that activity is much more focused during this time, which creates some distinct advantages for both buyers and especially for sellers. 

Here are my Top 9 Reasons to List Your Home NOW! 

1.     Fewer homes are on the market, so you’re not competing with as many other available homes.

2.     Many times you can get a better sale price for your home because there are less homes on the market.

3.     Buyers have shorter work schedules and more available times to look for homes.

4.     Homes ‘show’ better with the warmth of homes during the colder months.

5.     The Laura MacDonald Team are experts at helping you stage your home to get buyers emotionally attached.

6.     Buyers are more focused and serious on making a decision more quickly.

7.     Many relocation and transfer buyers traditionally come into the market in January, ready to purchase their new home.

8.     A good agent will be able to manage showings so as not to disturb you during family events.

9.     Get more for your home by listing with The Laura MacDonald Team – Our sale to list price ratio is a whopping 97.85%.

Free Seminar on Tax Credits and Lending Changes

Confused by the Tax Credit Options for Home Buying? 

Join us at The Lodge at Des Peres (12325 Manchester Rd., 63131) on Thursday, February 25, 2010 from 5:30 – 7:30 PM for this FREE and interactive seminar where you’ll learn: 

• How to qualify for the Extended Tax Credit of up to $8,000 for First Time Buyers
• $6,500 Tax Credit for ‘Move-up’ Buyers
• Lender changes affecting your loans

Hosted by:  The Laura MacDonald Team http://www.thelauramacdonaldteam.com, and 

 Joe Lager, VP of Pulaski Bank http://www.pulaskibankstl.com 

Space is limited and registration is required.  Call 314-605-2896 TODAY to register!

Free Seminar on Home Improvements

How to Build Value in Your Home!

Join us at The Lodge at Des Peres (12325 Manchester Rd., 63131) on Thursday, January 21, 2010 from 5:30 – 7:30 PM for this FREE and informative seminar where you’ll learn:

• Tips on home updates
• Home improvements that build value in your home
• Color transforamtions for your home
• Discover if the time is right, or not, to consider a move

There will be door prizes and a chance to win a FREE Home Color Transformation (a $300 value).

Sponsored by:  The Laura MacDonald Team http://www.thelauramacdonaldteam.com and

The Design Source Limited http://www.thedesignsourceltd.com/new/index.html

Space is limited and registration is required.  Call 314-605-2896 TODAY to register!

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