Just released HMI (Home Builders/Wells Fargo Housing Market Index) declined one point to 15 in June from 16 in May.

NAHB Chairman Joe Robson noted “the outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability”. “However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November, a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans.”

Rates on 30-year mortgages touched record lows (4.78%) in April, they have climbed since then on hints of the U.S. recession, now in its highest level (5.59%) since November.

Although the swollen stock of new homes has been shrinking; in April the inventory of homes available for sell fell 4.2 percent to 297,000, the lowest level since May 2001; Home builders remain cautious about the outlook for the next six months for most potential buyers are uncertain about the economy and their income security while the others are still unable to sell their existing homes.

In the meantime, Home Builders remain hopeful that potential homeowners with solid credit history would been nudge off the fence by the possible end of discounted mortgage rates and tax credit.

According to National Association of Realtors, existing US Real Estate sales in April rose 2.9 percent to a seasonally adjusted annual rate of 4.68 million units in April.  Despite a modest increase from March 2009 figure, it is still 3.5 percent below the level in April 2008. The national median existing-home price for all housing type was $170,200 in April, which is 15.4 percent below 2008.  Distressed properties accounted for 45 percent of all sales in April, continue to downwardly distort the median price.

Lawnrence Yun, NAR chief economist pointed out the “most of the sales are taking place in lower price ranges and activity is beginning to pick up in the mid-price ranges, but high-end homes remain sluggish”.

The deeply discount prices on foreclosure properties and $8000 tax credit are attracting many first time home buyers with good credit and long term plans; particularly in California, Nevada, and Florida.  

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low of 4.81 percent in April from 5.00 in March.

Total housing inventory rose 8.8 percent to 3.97 million existing homes available for sale, which represents a 10.2 month supply at the current sales pace. Compared with a 9.6 month supply in March. The NAR suggested that the rise in inventory was largely seasonal from sellers entering the spring market and despite this slight increase; the inventory over the past few months has remained consistently lower in comparison with a year earlier.

The U.S. real estate market is in the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down prices. The single-family home prices according to the Standard & Poor’s/Case-Shiller Home Price Indices released on Tuesday showed prices in the first quarter of 2009 dropped at a record annual pace of 19.1 percent.

Is the US Real Estate market about to rebound?

A better-than-expected consumer confidence number sent the stock market higher on Wednesday. This may just be the sign that for many potential home buyers that have been staying on the sidelines and waiting for prices to hit bottom and for the economy to stabilize.

The Standard & Poor’s/Case-Shiller Home Price Indices is a lagging indicator especially since the report was based on March numbers. The index did show a constant leveling off of home price declines. The U.S. consumer confidence soared in May to its highest level in eight months could indicate that Home Price Index reports to be released in the up coming months could also reflect the same soaring consumer confidence.

Although the confidence report only showed 2.3 percent intend to buy homes over the next six months, the first sign of a confidence turn around is likely to be followed but a slow upward trend for bigger tickets items such as homes. Many consumers will find the current low interest rates and affordable US real estate prices hard to resist once a sense of confidence has returned to the US market.

The stock market suffered a sudden drop in the early trading this morning due to  data released by The Commerce Department. The department announced housing starts fell 12.8 percent to a seasonally adjusted annual rate of 458,000 unites, the lowest on the records dating back to 1959.

New building permits, which projects a sense of future construction, dropped 3.3percent to 494,000 units, the lowest since records started in 1960.

For the amateur investors who do not devote time to consider a wide range of data and news may see the above announcement as catastrophic. The seasoned investors who follow and analyze current market data from all around would simply understand the announcement was within expectation and not a cause of great alarm.

The well informed investors are well aware that although the US real estate market may be showing a faint heartbeat for recovery, but the excess inventory in unsold homes of over 2.5 million units and the ever increasing number of foreclosure property would discourage cash strapped home builders  from attempting to build more new homes in the foreseeable future. Hence the drop in decline in New Home Permits is logically.

This graph from Freddie Mac clearly illustrates the volume of excess unsold homes alone would take more than several months for this weak market to digest. Government incentives and slightly improved mortgage liquidity will take its time to deliver any effect on this never been before crisis.  

The New York Post reported the Chinese Ministry of Commerce will be bringing 400 executives to the U.S. and Canada next month to shop for distressed assets. Any significant buying by Chinese investments would further bolster Beijing’s presences in the US economy.

While it remains unclear which specific companies might be targeted, but it looks like the Chinese have strong interest to take advantage of the weakened North American auto industry.

Last month the “U.S. Real Estate Investment Expo” in Beijing attracted thousands of serious potential private investors looking for discounted real estate in the US. Although the first quarter export figures of China dropped more than 10% in the first quarter of 2009, but its GPD remains stronger than most other countries in the world.

This could be a sign that smart investments are sensing the timing to enter the U.S. real estate market is coming sooner than some economist many predict.

Industry experts and our Central Showplace spot poll results are consistent as many conflicting opinions still exist:

 DONALD TRUMP

“It’s one of the best times to buy real estate”, said Donald Trump, chairman and president of the Trump Organization.

“It’s an amazing time to buy,” Trump said. “This is the best time I’ve ever seen to buy both real estate and probably other things. This is one of the great opportunities.”

SAM ZELL

Billionaire investor Sam Zell made what is acknowledged to be one of the best-timed investment decisions ever by selling his real estate empire at the peak of the market in February 2007.

Zell, sold his holdings in the U.S. office market by selling Equity Office Properties Trust to Blackstone Group LP for $39 billion including debt in the biggest leveraged buyout at the time. The sale earned Zell approximately $900 million.

Zell, chairman of Chicago-based apartment REIT Equity Residential, said there are signs the housing market may be starting to recover.

The single-family housing market is starting to “bottom out” and “this summer we’ll see equilibrium,” he said.

MARK FLEMING

“We expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices,” Fleming said in the report. “Decreases are now being driven by rising unemployment and a high volume of distressed home sales.” Mark Fleming, the chief economist for First American CoreLogic Inc.  in Santa Ana, California.

The percentage of all U.S. homes empty and for sale, known as the vacancy rate, fell to 2.7 percent in the first quarter. It hit an all-time high of 2.9 percent in the first and fourth quarters of 2008, the Census Bureau said.

 DANN ADAMS

More U.S. consumers are falling behind on their mortgages, an indication that the housing market has yet to hit bottom.

Dann Adams, president of U.S. Information Systems for Equifax, reported that 7 percent of homeowners with mortgages were at least 30 days late on their loans in February, an increase of more than 50 percent from a year earlier.

He also said 39.8 percent of subprime borrowers were at least 30 days behind on their home mortgage loans, up 23.7 percent from last year.

“I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that despite a recent burst of relatively positive news that has fueled hope that the U.S. housing market has turned a corner” Adams said.

 SPOT POLL RESULTS

Central Showplace Spot Poll Results seem to reflect this optimistic but cautions outlook:

With the slow down of the US economy and the strength of the Canadian Loonie, it is a good time for Canadians to buy US Real Estate?

63% - Yes, now is a good opportunity to buy.

27% - Yes, but I’m waiting for prices to fall more.

10% - No way, it’s a bad time to buy.

The decline of Real estate values across America has affected the price of homes in virtually every city in America. Homes in many areas are now being offered at prices that have not been seen for years.

Stories about the bursting housing bubble look for an explanation. These stories point to the lack of available credit that has in turn resulted in a lack of financing for real estate, they point to a faltering economy with major job losses being announce every month, they point to a lack of buyers and describe a real estate market that was overbuilt and over priced that was spurred by easy credit and over-zealous buyers and sellers. Whatever the reason, the simple fact is, there has been a serious erosion of value.

While the market might be priced right for buying that second home in the US, it is still important to realize that looking for the house that fell the most in value may not be the right path to finding the best value. In fact, you might find that the home with best value is not in an area that has been crushed.

“The three most important words in real estate are; location, location and location!”
Will Rogers

This is sage advice and it still holds true today. The very first thing that you should want to determine in your search is the location for your second home. We receive calls every day from people that simply say; “I want a place in Florida.” Well, Florida is a pretty big state and has a lot to offer so it is important to be able to narrow that search down to at least a city and then to at least a neighborhood.

“It’s how you live!”
Artist - Point of Grace

Almost everyone will agree that where you want live is important, but how you want live will eventually weigh heavy on your final choice. When you are looking for that second home, you should be able to list the amenities and activities that are important to you.

“If it sounds too good to be true, it probably is”
Quote: Almost everyone you know!

There are not that many things that actually reflect their true value like real estate does. The value of real estate is constantly in flux and determined by a cocktail of influencing factors. There are indicators that are easy to find that will report on the market; like amount of time it will take for the current demand to absorb the current number of homes that are being offered for sale, the average number of days that a home is staying on the market before it is sold and the relationship between the asking price and the selling price of the home. There are other factors like the actual price of the home, the availability of financing and the total monthly cost of ownership that also influence the demand and eventual value of a home. The condition of the local economy will also influence the value of a home. Is the local economy creating jobs or losing jobs and what kind of paycheck is associated with the jobs that make up the work force? There is a lot to take in.

The bottom line is that just because the price of a home has fallen to an all time low does not make it a great buy. Location is still the most important factor when you are searching for that second home

By: Harold Green

Central Showplace

The Pending Home Sales Index in the South rose 8.5 percent to 93.2 in March and is 7.7 percent above a year ago. In the West the index increased 3.9 percent to 93.1 and is 1.7 percent higher than March 2008. The index in the Northeast fell 5.7 percent to 59.5 in March and is 24.1 percent below a year ago. In the Midwest the index slipped 1.0 percent to 82.3 but is 8.2 percent higher than March 2008.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in March, rose 3.2 percent to 84.6. February’s pending home sales index was slightly revised down to 82.0 from 82.1. Compared to the same period a year ago, pending home sales rose 1.1 percent.

First-time homebuyers looking for bargains snapped up about half of all homes sold last month. Much of this is attributed to first-time buyers taking advantage of favorable affordability conditions, including an $8,000 tax credit.

“Homes are more affordable than they’ve been in years and mortgage rates are near record lows”, said Lawrence Yun, the National Association of Realtors chief economist. “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” said Yun.

The median sales price in March was $175,200, higher than February’s median price of $168,200.

The National Association of Realtors (NAR) estimates that distressed sales have accounted for 45 percent of existing home sales in recent months, which is one reason why prices have fallen so sharply. The combination of falling home prices and lower mortgage rates has made home ownership much more affordable. The NAR Housing Affordability Index has surged more than 50 points over the past 6 months and is at an all-time high.

In Florida, nearly two-thirds of all sales are foreclosures and short sale properties, many of which are not counted by real estate agents since they are sold at auction or by banks directly to home buyers.

A study conducted by the National Association of Realtors (NAR) for the Realtor Association of Greater Miami and the Beaches (RAMB) provides a profile of homebuyers in Miami-Dade and Broward counties.  The 2008 Profile of Home Buyers and Sellers provides a comparison of the current state of the South Florida real estate market, and how it compares to the rest of the state and the nation.

• A significantly higher number of South Florida home buyers were born outside the U.S.  44 percent of South Florida buyers were not born in the U.S. compared to 17 percent in Florida and 9 percent in the U.S.
   
• The median age of South Florida homebuyers is 41 compared to 43 in Florida and 39 for the entire U.S.  For first-time homebuyers, the median age in South Florida is 34 compared to 32 in Florida and 30 for the entire U.S. 
   
• The 2007 median household income of homebuyers in South Florida was $74,000 compared to $68,500 in Florida and $74,900 in the U.S.