Home Builders Have Little Expectations For The Future

Published on August 16, 2011 by

Homebuilder confidence 2009-2011

Home builders nationwide report that they have very little confidence or change for the better in the short-term or even further out to medium-term. This should tell us all a lot about the current housing market. Do not buy into any of the media hype trying to tell us that there are positive things in the housing market.

A recent headline saying that new build starts are more then expected is just using words to mask the fact that the new housing market is in the dumps and has been for years and will continue to be for years.  If anything positive can be said for the current housing market that would be that prices and interest rates are low so home affordability is at all-time highs!

Many of the media members tried to spin the Housing Market Index into something positive by saying that it was improving two months ago. While it was true it didn’t bother to mention how poor the reading is. For the second straight month the HMI is 15 out of 100! It’s not considered a positive number until it reaches at least 50. Anyone who is trying to tell you the market is recovering or good is flat out wrong. Imagine if you scored 15 out of 100, is there anyway you could really tell your family or friends something positive about it?

Since 2006 the HMI has been under 50 and reflected a strong buyers market for anyone that is considering a new home as opposed to the many great deals currently available with existing homes.

First you had Bernanke saying that interest rates will remain low for another two years and now you have the home builders saying that they don’t expect any changes for years to come. This means that you will have a great buyer opportunity for the next two years. This is fantastic news for anyone that is able to qualify for a mortgage during these difficult times. We may end up seeing a significant increase in VA Home Loans since they are able to qualify for mortgages much easier then civilians that are not eligible for a VA Loan.

This time in history is unique and I’m sure many will wonder why they did not purchase a home during these next couple of years when the variables are so favorable for buyers. If you have any questions about what opportunities may be available to you simply contact a loan officer today and get a free consultation and be prepared to capitalize on the great opportunity of today.

New Home Inventory Shrinks, Overall Inventory Still Rising

Published on July 27, 2011 by

New Home Supply 2010-2011

Home builders have been awfully slow to build up any inventory they have been selling during this slow market. The new home inventory continues to go lower and lower as they find it difficult to compete with distressed homes and other existing homes that are available.

This is the third month in a row where home sales have hit the media and showcased a continuing negative market. The home inventory is rising as we continue to see more and more foreclosed homes although this time around they are more strategic defaults.

The graph on the right provides you with a downward trend of new home inventory but also keep in mind that compared to this time last year there are almost a quarter percent less of new homes for sale.

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Although inventory is down the home builder confidence report recently showcased higher expectations for this Fall indicating that they may start to see a recovery in new homes coming. With current new home sales volume there is a little bit more then 6 months of inventory which is the lowest it's been since the expiration of the federal tax credit last year.

Mortgage interest rates continue to stay low and with all the talks of the U.S. National Debt Ceiling we may see interest rates go even lower and possibly to all-time lows providing a huge opportunity for those looking to purchase a home as well as those looking to refinance and capitalize on the struggling economy. If you have any questions simply contact a loan officer and find out what opportunities are available to you today.


Looking at Mortgage Rates This Week : July 25, 2011

Published on July 25, 2011 by

Congress debates the debt ceiling

Mortgage interest rates were worse last week as the Greek financial issues got closer to being resolved. The leaders in Europe are in agreement and hopefully all the concerns of debt issues will calm down.

Last week marked the first week in quite a few where interest rates actually increased slightly, yet the adjustable rates continued to dip and provide even greater savings and value over fixed rate loans. The spread between fixed rates and adjustable rates is approaching all-time highs. If you are interested in learning more about the opportunity to capitalize on the low rates contact a loan officer today.

This week the big talk and impact on interest rates is simply the U.S. debt ceiling. Although the expectation is to raise the debt ceiling there is no agreed upon plans on how to do so. The talks and resolutions should impact interest rates immediately.

This week we will also receive some updated reports on New Home Sales, Pending Home Sales and Consumer Sentiment. If you have any questions on how this may impact you simply call your loan officer today.


Home Sales Are Extremely Low and Inventory Builds

Published on July 21, 2011 by

Existing Home Supply June 2010-June 2011

Home sales continue to slow down and this is in the middle of the buying season. Foreclosures are continuing to keep on coming as we see more and more strategic defaults and the slow process of banks to market and sell their homes. The image above shows how inventory is continuing to build up. This news comes out during the same week where home builders showed they were planning to build more homes and sell more through the end of the year.

Home sales have not been this low since November of last year. The rising inventory of homes available in combination with the additional foreclosures should continue to push the value of homes lower. Many American homeowners are already in serious denial about the value of their homes and this should make that a bit more difficult to stomach. If you have questions about your options with low prices and low interest rates you should contact a loan officer. You can get a free consultation with no obligation that may be very valuable to you as you consider purchasing a home or refinancing your existing mortgage.

Nationwide the activity and values of home can vary greatly. Here is a snapshot of home sales by region, home resale activity varied:

  • Northeast : -5.2% from May
  • South :+0.5% from May
  • Midwest : +1.0% from May
  • West : -1.7% from May
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This snapshot is very general and if you are interested in what opportunities are available to you, you should look much more specifically at the neighborhood, city, state you are considering. Home affordability continues to be at all-time highs and present great opportunities whether you're looking for an existing home or a new home. Regardless of which you choose you are sure to get great value for your money.


Home Builders Gaining Confidence But Still Dismal

Published on July 19, 2011 by

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Housing Market Index (Homebuilder Confidence)

Yes, home builder confidence is on the rise but take into consideration that it's coming from a long time low and although there was an increase it is still pitifully low.

Last month there was a very sharp drop in confidence so it's welcoming that at least there is positive movement and direction. The home builder confidence is measured on a scale of 100 with 100 being the highest….and today we are at 15. It has also been more then 5 years since we have seen a reading come in at 50 or higher.

The data for the report is based on single-family home sales, projections and foot traffic levels. With mortgage interest rates extremely low and home prices continuing to get hurt by foreclosures you have home affordability at all time highs. This is definitely a time where we will look back and wonder why we didn't purchase a home.

The confusing part about the report is that foot traffic did not increase at all yet the builders think there is going to be a significant increase between now and the end of the year. Current sales were up slightly but why would builders think they are going to sell a bunch of homes when the buying season is past the half way point and you would expect sales to slow.

We still continue to see more foreclosures and the existing previous ones still have not been unloaded by the banks which continues to build up the massive excess of home inventory that is currently available. Although the home builders seem to think things are getting better I would imagine it's much more likely that they are just trying to keep their hopes up and they don't really believe sales will increase through the end of the year.

If you can qualify for a loan at this time you may want to take a serious look and see what opportunities are available to you. If you are eligible for a VA Home Loan then you could have a great opportunity to capitalize on the current situation with no money out of pocket. If you have any questions simply contact a loan officer and find out what opportunities are available to you.


Builder Confidence and New Home Supply is Down

Published on June 24, 2011 by

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New Home Supply (2010-2011)

There is lots of news and data out showing that new home sales are healthy and the bottom line is that they couldn't be further from the truth. Regardless of what the reports are saying take a long look at what the home builders confidence is. After all they will know the status of their business best since they are directly tied to it.

While new homes may have a small inventory and moving at a decent pace keep in mind that the overall inventory of homes is up and continues to grow which keeps on driving the prices lower. Home builder confidence is at a 9-month low this month; and the expectations going forward are for it to worsen. Foot traffic is slowing and this is in the middle of the “buying season”. Remember your first step to purchasing a home is to contact a loan officer. Get your finances in order and be prepared when you go out looking to purchase a home.

If you're considering purchasing a home and taking advantage of the all-time highs of home affordability then fantastic. Remember that there are plenty of existing homes on the market and that distressed properties are at steep discounts of an average 20% off. If you have any questions about the home supply simply contact a local realtor and they should be able to provide you with information relevant to your desired area.


Home Builder Confidence Slip Sliding Away

Published on June 21, 2011 by

Homebuilder confidence slips in June 2011

Just when you thought that the home builders confidence would increase it shocks us all and continues to go lower. Previously there were reports about new home sales increasing and building permits increasing and with those two things you would think the home builder confidence would have followed suit.

In addition to the lower confidence it was also the biggest one-month move since May of 2010 when the federal home buyer tax credits expired. With this in mind any one that is looking to capitalize on the opportunity for a new home may be in a much more superior position. Contact a loan officer and get your finances in order first, this should always be your first step when you consider purchasing a home.

Remember the Housing Market Index is compiled with three different and separate surveys to give us the best idea of the home builder’s businesses. The questions for the home builders are listed below:

How are market conditions for the sale of new homes today?
How are market conditions for the sale of new homes in 6 months?
How is prospective buyer foot traffic?
  1. How are market conditions for the sale of new homes today?
  2. How are market conditions for the sale of new homes in 6 months?
  3. How is prospective buyer foot traffic?

The report is scored based on responses and comes in the form of 1-100. Anytime the report is under 50 it is considered unfavorable conditions for the builder. The readings have been well below 50 for quite some time and the last time it was in favor of builders was more then five years ago.

Home affordability continues to improve as we see the prices and interest rates continue to drop. It was always more difficult to have it apply directly to the new homes but with the builder confidence down so low it may create the best opportunity ever to purchase a new home as well.

Housing Starts Increase Slightly But Remain Extremely Low

Published on June 17, 2011 by

Housing Starts (2009-2011)

The housing market has been in the dumps for years now and we are all hoping and looking for signs of hope. Well, here is a small glimmer that things may be improving and not continuing to get worse. I mean nobody knows if we have hit the floor yet.

The housing starts increased this month unexpectedly and although it was slight it was still an improvement. Yes, overall things are still very low but maybe this is the start of movement in a positive direction and hopefully not just an unexpected bump.

The slight improvement is 4 percent to a seasonally-adjusted, annualized rate of 419,000 units and just a little bit better then the 6 month average although the 6 month average is a very low target to surpass.

The reason why this may be a sign of a positive direction and hopefully some recovery in the housing market is that the Building Permits were also up so that is an indication that we could see more improvements in the future.

This report was a surprise to many since it was recently reported that home builder confidence is at its lowest reading since September 2010. Additionally, home sales are slow and many are going to investors who are simply picking up discounted and distressed homes. It doesn’t make a lot of sense for new homes to compete with much of the existing inventory.

If you are looking to capitalize on the low prices and low interest rates contact a loan officer right away and be prepared to move quickly and effectively regardless if you look to purchase a new home or an existing home. Once you are prepared financially you can move forward confidently.

Building Permits Disappearing Quicker Then Expected

Published on May 18, 2011 by

Housing Starts (May 2009-April 2011)

It is becoming a growing concern that the building permits are dropping so quickly and unexpectedly. The Single-Family housing starts was down by 21,000 in comparison to last year this time.

Yes, there is plenty of available housing with the most recent boom but some economists are growing concerned that there will be a future bubble based on the population expectations. The stats are reported by the U.S. Department of Commerce.

This year the stats are showing a five percent drop in housing starts compared to last year and last year was not a banner year at all. The results of the report are worse than Wall Street was anticipating. This marks the 2nd year in a row where housing starts are below 400,000 units.

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Building permits are issued by local government so it's an easy thing to track and report on. When the permits are down the housing starts are down, usually a house will start construction within 60 days of being issued the permit.

If you are set on purchasing a new home this year then know that the supply will be low as most of the available homes for sale and that are selling are existing homes. If you have questions simply reach out to a loan officer and be prepared to act quickly and effectively when purchasing your new home. There is a lot of hope that the market is recovering and they point towards the increased foot traffic shopping, low mortgage rates and some job growth.

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Anyway you choose to look at things currently it is easy to grasp the concept that home affordability is really good right now. If you are employed and you qualify it's a great time to purchase a home. Contact a loan officer today for your free consultation.


Home Builders Sales Today and Tomorrow

Published on May 17, 2011 by

NAHB HMI Index 2009-2010

Home builder confidence continues to be dismal. Worse yet is that they are ranging in a dismal area and can't seem to get out of it. The reading for builder confidence this month was a very low 16 out of 100.

A score above 50 would suggest favorable conditions for builders but it's been many years since we've seen a score above 50. This is also the sixth time in seven months where they have scored a 16 which is the longest flat line they've seen in the reports history. It was in 2006 the last time the index was higher then a 50.

The report is based on surveys sent out to home builders each month. The intent of the survey is to get the information on current and future single-family home sales and also the interested foot traffic.

Comparing the numbers to last month (April) there was very little activity:

  • Current single-family sales : 16 (+1 from April)
  • Projected single-family sales : 20 (-2 from April)
  • Buyer foot traffic : 14 (+1 from April)

While there is a slight boost in today's sales and foot traffic you can expect that to trend down as the season progresses and if the economy continues to struggle. Additionally you have the foreclosed homes on the market representing a significant amount of the purchase transactions. If you have any questions about what may work out best for you simply contact a loan officer and they will help you every step of the way.

Home builder confidence is flat and they are reporting a worsening sales expectation for the upcoming six months and you may find that if you are shopping for a new home that the builders will be more then happy to negotiate on the price and the upgrades.

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The interest rates and the home prices due to foreclosures have created an excellent opportunity for the home affordability. If you are planning to purchase a home this year then take a moment to smile and realize that now is a great time to purchase yourself a home whether it's an existing home or a new home. The first step for purchasing a home is to always contact a loan officer and get pre-approved so you may work quickly and efficiently when you find the home you'd like to purchase.