NAR mailed an eight-page questionnaire in July 2009 to a national sample of 120,038 home buyers and sellers who purchased their homes between July 2008 and June 2009, according to county records. It generated 9,138 usable responses.

“Tax incentives, record high affordability conditions and a pent-up demand brought a record share of first-time home buyers into the market,” he said. “These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up – they absorb inventory, free existing owners to make a trade and stimulate related goods and services.”

“It’s interesting to note the last cyclical peak of first-time home buyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession,” according to Paul Bishop, NAR vice president of research.

The number of first-time home buyers rose to 47 percent of all home sales from 41 percent of transactions in last year’s study, and was the highest on record dating back to 1981. The previous high was 44 percent in 1991.

The profile shows the median age of first-time buyers was 30 and the median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study, and plans to stay in that home for 10 years.

The Pending Home Sales Index based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9. The gain from a year ago is the largest annual increase on record, and the index is at the highest level since December 2006 when it was 112.8.

“What we’re witnessing is a rush of first-time buyers trying to beat the expiration of the tax credit at the end of this month,” he said. “Home values will stabilize sooner rather than over-correcting. That, in turn, will mean wealth stabilization for the vast number of middle-class families and lay the foundation for a durable economic recovery.” according to Lawrence Yun, NAR chief economist.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales.

A forecast for housing and the economy will be released November 13. Existing-home sales for October will be reported November 23 and the next Pending Home Sales Index will be on December 1.

Canadians owning a second home in Florida will find that Short Term Vacation Home Rentals to be a great way to subsides the cost of owning a property. Canadians typically like to spend winter months in Florida, while Americans travel to Florida during summer periods while kids are out of school. A good short-term rental program can be the perfect fit, but it does require some knowledge.

Here are a few pointers to select a property that is desirable to potential short term renters and long term tenants.

1. Speak to local rental agents. Real Estate agents who specialize in rental properties have a clear understanding of what home renters look for in both long term and short term vacation home rentals. Agents who focus on buy and sell of properties often consider rental transactions too time consuming and may not provide investors with the most relevant information.
   
2. Compare prices and levels of services offered by property management companies in the area if you do not live in the same city. Investigate if the agents or companies that specializes in short-term rentals in the area. Making contact with local handyman is essential as rental properties experiences more wear and tear then your own home.
3. Conduct you own research to find out where the demand is. Read local newspaper classified Ads, visit short-term rental websites, and drive around local tourist attractions. This will give investors solid information on what is the most popular, in which area and for what prices. Try to locate a property with at least two attractive attributes such as “view”, “proximity to theme parks, golf course”, “beach side”, “Lake front”, “fitness facilities”, etc.
4. Do not judge a property based on peak season rental income alone. Collect information on off-season rental as well. Investors must balance the potential income gaps between full price peak season fees, off-season discounted rate, and non-income months during vacancies and owner’s self –enjoyments.
5. Talk to an accountant to verify that the income you can realistically expect to receive is appropriate for the home’s purchase price. More importantly, evaluate your financial position carefully to see if you can afford the investment property after all taxes, agent’s fees, maintenance fees, regular property upkeeping and unexpected expenses.
6. If the targeted area attracts lots of senior citizens, one-level living may be the best choice. Avoid homes where renters must climb a flight of stairs to reach the entrance.
7. Look for a property within a reasonable distance of shopping and area attractions. Check to see if it is accessible by public transit system and if parking is available.
8. Find a well maintained home, or at least one that does not need a major renovation. Investors must bear in mind that a Non-attractive vacation property may not generate the desired occupancy rate and level of income.
9. Before buying a home in developments, make sure the restrictive covenants allow rentals.
10. Purchase home insurance and do disclose that it will be used as a vacation rental home. Insurance companies can refuse to compensate the property owner if the purpose of use was misrepresented. Investors must protect themselves against possible damages and accident claims.

Rental properties can be a good investment, taking these simples steps can ensure this process go more smoothly and the return more profitable.

Foreclosures and short sales in US Real Estate seem to be great deals, but let the buyer beware: You could be buying a money pit.

A foreclosed home is bought as is and will not have the history available that a seller would be able to give you. This means you will buy the home and accept the flaws it may have; in many cases the former owner will have ceased taking care of it before the home went into foreclosure. Remember you’re dealing with people with big financial problems and you don’t really know what you’re getting.

Buying a foreclosed home will often result in additional waiting time as well as work. Also remember you need to have cash on hand because of the short time frames involved in closing.

Do your homework:

• Title searches
• Hidden leans and claims
• Damage from disgruntled homeowners
• Hidden maintenance issues
• Unpaid taxes

The US Real Estate market has been in decline for almost 3 years. Despite what many analysis believe will be a slow recovery, there are signs that 3 years of pent up demand and current low interest rates can start a very fast recovery.

The economic environment is going to get better based on the stimulus packages and the Fed easing. This will intern provide the fuel needed to propel the depressed US real estate market forward very quickly.

An example can be seen in Canada, while in the middle of a recession, Canada is also experiencing a major housing boom. Low borrowing costs, more affordable prices in many markets and some pent up demand after the fall and winter sales freeze provided heavy-duty support for housing. The Canadian national residential average price in May reached the highest monthly level on record.

The major factor holding down the US real estate is liquidity; preventing many would be homebuyers from getting the financing they need. Once liquidity is available to the US market, the homes sales will have all the ingredients needed to propel the US real estate market higher much like the Canadian market.

Signs are already starting, the National Association of Realtors said that sales jumped 7.2 percent to an annual rate of 5.24 million units, the highest since August 2007, beating market expectations for a 5 million unit pace. Sales were at a 4.89 million pace in June.

July’s percentage increase was the largest monthly gain since the series started in 1999 and marked the fourth straight monthly advance. The last time sales rose for four consecutive months was in June 2004, the NAR said.

The release of housing start data on June 17 has sparked a furry of responses on the Internet. Some commentators are horrified by the increased number of housing start while others are seeing the data as a sign of real estate market bottom.

One side argues that the market is currently over-supplied with months of existing inventory to consume as well as hundreds of thousands of homes under foreclosure. Adding more supply to the market would only drive prices down further and create more chaos.

In the West, housing starts jumped and incredible 28.6%, followed by the South with a 16.8% increase and the Midwest with a 11% increase. In absolute terms, overall starts were at a seasonally adjusted annual rate of 432,000 in May vs 454,000 in April. However, reader of this data must bear in mind that April suffered a significant drop from March data.

Most of the national wide increase came from multi-unit structures (Condos and Apartments) which is a very volatile number. Comparing year over year data,multi-unit homes are still down 54.6% and single family start are down 40.9%. Hence it is difficult to call this short term rise in housing start a “rebound”.

“Residential real estate has finally found a floor”, Jim Cramer told CNBC viewers on Tuesday.

The cheering camp argues in addition of the jump in housing start, the Building Permits also showed encouraging increases.. The South and the West jumped 17% and 29% respectively. They believe the Building permits is a more accurate indicator to the market’s future. This camp is confidant that the government’s stimulus package, inflow of immigrants and capital from foreign bargain hunters will ease current condition and results could be seen as soon as the end of 2009.

Has the US real estate market turned around?

Despite the different reasoning of each camp, both sides agree that the housing start data alone may not imply a bottom in housing prices. But both sides agree the downward spiral of the US real estate market have eased in the near term and further data is needed to see if this temporary stabilization can be sustained.

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.