Economic and Market Watch Report
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Economic and Market Watch Report Economic and Market Watch Report Document Transcript

  • Economic and Market Watch Report 2nd Quarter, 2010 © 2010 Regional Multiple Listing Service and NATIONAL ASSOCIATION OF REALTORS®Reproduction, reprinting, or retransmission in any form is prohibited without written permission.
  • Regional Multiple Listing Service Economic and Market Watch Report Regional MLS, Inc. delivers MLS and Property Data services to over 10,000 real estate professionals in Southeastern Florida. Our objective is to be the leader in real estate information with comprehensive databases, excellent customer relations and intelligent applications of technology. We are committed to providing property information-based tools and resources to enhance our customers’ success. As a RETS compliant MLS, our customers enjoy products and services delivered by our many Technical Partners. Index Local Report Florida Broward County .......................................................................................................... 1 Indian River County .................................................................................................... 4 Martin County ............................................................................................................. 5 Miami-Dade County .................................................................................................... 6 Okeechobee County ..................................................................................................... 8 Palm Beach County ..................................................................................................... 9 St. Lucie County .......................................................................................................... 12 Others ........................................................................................................................... 14 Trends ............................................................................................................................................... 15 Chief Economists Commentary* ................................................................................................... 16 Economic Monitor* ......................................................................................................................... 18*Reprinted from Real Estate Outlook: Market Trends and Insights. ©2010 NATIONAL ASSOCIATION OF REALTORS ®.Used with permission. Reproduction, reprinting, or retransmission of this article in any form (electronic media included) isprohibited without permission. For subscription information please call 1-800-874-6500.
  • Local Report Broward County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : In the first two months of the second quarter, 11,290 jobs were added to the payrolls of Broward County. As a result of these new jobs, the average monthly unemployment rate fell from 10.8% during the first quarter to 9.9% for April and May. This steady job creation may help to maintain demand for home purchases. Favorable mortgage rates should support this trend. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $136,200 $167,200 # Homes on the Market * 1,222 1,146 # Homes Sold ** 418 491 *** # New Homes Built *** 232 202 Avg # of Days on Market 101 107 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33009 $71,600 -55.08% 9 28.57% 48 95.5% 33019 $318,000 85.21% 3 0.00% 109 96.4% 33020 $109,300 70.78% 5 150.00% 121 94.2% 33021 $154,000 45.83% 3 -25.00% 128 89.7% 33023 $126,400 51.56% 4 -55.56% 131 97.1% 33024 $123,100 4.50% 10 0.00% 41 95.6% 33025 $88,900 -33.31% 15 200.00% 54 102.1% 33026 $234,000 162.92% 3 200.00% 61 95.8% 33027 $135,000 -35.28% 4 -69.23% 35 102.0%*** % Change of current quarter compared to the same quarter to year ago. 1
  • Local Report Broward County, FL Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33028 $295,000 45.68% 1 -50.00% 16 100.2% 33029 $275,000 7.55% 2 -33.33% 35 94.9% 33060 $175,300 3.30% 11 120.00% 129 90.8% 33062 $462,800 112.68% 18 100.00% 131 70.3% 33063 $111,700 -17.50% 24 41.18% 111 100.6% 33064 $75,900 -39.52% 43 13.16% 110 96.0% 33065 $108,900 31.36% 15 -28.57% 115 96.4% 33066 $98,500 -25.04% 4 -33.33% 149 99.4% 33067 $257,000 38.10% 29 31.82% 96 93.8% 33068 $91,300 24.73% 19 46.15% 100 97.7% 33069 $84,800 21.84% 9 -18.18% 175 95.9% 33071 $157,200 -3.02% 10 25.00% 108 97.8% 33073 $138,200 5.98% 8 -27.27% 164 104.2% 33076 $382,200 58.85% 13 44.44% 166 96.4% 33301 $277,900 -27.82% 10 233.33% 118 86.5% 33304 $191,500 6.63% 13 160.00% 192 81.9% 33305 $157,700 -78.68% 3 50.00% 131 91.5% 33306 $120,000 N/A 1 N/A 386 100.0% 33308 $378,100 39.26% 9 50.00% 115 79.2% 33309 $61,400 -21.58% 16 -5.88% 84 101.9% 33311 $81,500 7.95% 5 -61.54% 51 91.5% 33312 $99,000 -1.69% 6 20.00% 57 102.0% 33313 $76,200 7.32% 5 25.00% 76 97.8% 33314 $97,000 58.24% 2 100.00% 11 104.4% 33315 $152,500 -54.48% 7 600.00% 95 88.5% 33316 $369,500 139.94% 7 600.00% 30 79.3% 33317 $295,200 72.83% 5 -37.50% 264 79.9% 33319 $46,500 -33.57% 14 133.33% 44 94.2% 33321 $75,300 -15.49% 15 25.00% 105 91.9% 33322 $112,000 -24.12% 6 20.00% 34 97.4% 33323 $325,200 N/A 5 N/A 68 97.6% 33324 $95,300 -16.84% 4 -33.33% 21 95.1% 33325 $276,100 62.79% 4 33.33% 143 97.5% 33326 $269,200 73.90% 3 -62.50% 107 94.9% 33327 $366,900 59.52% 2 0.00% 317 99.2% 33328 $285,000 44.67% 1 -50.00% 44 95.3%*** % Change of current quarter compared to the same quarter to year ago. 2
  • Local Report Broward County, FL Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33330 $358,000 N/A 1 N/A 9 99.1% 33331 $276,500 -0.54% 2 100.00% 123 97.0% 33332 $840,500 N/A 4 N/A 191 96.5% 33334 $136,100 43.87% 6 50.00% 103 92.3% 33351 $101,600 -15.75% 12 50.00% 77 97.7% 33441 $140,500 -19.53% 20 -31.03% 122 93.8% 33442 $124,600 18.22% 40 60.00% 121 95.2% OTHER $55,000 56.70% 1 0.00% 106 76.4%*** % Change of current quarter compared to the same quarter to year ago. 3
  • Local Report Indian River County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : In the first two months of the second quarter, 207 jobs were added to the payrolls of Indian River County. As a result of these new jobs, the average monthly unemployment rate fell from 14.2% during the first quarter to 13.3% for April and May. This steady job creation may help to maintain demand for home purchases. Favorable mortgage rates should support this trend. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $153,700 $161,500 # Homes on the Market * 384 282 # Homes Sold ** 59 90 *** # New Homes Built *** 79 50 Avg # of Days on Market 101 101 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 32948 $97,500 N/A 2 N/A 111 83.0% 32958 $128,500 4.30% 29 107.14% 77 95.4% 32960 $62,400 -47.65% 4 -71.43% 60 91.1% 32962 $95,600 59.60% 15 275.00% 77 94.2% 32963 $463,800 0.37% 8 100.00% 137 88.4% 32966 $167,700 -0.47% 10 -37.50% 151 96.7% 32967 $163,700 37.68% 8 33.33% 87 91.3% 32968 $168,800 -4.74% 13 225.00% 153 88.4% OTHER $34,000 -70.18% 1 0.00% 16 96.0%*** % Change of current quarter compared to the same quarter to year ago. 4
  • Local Report Martin County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : In the first two months of the second quarter, 704 jobs were added to the payrolls of Martin County. As a result of these new jobs, the average monthly unemployment rate fell from 13.2% during the first quarter to 11.7% for April and May. This steady job creation may help to maintain demand for home purchases. Favorable mortgage rates should support this trend. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $272,000 $306,800 # Homes on the Market * 1,184 978 # Homes Sold ** 262 347 *** # New Homes Built *** 44 28 Avg # of Days on Market 140 160 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33455 $386,900 -26.05% 72 28.57% 199 89.8% 34956 $44,000 -76.84% 5 150.00% 131 101.1% 34957 $128,900 12.09% 33 37.50% 103 96.0% 34990 $324,000 21.12% 39 -13.33% 114 93.5% 34994 $121,100 12.76% 34 3.03% 156 87.5% 34996 $1,062,000 241.48% 19 -9.52% 200 83.6% 34997 $194,800 10.37% 98 44.12% 132 91.3% OTHER $385,400 -26.00% 47 42.42% 227 89.3%*** % Change of current quarter compared to the same quarter to year ago. 5
  • Local Report Miami-Dade County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : Employment increased by 7,996 jobs in Miami-Dade County during April and May. However, the number of job seekers also increased. The combined effect of these two trends was an increase in the average monthly unemployment rate from 11.4% for the first quarter to 11.9% in the first two months of the second quarter. The solid job growth may provide a stimulus to home sales, while historically low mortgage rates boost affordability. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $181,600 $249,300 # Homes on the Market * 219 245 # Homes Sold ** 36 50 *** # New Homes Built *** 194 256 Avg # of Days on Market 177 91 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33015 $44,500 -59.55% 3 200.00% 124 98.2% 33018 $330,000 N/A 1 N/A 118 94.6% 33032 $98,000 -54.14% 1 -83.33% 75 95.1% 33033 $151,600 -4.05% 4 300.00% 59 99.0% 33055 $48,500 N/A 2 N/A 10 102.1% 33109 $1,800,000 N/A 1 N/A 204 72.1% 33126 $130,000 -16.67% 1 -50.00% 18 74.3% 33131 $205,000 -43.50% 1 -50.00% 467 93.6%*** % Change of current quarter compared to the same quarter to year ago. 6
  • Local Report Miami-Dade County, FL Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33133 $1,290,000 N/A 1 N/A 29 88.4% 33138 $188,500 N/A 2 N/A 171 86.2% 33139 $333,800 N/A 3 N/A 214 99.2% 33140 $79,000 N/A 1 N/A 8 88.8% 33144 $152,500 N/A 1 N/A 10 80.3% 33145 $60,000 N/A 1 N/A 80 75.1% 33150 $125,000 N/A 1 N/A 39 92.6% 33155 $245,000 N/A 2 N/A 112 95.4% 33157 $50,000 N/A 1 N/A 13 83.3% 33160 $223,000 -51.15% 4 100.00% 102 87.2% 33161 $335,000 N/A 1 N/A 36 96.0% 33165 $520,000 217.27% 2 100.00% 21 95.5% 33167 $52,500 N/A 1 N/A 8 100.0% 33169 $220,700 -19.48% 9 50.00% 42 97.4% 33172 $86,000 N/A 1 N/A 330 100.0% 33174 $175,000 -25.21% 1 0.00% 33 83.7% 33185 $295,000 N/A 1 N/A 39 93.7% 33187 $257,000 N/A 1 N/A 8 100.0% 33196 $50,000 N/A 1 N/A 355 76.9% OTHER $271,000 663.38% 1 -50.00% 46 93.4%*** % Change of current quarter compared to the same quarter to year ago. 7
  • Local Report Okeechobee County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : In the first two months of the second quarter, 211 jobs were added to the payrolls of Okeechobee County. As a result of these new jobs, the average monthly unemployment rate fell from 13.7% during the first quarter to 12.1% for April and May. This steady job creation may help to maintain demand for home purchases. Favorable mortgage rates should support this trend. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $90,200 $80,700 # Homes on the Market * 41 27 # Homes Sold ** 5 6 *** # New Homes Built *** NA NA Avg # of Days on Market 151 46 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 34972 $55,200 -46.41% 3 50.00% 77 86.8% 34974 $69,300 -7.10% 2 -60.00% 19 93.7% OTHER $180,000 350.00% 1 0.00% 10 90.0%*** % Change of current quarter compared to the same quarter to year ago. 8
  • Local Report Palm Beach County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : In the first two months of the second quarter, 7,594 jobs were added to the payrolls of Palm Beach County. As a result of these new jobs, the average monthly unemployment rate fell from 12.4% during the first quarter to 11.4% for April and May. This steady job creation may help to maintain demand for home purchases. Favorable mortgage rates should support this trend. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $255,900 $255,800 # Homes on the Market * 20,002 17,842 # Homes Sold ** 4,292 5,666 *** # New Homes Built *** 346 252 Avg # of Days on Market 159 149 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33401 $204,700 -14.14% 131 40.86% 178 90.2% 33403 $107,200 -1.29% 30 11.11% 132 97.0% 33404 $206,800 -18.36% 139 63.53% 154 88.6% 33405 $177,400 -28.90% 67 59.52% 187 91.6% 33406 $126,800 7.09% 58 45.00% 133 90.8% 33407 $105,100 21.78% 76 65.22% 93 94.5% 33408 $307,700 -0.19% 103 19.77% 173 87.4% 33409 $91,000 -9.27% 103 49.28% 104 93.5% 33410 $275,000 -16.89% 150 15.38% 170 90.4%*** % Change of current quarter compared to the same quarter to year ago. 9
  • Local Report Palm Beach County, FL Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33411 $162,500 -5.19% 313 38.50% 131 94.2% 33412 $368,200 -8.23% 67 36.73% 216 90.7% 33413 $175,100 -1.79% 43 -8.51% 147 96.4% 33414 $292,300 -12.67% 238 20.20% 140 91.3% 33415 $76,700 -13.53% 120 18.81% 118 94.2% 33417 $69,700 3.11% 103 18.39% 106 94.8% 33418 $409,100 3.81% 215 27.98% 179 86.6% 33426 $112,100 -5.32% 109 37.97% 145 93.5% 33428 $194,800 5.93% 116 22.11% 120 93.2% 33430 $126,200 -32.69% 5 150.00% 71 86.9% 33431 $316,400 -33.79% 82 46.43% 124 90.2% 33432 $742,700 -2.81% 130 56.63% 255 85.6% 33433 $210,400 5.84% 162 38.46% 153 90.4% 33434 $221,400 22.32% 129 35.79% 147 87.8% 33435 $150,400 -46.32% 131 35.05% 186 89.2% 33436 $196,400 21.53% 166 16.08% 130 91.0% 33437 $221,600 0.23% 259 48.85% 122 93.8% 33444 $204,300 -5.68% 68 44.68% 158 89.3% 33445 $122,000 -14.98% 137 15.13% 142 91.6% 33446 $275,200 -13.78% 133 27.88% 156 87.7% 33449 $343,500 -2.55% 38 15.15% 160 91.4% 33458 $256,700 -7.23% 219 26.59% 159 92.4% 33459 $45,100 N/A 1 N/A 10 100.2% 33460 $113,100 -7.14% 98 28.95% 109 92.1% 33461 $82,100 8.03% 106 43.24% 110 95.0% 33462 $247,400 14.91% 110 22.22% 161 85.9% 33463 $115,600 -14.50% 184 14.29% 107 96.0% 33467 $184,100 -8.95% 247 25.38% 147 93.5% 33469 $420,200 -24.45% 52 15.56% 184 87.5% 33470 $180,100 -13.33% 64 -21.95% 128 96.6% 33472 $224,000 -31.75% 66 34.69% 134 92.3% 33473 $456,900 5.52% 49 104.17% 121 96.2% 33476 $174,500 29.26% 5 400.00% 189 94.0% 33477 $569,600 44.39% 120 9.09% 173 83.5% 33478 $293,800 -2.33% 39 34.48% 144 93.1% 33480 $755,800 -16.06% 91 42.19% 194 83.8%*** % Change of current quarter compared to the same quarter to year ago. 10
  • Local Report Palm Beach County, FL Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 33483 $644,000 -12.71% 86 40.98% 216 87.8% 33484 $155,600 22.62% 171 26.67% 136 90.3% 33486 $359,600 15.07% 62 -10.14% 149 93.7% 33487 $408,800 -18.11% 128 30.61% 185 86.8% 33493 $28,000 N/A 1 N/A 164 104.1% 33496 $528,100 -11.64% 99 8.79% 190 86.0% 33498 $334,300 -2.85% 42 -10.64% 112 93.8% OTHER $86,200 58.75% 5 150.00% 73 91.0%*** % Change of current quarter compared to the same quarter to year ago. 11
  • Local Report St. Lucie County, FL Buyers Sellers 1 2 3 4 5 Market Market Labor Market : In the first two months of the second quarter, 1,348 jobs were added to the payrolls of St Lucie County. As a result of these new jobs, the average monthly unemployment rate fell from 14.9% during the first quarter to 13.7% for April and May. This steady job creation may help to maintain demand for home purchases. Favorable mortgage rates should support this trend. Housing Market : Q1 10 Q2 10 Q3 10 (Forecast) Average Price $107,000 $115,700 # Homes on the Market * 3,145 2,292 # Homes Sold ** 1,284 1,468 *** # New Homes Built *** 107 51 Avg # of Days on Market 108 125 * Available as of Jun. 30, 2010. ** May not add to total of zip codes.*** During the first two months of 2nd quarter. Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 34945 $153,500 -18.00% 8 100.00% 92 89.5% 34946 $100,900 -55.57% 4 0.00% 188 86.9% 34947 $106,400 69.16% 5 -37.50% 117 90.7% 34949 $184,200 -16.80% 78 47.17% 217 90.5% 34950 $46,600 -30.65% 21 0.00% 139 89.6% 34951 $82,500 3.64% 56 5.66% 121 94.7% 34952 $86,500 -17.70% 167 21.01% 136 94.2% 34953 $105,800 -2.40% 465 1.09% 116 98.2% 34954 $205,000 N/A 1 N/A 512 91.1%*** % Change of current quarter compared to the same quarter to year ago. 12
  • Local Report St. Lucie County, FL Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 34981 $169,400 21.61% 8 14.29% 85 101.1% 34982 $67,900 -15.13% 93 55.00% 133 93.2% 34983 $94,900 0.85% 211 -1.40% 91 95.0% 34984 $139,700 34.46% 81 3.85% 103 90.6% 34986 $159,100 8.38% 192 23.87% 138 92.0% 34987 $164,900 -1.08% 63 85.29% 143 94.3% OTHER $260,300 89.58% 15 66.67% 132 92.7%*** % Change of current quarter compared to the same quarter to year ago. 13
  • Local Report Others Data by Zip Codes for Q2 2010 Total # % Change in # % of Asking Price Price Change Average Days Zip Code Average Price Homes Sold Homes Sold (Sold/ *** on Market (Quarter) *** List Price) 32114 $115,000 N/A 1 N/A 432 100.0% 32234 $127,500 N/A 1 N/A 119 120.4% 32669 $114,000 N/A 1 N/A 38 91.3% 32976 $297,500 340.74% 2 0.00% 118 88.0% 33137 $40,000 N/A 1 N/A 96 80.2% 33440 $106,000 N/A 2 N/A 113 94.3% 33594 $70,000 N/A 1 N/A 28 100.0% 33614 $125,000 N/A 1 N/A 221 83.3% 33615 $148,300 N/A 3 N/A 101 92.8% 33897 $92,000 N/A 1 N/A 150 103.4% 33950 $225,000 N/A 1 N/A 357 77.6% 34972 $45,000 N/A 1 N/A 80 75.0% OTHER $2,591,700 N/A 3 N/A 157 82.7%*** % Change of current quarter compared to the same quarter to year ago. 14
  • TrendsSqueezing Every Sale from the Tax Credit By Ken Fears Manager, Regional Economics  By most accounts the Federal tax credit succeeded at what it was intended to do; stop the precipitous decline in home prices.  But not all would‐be homebuyers are celebrating.  Short sales continue to take longer than other properties to close and some contracts could fall through as a result of delays.   H om e Sa les D ra g t he  M ed ia n P ric e U pw a rd 1 2 ‐M o n t h  C h a n g e  in  H o m e  S al e s  ( R e d )  a n d  M e d i a n  P r ic e   ( B l u e ) 5 0 .0 % 4 0 .0 % 3 0 .0 % 2 0 .0 % 1 0 .0 % 2 0 0 7   ‐  O c t 2 0 0 7  ‐   A p r 2 0 0 9   ‐  A p r 2 0 0 4   ‐  A p r 2 0 0 5   ‐  O c t 2 0 0 8  ‐   O c t 2 0 0 9  ‐  O c t 2 0 0 4  ‐  O c t 2 0 0 6  ‐  O c t 2 0 1 0   ‐  J a n 2 0 0 5   ‐  J a n 2 0 0 8  ‐   J a n 2 0 0 6  ‐  J u l 2 0 0 7  ‐  J u l 2 0 0 8   ‐  J u l 2 0 0 9  ‐   J u l 2 0 0 4  ‐  J u l 0 .0 % 2 0 1 0  ‐   A p r 2 0 0 5  ‐  A p r 2 0 0 6  ‐  A p r 2 0 0 8  ‐  A p r 2 0 0 4  ‐  J a n 2 0 0 6  ‐  J a n 2 0 0 7  ‐  J a n 2 0 0 9  ‐  J a n 2 0 0 5  ‐  J u l ‐ 1 0 .0 % ‐ 2 0 .0 % ‐ 3 0 .0 %  Nationally, there was a 5.1% decline in home sales from May to June, but the 2010 sales volume remains much higher than it was in 2009.  Home sales were 9.8% higher in June of this year compared with the level 12 months earlier.  Here in the area covered by Regional MLS, Inc. there were 24.6% more home sales in the second quarter of 2010 than during the same period in 2009.  This upward trajectory for sales has provided the basis for the confidence necessary to stimulate modest price growth in many markets around the country.  The national median home prices was 1.0% higher in June than 12 months earlier, while locally there was a 1.3% increase in the average home price over the four quarters ending in June.  This price growth in turn has helped to stabilized the credit markets and abate the flow of foreclosures from resetting loans.    Not all home sales have gone smoothly, though.  Many Realtors® report problems closing short sales.  Anecdotal information suggests that banks are under staffed.  In addition, new Federal programs and requirements add to the litany of paperwork required to complete one of these transactions.  In early May, just after the deadline for the home buyer tax credit, the NAR began a campaign to have Congress extend the time frame for homebuyers to complete their home sale and receive the tax credit, so long as they were under contract on April 30th.  Near midnight on June 30th, Congress passed a stand‐alone bill to extend this closing period.  Such quick action is a true feat in Washington.  Here in the area covered by Regional MLS, Inc. the time to close after a contract was signed increased over the 4‐quarter period ending in June by 9.7% suggesting that banks are having trouble closing deals in this area.  Nationally, an estimated 75,000 home buyers could not close by the July 1st deadline. This extension will help them and likely many local buyers.    The tax credit clearly had positive effects for the national and most local markets.  Congress’ extension of the closing data will sprinkle home sales over the subsequent three months, helping to smooth the decline from the tax‐incentive‐fueled period.  Sales are likely to remain lower than during the credit period, but mortgage rates continue to skim along all‐time lows and sellers desperate to move before autumn will make price adjustments.  The result may be modest and localized price adjustments, but steadier sales as employment slowly begins to recover.   15
  • CommentaryGearing up for the fightby Lawrence Yun, NAR Chief EconomistIt hasn’t been a pretty sight in the first month without the tax credit. Pending sales for existing homes fell 30percent in May. New home sales (which measures contracts and not closings) fell by 33 percent to its lowestlevel in nearly 50 years. Single-family housing starts also took a dip in May, falling 17 percent. The bigdeclines should have been expected because consumers are rational when making purchase decisions andthey respond to incentives. Why sign a contract in May when doing so in April will result in an $8,000 check?Going forward, contract signings for June and July could also remain similarly weak.However, even with these short-term setbacks the overall tax credit stimulus can only be called a success interms having stabilized home prices. Stable home values lessen foreclosure pressure, improve bank balancesheets, and most importantly, help steadily revive consumer confidence about a home purchase. Currentlythere are signs of home price stabilization in nearly every market. Prices are, surprisingly rising at a double ,digit pace in San Francisco and San Diego. Be mindful, however that low sales activity over the short-term ,will cause housing inventory to rise, and the months’ supply of homes available for sale could reach 10 monthsor higher. Provided such elevated inventory will only be for the short-term and not prolonged, then homeprices will not undergo heavy pressure to fall. Experience shows, unlike sales, prices are far less immune tobig month-to-month fluctuations.The key test of a sustainable long-term recovery without the stimulus medicine, will only start to show in the ,next several months. For this to happen, we need job growth. Not the artificial temporary Census jobs, buttrue private sector jobs. The net private sector jobs, expanded so far this year to June, were at 593,000. Thisis relatively small potatoes after the 8 million job cuts in the past two years, but it is nonetheless a start of anexpansion. And the latest report from the Bureau of Labor Statistics shows that in June the economy lost jobsfor the first time this year. Those temporary Census job additions are over, and state and local governmentsalso cut payrolls. Businesses did add 83,000 payrolls, and – surprisingly — the unemployment rate declined.Expect one million job additions for the balance of the year and another 1.5 to 2.2 million in 201 1.Mortgage rates also need to remain favorable. Because of the uncertainty regarding the strength of overalleconomic expansion and of uncertainty regarding the future of the Euro, many investors have put money intothe safe U.S. Treasury bond market. That has pushed down the 10-year Treasury yield to 3 percent as of thiswriting. The 30-year fixed rate mortgage then can be at around 4.8 percent. That is super favorable forconsumers.While jobs expand and rates remain low (fingers crossed), we need to assure that any unnecessary barrier tomarket recovery be taken down. One of these barriers was the lack of flood insurance. Because the privatemarket has difficulty in providing national flood insurance, the federal government has been involved in theprogram. This is not a new or simulative federal program, but simply an old program that has been inexistence for many decades. Nearly seven percent of all owner-occupied homes require flood insurance inthe country. The figures are as high as one-third of all homes in Louisiana and Florida (which as we know arealso now being negatively impacted from the oil spills). Without flood insurance, a homebuyer cannot obtain amortgage. Fortunately, lawmakers listened and understood the damaging impact and a bill to reauthorize floodinsurance passed with a strong majority.Another barrier to recovery could have been the psychologically demoralizing impact of not getting the taxcredit among those homebuyers who signed their contracts in April and earlier. They responded togovernment stimulus, yet they were unable to receive the benefit - through no fault of their own. Many homesrequire a ‘short sale’ approval from a bank. However, this process is far from being short; it often takesseveral months and is can be very messy. As a result many home purchases were not able to close by theJune 30th deadline. Fortunately, Congress passed legislation on the very last day - June 30th- to extend theclosing deadline to September 30th. It is estimated that up to 180,000 homes that were under contract couldhave fallen out had the extension not occurred. 16
  • CommentaryThe flood insurance and tax credit deadlines were short-term barriers and they were removed. But anothermuch higher barrier to recovery which could arise is the elimination or a reduction in the mortgage interestdeduction (MID). There has been increased chatter among opinion makers about the need to eliminate or trimthis deduction, particularly in light of a very high U.S. budget deficit. In addition, after witnessing anunprecedented rise in foreclosures, some commentators are attacking the essence and societal value ofhomeownership, implying that housing should not get favored tax treatment.As we have painfully learned from the recent housing market debacle, people who are not yet financiallyqualified should not become home owners, period. However to blame the housing market collapse in any way ,or in any part on the mortgage interest deduction is equivalent to suggesting we need to completely scrap thefree market system because of the banking crisis. Remember, mortgage interest deductions have been inplace for many decades without bringing volatile swings to the housing market. Perhaps we should turn ourattention to what was new in the recent unprecedented housing cycle; namely, the very lax mortgageunderwriting standards and faulty work of credit rating agencies.If we were to rewrite the tax code beginning with a blank slate, perhaps, a full discussion on the benefits andcosts of having MID should take place. But the country is not starting from scratch and we have to contendwith history. The mortgage interest deduction has been part of the U.S. tax code since the inception of theincome tax nearly a century ago, when the U.S. income tax code came into existence.Under 17 U.S. Presidents and their administrations, hundreds of millionsAmericans have purchased theirhomes with the understanding of this important tax break.As a result, many hard-working, tax-paying citizenshave been able to realize one of the sacred tenets of the American Dream – of owning a piece of America.Homeowners, aside from paying about 80 to 90 percent of all federal income tax, have been an importantstabilizing force in the country as they are rooted in the community and the country Homeowners are already .taking on a massive burden of taxation, and to say they need to be taxed more is simply unjustified.In my view, to eliminate or change the mortgage interest deduction – a long-running, settled portion of theU.S. tax code – would be to change the rules in the middle of a game. It would result in a massive,unexpected redistribution of wealth in the country While in any particular year only about one-third of .taxpayers itemize, most homeowners have resorted to claiming the mortgage interest deduction at some pointin their homeownership life. In the most recently available data from IRS tax returns, 63 percent of thefamilies who claim the mortgage interest deduction earn between $50,000 and $200,000 per year That is only .small part of the story, however. Because of the capitalization impact of the expected stream of futuremortgage interest deductions, a removal of the mortgage interest deduction will lead to home values falling by15 percent, equating to a destruction of housing wealth equivalent to $2.5 trillion. That wealth destruction willbe felt by all homeowners, including those who purchased homes with cash and those who have fully paid offtheir mortgages. Even in today’s economy – that is a lot of dough. Because the mortgage interest deductionhas been around for generations and generations, any changes may lead people to doubt about what is settledand what is not? Does a change mean future capricious changes to other ‘well understood’ contracts? Forexample, will future opinion makers start mentioning the need to tax ROTH IRA earnings in retirement forthose who are able to pay (i.e., the rich) to help reduce future budget deficits? Even though the ROTH IRAwas created with expressed purpose of providing tax free earnings (since this retirement contribution is madewith after-tax dollars)?A final and very important aspect to consider in the debate about the mortgage interest deduction is positivesocietal externalities. Academic studies have demonstrated the positive social benefits of ownership, includinglower juvenile delinquency rates, lower teen pregnancy rates, and higher student achievement levels amongchildren of homeowners versus those of non-owners who were of similar socioeconomic background.Yes,homeownership is not for everyone. However, for those who are financially qualified, have demonstratedfinancial responsibility, and are willing to purchase a home that is well within their budget, tilting the field infavor of ownership through the mortgage interest deduction—as America has done for the past century—caninduce immeasurable societal benefits beyond the counting of the dollars. The fight over this well establishedtax benefit is coming. Be ready. 17
  • Economic Monitor This table reflects data available through July 2, 2010. Likely Direction Recent Over the Next ForecastMonthly Indicator Statistics Six MonthsExisting Home Sales remained at elevated levels in May, although they Weak in the shortdeclined from the previous month. Resales posted a seasonally adjusted May 10 5,660 term after the taxannual rate of 5.66 million units in May – 2.2% off April’s upwardly revised April 10 5,790 credit and a steadypace of 5.79 million units. May resales were 19.2% ahead of a year ago. May 09 4,750 climb laterThe national median price for an existing home rose to $179,600 – 2.7%higher than in May of 2009.New Home Sales declined significantly in May to a seasonally adjusted Buyers of newannual rate of 300,000 units – 32.7% off April’s rate and 18.3% down from May 10 300 homes are lessthe level in May of 2009. The inventory of new homes available for sale at April 10 446 influenced by thethe end of May stood at 213,000 units – an 8-month supply at the current May 09 367 tax creditsales pace.Housing Starts also declined in May, posting a seasonally adjusted annual High existing homerate of 593,000 units – 10.0% off April’s level, but 7.8% ahead of that in May 10 593 inventory but veryMay of 2009. Building permits – generally a reliable indicator of future April 10 659 low new homestarts – were down 5.9% from April, but up 4.4% from a year ago. May 09 550 inventoryHousing Affordability continued to dip, while remaining at healthylevels. NAR’s Housing Affordability Index posted a reading of 162.0 in May 10 176.0 To remain atMay, off April’s reading of 168.3 but comparable to that in June of 2009. April 10 177.5 historicIncreases in the median price of an existing home as well as an increase May 09 180.7 highsin the level of qualifying income helped contribute to the decline.Mortgage Rates remain at historically low levels. The average rate on a June 10 4.74% Any downward30 year fixed rate mortgage dropped 15 basis points in June from last month May 10 4.89% drift is short-termto 4.74% -- its lowest level since April of 1971 when Freddie Mac started its June 09 5.42% and is pure bonusPrimary Mortgage Market survey.Employment The U.S. economy lost 125,000 jobs in June – the first job Good revival signsloss this year so far. Temporary Census jobs and cuts in state and local June 2010 -125 in thegovernment payrolls contributed to the negative numbers. On the positive May 2010 +2 manufacturingside, businesses did hire an additional 83,000 workers, and the federal 12-month total: sectorgovernment added 27,000 (non-Census) jobs. To many analysts’ surprise, -170the unemployment rate actually fell – from 9.7% in May to 9.5% in June,due primarily to “discouraged” workers who are no longer looking for jobs.Economic Growth The economy grew at 2.7% annual rate in the firstquarter of 2010. This is the third and final estimate of GDP growth based Steady 2010:I +2.7% moderateon more complete data. GDP increased 5.6% in the fourth quarter of last 2009:IV +5.6% uneventfulyear. Increased personal consumption expenditures – i.e., consumer 2009:I -6.4% expansionspending – was offset by larger than previously estimated decline in stateand local government spending.Notes: All rate are seasonally adjusted. New home sales, existing home sales, and housing starts are shown in thousands. Employment growth is shown asmonth-to-month change in thousands. Inflation is shown as the month-to-month change in the Consumer Price Index. Sources: NAR, Bureau of theCensus, Bureau of Labor Statistics, Freddie Mac, and the Mortgage Bankers Association 18