Monday, August 6, 2007

Pending home sales index shows surprising gain in June, suggesting more deals to buy houses are in pipeline to close.

By Chris Isidore, senior writer
August 1 2007: 10:48 AM EDT

NEW YORK ( -- Home sales could see an increase in the coming months, as the latest reading on the state of the battered U.S. real estate market from an industry trade group showed surprising strength.

The National Association of Realtors' pending home sales index jumped 5 percent to 102.4 in June, the group announced Wednesday. Economists surveyed by had forecast the index would slip 0.6 percent after a revised 3.7 percent drop in the May report.

It was the biggest increase in the index in three years. But that is up from a May reading that matches the second lowest on record. Only September 2001, the month of the terrorist attack, had a weaker pending home sales reading than May.

And even with the increase, the June reading is 8.6 percent below the June 2006 level, showing that there is still weakness in the market.

The index was created in 2001 to be a more forward-looking reading on home sales than the group's existing home sales report, which charts sales at the time of closing. The pending home sales index tracks when a sales agreement is signed, generally a month or two ahead of closing.
Even the Realtors weren't willing to state that the housing market has turned around, although it did say the pickup in the index is good news.

"It is too early to say if home sales have already passed bottom," said Lawrence Yun, the senior economist for the group in the report. "Still, major declines in home sales are likely to have occurred already and further declines, if any, are likely to be modest given the accumulating pent-up demand."

The report is a rare island of good news in a sea of other reports showing weakness in the housing market. Tuesday, Standard & Poor's/Case-Shiller Home Price Index showed further declines in home prices and values, and Wednesday, the Mortgage Bankers Association reported that applications for new mortgages fell to a five-month low. Other recent reports have shown declines in both existing and new home sales.

Still, the report was good news for worried U.S. financial markets, which have been tumbling for much of the past week on worries about housing and rising mortgage delinquencies and defaults. U.S. stocks, which had been lower before the pending home sales report, turned higher immediately after its release, but then quickly gave up those gains.

Friday, July 13, 2007

Home Prices Expected to Rebound in 2008

Sorry I haven't posted as much the last week or so. Been kind of busy working on real estate deals. But this article came by my desk and thought it was worth passing on.

By Associated Press

WASHINGTON - The prices of existing and new homes are expected to bounce back next year after a dreary 2007, a real estate trade group said Wednesday.

The National Association of Realtors also said it expects existing-home sales to rise to nearly 6.4 million in 2008, up from the 2007 estimate of more than 6.1 million. Nearly 6.5 million existing homes were sold in 2006, the association said.

As for new homes, sales are projected at 865,000 in 2007 and 878,000 next year, but the 2008 projection would still be down more than 20 percent compared with the nearly 1.1 million new homes sold in 2006.

More than 1.4 million housing starts, including multifamily units, are forecast this year and in 2008, but that is down from 1.8 million last year.

Existing-home prices are expected to gain 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800, the according said. The median new-home price should rise 2.2 percent to $222,700 next year after a 2.6 percent drop to $240,100 in 2007.

"Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008," Lawrence Yun, NAR senior economist, said in a release. "Buyers now have an overwhelming advantage given the wide selection of homes available in many markets. But with profit margins coming under pressure, homebuilders will limit new construction well into 2008."

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Tuesday, June 26, 2007

The rich: Still bullish on real estate

Unlike many Americans, the wealthy still think their homes are great investments.NEW YORK ( -- The very rich are different from you and me: they don't seem to be too worried about the current housing slump. At least that's what a new study released Monday found.

More than half of affluent homeowners expect their property value to appreciate at least somewhat during the next year, according to the Coldwell Banker Previews International Luxury Survey. A tenth of them expect significant gains.

The study polled 301 homeowners with million-dollar homes (two million dollars in California) and more than a million dollars in investable assets.

"These are very successful people and they still think that real estate is a good investment," said Jim Gillespie, Coldwell Banker's chief executive.

Overheated housing markets have cooled down

The results run counter to most industry watchers' predictions for a continued slump in the overall market. Some forecasts see home prices dropping about 8 percent for the two-year period through the end of 2008.

Part of wealthy home owners' optimism, according to Gillespie, is that the luxury market has held up nationwide during the recent slump.

It may also confirm a basic contrarian investing impulse found among many of the wealthy: the best time to buy is when others are selling. 40 percent polled say they may buy a second home this year.

Looking ahead, 36 percent of the affluent expect the price of their homes to increase significantly over the next five years and 58 percent expect at least some gain, according to the survey.

Women are even more optimistic, with 61 percent expecting some price increase during the next 12 months compared with 50 percent for men.The wealthy also appear to want more space; 61 percent of those moving this year plan to buy a bigger house.

Gillespie pointed out, with some amazement, that almost half want to make the move because of the way their space is designed. "They're living in multi-million-dollar homes and they don't like their floor plans?" he asked.

Their new spaces are likely to include many features that were once very rare in American homes.

"What constitutes a luxury amenity is evolving," said Gillespie. "High-end kitchens and entertainment rooms now are givens."

Rate woes: the latest hit to home values

The survey found that 72 percent of the rich already have designer kitchens, 63 percent maintain formal landscaped gardens and 34 percent have wine cellars. Some 72 percent of their houses boast rooms devoted to entertainment. 30 percent of those report having rooms with theater-type seating.

The number one next must-have amenity, according to the study, is heated floors. 23 percent of wealthy homeowners already have them, and another 21 percent are considering their addition.

Other desirable add-ons include tennis courts (19 percent), kitchens in the master suites (16 percent) and putting greens or small golf courses on the property (16 percent).Many of the arriviste amenities - boat docks, gyms, indoor pools - have to do with sports activities and maintaining a healthy lifestyle.

Retiring in style

The survey also questioned the wealthy about they want to spend their retirement. Chief among them were travel with 87 percent of females and 84 percent of males wanting to indulge in foreign travel and 77 percent and 71 percent planning on domestic trips.

Spending time with families was big for both sexes (64 percent men and 63 percent women) and the majority hoped to remain physically active pursuing sports (65 percent of men and 76 percent of women).

A significant proportion can't seem to picture themselves out of harness: 19 percent of men and 16 percent of women plan to start a new business after they retire.

Some 54 percent of men and 67 percent of women said their main activity in retirement is to just enjoy life.

With the luxurious homes they already own, that shouldn't prove too difficult.